What Determines the Suspension of Budget Support?

Although Budget Support (BS) was not designed to push political reform in recipient countries, donors have nonetheless used it to sanction democratic regress. An econometric analysis of all BS suspensions by bilateral donors in the period 2000-11 finds that suspensions effectively do reflect downward tendencies in voice and accountability, and in level of democratic functioning. The larger the in-country BS donor group, the more suspensions. Interestingly, ideological alignment between donor and recipient and aid dependence decrease the likelihood for suspensions, while domestic donor economic growth increases it; and multilateral suspensions have the largest positive effect of all.