Danish Balance of Payments Support

This study is an analysis of Danish Balance of Payments Support (BOP) covering the period 1988-94. This aid instrument has not so far been used as an active tool to further Danish policy conditionalities vis-à-vis the reform process in developing countries. On the contrary, BOP has mainly been used in a residual manner, and Commodity Import Support (CIS) has by far been the dominant modality used. Yet, fundamental changes are underway in parallel with the almost complete disappearance of the demand for traditional Danish import support commodities. Thus, other BOP instruments such as debt relief, credit lines, support to Open General License (OGL) systems and co-financing with the World Bank have been on the rise in recent years. Nonetheless, despite the macroeconomic nature of BOP assistance existing evaluation studies and reviews have focused on microeconomic and administrative issues related to BOP disbursements and proper programme management. Very little can therefore at this stage be concluded about the macroeconomic impact of Danish BOP aid.