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The Fiscal Effects of Aid in Zambia


  • Sonja Fagernäs
  • John Roberts


Working Paper 10 forms part of a set of four ESAU papers on the fiscal effects of aid in African countries. The others are on Malawi (Working Paper 7), on Uganda (Working Paper 9) and a literature Survey and Synthesis (Working Paper 11). The first, historical and analytical background, part of the paper charts the course of Zambia’s economic decline and impoverishment from the high point reached in the early 1970s to the 1990s, when a tentative recovery began in the wake of radical but incomplete reforms. The fall in mining revenues caused a fall in real public expenditure only partly offset by substantial aid inflows, and public services declined. The second part, devoted to the analysis of time-series data from the early 1970s to the late 1990s, shows that the main effect of aid has been to augment the capital budget, though it has also temporarily raised recurrent expenditure. Large aid inflows have not produced satisfactory development results because they have been overwhelmed by adverse economic circumstances and uncertain economic and public expenditure management.

Suggested Citation

  • Sonja Fagernäs & John Roberts, 2004. "The Fiscal Effects of Aid in Zambia," Working Papers 10, Economics and Statistics Analysis Unit (ESAU), Overseas Development Institute.
  • Handle: RePEc:odi:wpaper:10

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    Cited by:

    1. Chance Mwabutwa & Nicola Viegi & Manoel Bittencourt, 2012. "Monetary Policy Response to Capital Inflows in Form of Foreign Aid in Malawi," Working Papers 201232, University of Pretoria, Department of Economics.
    2. Aaron Batten, 2009. "Foreign Aid, Government Behaviour and Fiscal Policy Outcomes in Papua New Guinea," International and Development Economics Working Papers idec09-03, International and Development Economics.
    3. Giulia Mascagni & Emilija Timmis, "undated". "Fiscal Effects of Aid in Ethiopia: Evidence from CVAR applications," Discussion Papers 14/06, University of Nottingham, CREDIT.

    More about this item


    Fiscal; aid; aid effectiveness; Zambia; budget; economic growth;

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