Macroeconomic challenges of scaling up aid to Africa : A checklist for Practitioners

This handbook is intended as a practical guide for assessing the macroeconomic implications and challenges associated with a significant scaling up of aid to African countries. Its purpose is to provide a resource for policymakers, practicing economists in African countries, and staff of international financial institutions and donor agencies who participate in the preparation of medium-term strategies for individual African countries, including in the context of Poverty Reduction Strategy Papers (PRSPs). The handbook provides a checklist of the macroeconomic challenges that low-income countries are likely to face if they begin to receive significantly higher official development assistance (ODA) than in the recent past. The intention is to to help both donors and recipients provide a regularly updated vision for strengthening the potential impact of aid on growth, especially through policies that strengthen economic governance. The handbook identifies five fundamental guidelines for preparing a scaling-up scenario to guide a country's efforts to achieve the Millennium Development Goals: minimise the risks of Dutch Disease; to enhance growth in the short to medium term - it is important for governments to focus on developing policies that will allow them to effectively absorb higher aid levels and to remain alert to emerging supply pressures in different sectors; promote good governance and reduce corruption; prepare an exit strategy; regularly reassess the appropriate policy mix.