1. What are the advantages and disadvantages of using a fixed budget as outlined above?
2. What approaches can be taken to overcome the problems relating to fixed budgets?

The British government has pledged to spend 0.7 percent of national aid resulting in £12 billion being allocated to the Department for International Development’s (DfID’s) aid budget despite the fact that the Independent Commission on Aid Impact published a scathing report on DfID’s efforts to help developing countries. It concluded that the programmes had unrealistic targets and their performances were not properly assessed.
‘There is almost nothing better designed to perpetuate wastefulness than the knowledge that the overall budget is guaranteed come what may’, writes Dominic Lawson in The Sunday Times (2015).
He cites that in 2012 the House of Lords’ economic affairs committee warned that this target ‘wrongly prioritizes the amount spent rather than the result achieved; it makes the achievement of the spending target more important than the overall effectiveness of the programme’. In the same article Lawson points out that the Department for International Development spent a quarter of its £12 billion aid budget in the final month of last year as it rushed to meet its spending budget target with the result that multilateral aid organizations were ‘being stuffed with British taxpayers’ cash more quickly than they knew what to do with it’