General Budget Support, Facilitating Aid Effectiveness through Harmonization and Reduced Transaction Costs: A Case Study of Ghana’s Multi-Donor Budget Support (MDBS)

At the end of the 1990s General Budget Support (GBS) gained currency as an aid modality per excellence in facilitating aid effectiveness in ensuring development and reducing poverty in low income countries that were dependent on aid. This development culminated in the Paris Declaration on Aid Effectiveness which emphasized the need to harmonize donor policies and procedures such as arrangements for financing, disbursements and monitoring and evaluation, and to reduce aid transaction cost by eliminating duplicative missions and diagnostic reviews of aid programmes. This paper attempts to investigate the extent to which the MDBS has been able to ensure aid effectiveness by harmonizing donor policies and procedures and by reducing aid transaction costs.