Abstract

Though there are certain funds available these cannot be fully made use of by the developing countries (insufficient capacity of absorption: formation of a pipeline). Thus the realization of a public investment programme financially supported by donor countries does not cause special problems. Those donors, however, have so far not shared in the financing of recurrent costs. For the developing countries there are several alternatives to meet the increasing demand for funds required to cover those recurrent costs. These strategies, however, have proved to be inadequate to the achievement of the overall development objectives. Therefore we suggest that the donors should temporarily share in the financing of recurrent costs. The economic arguments leading to that proposal show that only the combined financing of investment and recurrent costs can increase the efficiency of development policy.