BUDGET support makes up 17% of total aid to the Pacific, double the global average.
Matthew Dornan, research fellow at the Australian National University’s Development Policy Centre, told the audience at Thursday’s 2015 Pacific Update conference in Fiji that, in some parts of the Pacific, this reliance on budget support is significant.
He said budget support accounts for 36% of Tonga’s budget and 30% of Tuvalu’s.
Stephen Howes, director of the Development Policy Center, said it appeared budget support in the Pacific was “here to stay for a while” and was the lone voice of concern on a panel that was largely supportive of the practice.
Dr Howes said he was surprised by this increased reliance after previous failures in the region.
In the past, 100% percent of Australian aid to Papua New Guinea came in the form of budget support, which has since been considered a policy failure.
Budget support, Howes warned, has a tendency to fail, particularly when reforming governments lose power or donors become so ambitious with their reforms that governments can’t deliver them.
“It requires deep country knowledge to be successful,” he said.
But there is evidence suggesting budget support can create long-term sustainable development solutions, according to Jerome Pons from the Delegation of the European Union for the Pacific.
He said budget support accounts for 25% percent of total EU development aid, and their research showed it was more successful than other aid approaches in delivering permanent change.
It was also a better way to do business.
“We are more predictable in the budget support we are giving countries,” he said. “Countries have asked for us to do it this way and we are happy to deliver.”
The Asian Development Bank agrees. “From our perspective, budget support is here to stay,” said Laisiasa Tora, economist at ADB’s Pacific Sub-Regional Office.