Direct Budget Support and Poverty Reduction Strategy Papers: A Fundamental Shift or a Transitory Fashion?

The landscape and language of development assistance has changed dramatically over recent years. From what can be characterised as primarily a donor-led, largely fragmented and uncoordinated, projectised approach to the delivery of development assistance, many donors have indicated their intention to shift towards direct budget support (DFID 2000, NFA 2001). This shift can be seen as a direct response to the problems associated with the donor-led project-based approach and to the failure of policy conditionality (Ruffer and Lawson 2002). It is also due to a recognition that in order to increase the efficacy of development assistance there needs to be a greater degree of local ownership of the development process, a sharper poverty focus and improved coordination between donors (DAC 1996, DFID 2000). During the same period the move towards direct budget support has been complemented by the adoption of Poverty Reduction Strategy Papers (PRSPs), a tool introduced by the World Bank in 1999 initially to ensure the proper use of debt relief under the enhanced Highly Indebted Poor Countries Initiative (HIPC). Since its introduction, the preparation of the PRSP has assumed a wider significance in terms of shaping development policy and the way assistance is allocated and delivered. There is now a distinct possibility that PRSPs may have a greater impact on development practice than on debt relief (Booth 2001).