General budget support was found to have induced and sometimes been instrumental in triggering positive and mostly lasting changes in four main areas: policy formulation and implementation, the composition of public spending, public finance management (PFM), and transparency and external oversight.

General budget support accompanied improvement in policies in several areas, depending on the objectives pursued and the weaknesses to be addressed. For example, budget support’s focus on outcomes was instrumental in improving policy monitoring in Uganda and in institutionalizing government annual performance reports. These monitoring reports provided timely information to policy makers and implementers on previous performance and challenges, and thus significantly improved policy making. Strong gains were made in the water and sanitation sector, where policy processes and the quality of policies gradually improved, thanks to the consultative processes nourished by these performance assessments. In other sectors, data reliability did not improve, and policy changes remained based on uninformed political decision making. In Tunisia, budget support contributed to discrete improvements in specific areas of reform, including trade tariffs, business environment regulations, and the tax system.

Improvements in sector policies and delivery processes were particularly substantial when general budget support was paired with sector budget support. In several countries, budget support contributed to the strengthening of sector policies, the adoption of a sector-wide approach and the implementation of sector policies, e.g., for the health and water and sanitation sectors in Burkina Faso. However, sometimes the contributions of budget support were positive but insufficient, by themselves, to improve service delivery. This was the case in Ghana, where budget support played a positive role in improving policy formulation, enhancing intrasectoral coordination (in environment and decentralization), and in strengthening the capacities of key public institutions. It also improved legislation and tariff adjustments designed to benefit natural resource management. However, while budget support helped to maintain the pace of reform and improve the quality of policies in Ghana, it could not overcome the barriers to effective policy implementation. 

In the six LICs, the discretionary funding enabled by budget support helped governments to significantly increase their social and pro-poor expenditure (health, education, social protection, water and sanitation, roads, and agriculture).

• In Mali, budget support provision was associated with an increase in expenditure on priority sectors from 39% of total public expenditure in 2003 to 54% in 2009. 
• In Uganda, a trebling of poverty reduction expenditure was facilitated at the beginning of the 2004–2013 period when budget support funds came onstream. Budget support made it possible for these expenditures to remain protected from budget cuts during the entire period, but their importance in per capita terms fell drastically after 2004–2005 as the government’s priority spending turned to infrastructure and defence, and basic service expansion stalled. 
• Even in countries where priority sectors already absorbed the largest share of public spending, this trend was clearly visible. In Mozambique, for example, the share of public expenditure on priority sectors rose from 61% to 67% during 2005–2012. This increase in spending would not have been possible without budget support. 
• In Ghana, the government ring-fenced budget support funding for pro-poor sectors, private sector development, natural resources, energy and oil. Despite this, pro-poor spending and public investment decreased in relative terms over the evaluation period.

In the LICs and Ghana, additional funding benefited spending on wages (higher salaries and more health staff and teachers), non-salary recurrent expenditure (mainly in Ghana), and a higher share of domestic funding of public investments. In addition, the implementation of PFM reform programs improved domestic revenue mobilization in all countries except Uganda and Burkina Faso and was associated with stronger budget planning and budget execution capacity (see below), thus increasing the efficiency of spending and providing an additional window of opportunity to increase amounts available for discretionary expenditure.

In turn, greater expenditure in social and priority sectors expanded access and delivery of services in these sectors. In education, the number of schools, teachers, and textbooks increased; in health infrastructure, essential drugs availability and personnel improved; and in water services, access was expanded. In all countries, budget support directly contributed to an increased provision of health, education, and other basic services.

In all countries, except Burkina Faso (Box 3.2), PFM vastly improved, as evidenced by repeated Public Expenditure and Financial Accountability (PEFA)23
 assessments. Budget support played an important role in these improvements through the provision of technical assistance (on issues such as integrated financial information systems, budget management, audit, and the legislative framework), the monitoring of the performance indicators contained in the performance assessments frameworks and in the variable tranches, and the close attention paid to PFM in policy dialogue. In most countries (Box 3.3), budget support was linked to wide PFM improvements at both central and local government levels, except in Tunisia, where the focus on PFM was limited to support for the development of the medium-term expenditure framework. In exceptional cases, such as Ghana, progress in PFM reforms was real but very limited: technical assistance and dialogue brought PFM issues to the fore and contributed to legislative improvements but remained largely ineffective as they were not backed by a prioritized and sequenced reform strategy. Since the reforms applied to only part of the budget, the limited progress made did little to improve the general management of government finances.

Contributions to Transparency and External Oversight were also made by budget support. Although they recognized the effectiveness of budget support, many EU Member States returned to project aid after 2010 (mainly because their constituents questioned the value of budget support). However, Member States entrust the European Commission to continue implementing budget support as the most effective way of promoting systemic changes, sustainable results, and domestic accountability. They are working closely with the European Commission in policy dialogue, capacity development, and performance monitoring, often through joint actions. To ensure the accountability of its actions to European taxpayers, the European Commission added budget transparency and external oversight as the fourth criterion for budget support eligibility. Within its budget support operations, the European Union prioritizes support for strengthening the functioning of supreme audit institutions (SAIs) and encourages the publication of budgets and budget accounts in a timely fashion. It also supports civil society participation in external oversight through the strengthening of the capacity of parliamentary committees and research bodies to scrutinize the budget. It also supports grassroots initiatives to enable populations to hold a government accountable for its spending actions (both budget management and service delivery).

In the two LMICs, budget support did not specifically target improved public accountability. In the six LICs, the evaluations confirmed that the EU’s dynamic approach to transparency and oversight had paid off, often paving the way for improved governance over the periods considered (all before 2015). Transparency and external oversight improved, as did the control of corruption in a range of countries: Mozambique (improved budget documentation and legislative and institutional framework for the control of corruption); Tanzania (quality, timeliness and scope of audits, external scrutiny and the legal framework for corruption); Zambia (external auditing); Burkina Faso (external oversight, Box 3.2); Uganda (legal framework and strengthening of capacities of accountability institutions, Box 3.3). In Tanzania, corruption cases prosecuted more than doubled between 2010 and 2014. In all cases, improvements were linked to increased operating budgets for the relevant institutions (facilitated by the additional discretionary funding), technical assistance and increased attention within policy dialogue, all linked to the provision of budget support. In Uganda, it took the temporary suspension of budget support to bring the government’s attention to corruption and governance issues.

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  The Public Expenditure and Financial Accountability (PEFA) program was launched in 2001 by seven international development partners: The European Commission, International Monetary Fund, World Bank, and the governments of France, Norway, Switzerland, and the United Kingdom. See https://www.pefa.org/.