📌 What happened

Following Burundi's 2015 political crisis, donors imposed economic sanctions and suspended all budget support to the national government. The conventional expectation is that removing donor budget support will force painful spending cuts and political concessions by making fiscal commitments untenable. This article argues that this expectation is overly simplistic because governments can use fiscal levers other than aid to preserve spending.

📊 Monthly budget records and time-series tests

• Uses monthly data on the government's fiscal position from 2005 through 2017.
• Employs time-series analysis to trace how fluctuations in aid relate to government spending and financing choices over time.
• Focuses on the period after the 2015 crisis when donors suspended all budget support to assess the fiscal response to sanctions.

🔑 Main findings

• Aid shortfalls did not lead to detectable cuts in government spending: overall spending levels remained resilient after donor support was suspended.
• Shortfalls in external budget support were systematically offset by increased domestic borrowing: the government substituted domestic debt for lost aid.
• The substitution pattern shows that the Burundian state was able to fulfill spending commitments despite sanctions, thereby blunting the direct political pressure that sanctions aim to create.

⚖️ What this means

• Economic costs imposed by suspending budget support do not automatically translate into political costs for target governments when domestic fiscal instruments are available.
• Sanctions that rely primarily on withholding budget support may be less effective where governments can and will substitute domestic debt for external aid.

This evidence from Burundi highlights the importance of examining fiscal responses—especially domestic borrowing—when evaluating the political effectiveness of economic sanctions.