Working Paper
Sector Investments as part of National Fiscal Policy

Sector investment programmes have become a common tool in development assistance. However, their contribution to national growth of production and poverty reduction has been less investigated. The sector investments can be seen as a part of national fiscal policy, but, when run poorly, they can become a fiscal burden. Based on the evidence from running sectoral programmes, this paper recommends a thorough preparation phase for programmes, as well as the need to link sector programmes to national budgeting process. If programmes become an integral part of the national fiscal policy, they can contribute to governments' budgeting process and allow for greater flexibility in terms of revenue collection and expenditure. Using a case study from the Agricultural Sector Investment Programme (ASIP) in Zambia, this paper illustrates the problems that can arise from a partial implementation of a sector investment programme.