The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

Increasing debt risks suggest African countries’ hard-won market access should not be taken for granted over the next decade. While debt crises, defaults, and severe restructurings would not leave African countries shut out of the markets forever, there could be a long wait with appetites for investment taking many years to return. There are six ways borrowing can be improved to better finance urgently needed investment with less risky lending while preserving market access. Step one: deliver on debt transparency. Step two: deepen domestic debt markets. Step three: generate more flexible financing. Step four: provide market access parachutes. Step five: ensure tighter use of proceeds. Step six: make a solid plan, and build a sustainable brand.

This article analyses evidence for each of the expected benefits of budget support in turn, and finds the biggest improvements in the pro-poor nature of public expenditure and public financial management. More modest improvements are noted in the predictability of aid and the burden of transaction costs, while less is known about the real effects on domestic accountability. Underlying them all is an assessment that programmes are incapable of 'buying' reforms. Drawing on the analysis, seven areas are highlighted where budget support design can be strengthened vis-à-vis its original rationale.

This paper investigates the relationship between copper prices, the exchange rate and consumer price inflation in Zambia using a structural vector autoregression with quarterly data for 1995–2014 and a combination of sign and zero restrictions to identify relevant global and domestic shocks. The paper makes two contributions. First, it provides new measures of exchange rate pass through (ERPT), based on less restrictive assumptions than previous estimates, to show how changes in the value of the kwacha are reflected in changes in consumer prices (distinguishing food and non‐food inflation). Second, the ERPT is disaggregated to demonstrate that measured ERPT depends on the nature of the shock, with implications for policy responses. Although the price of copper is the most important driver of the exchange rate, the fluctuations it caused are associated with a low pass‐through of about 7% (consistent with a period of relatively low inflation). Exchange rate fluctuations caused by monetary shocks, in contrast, come with a pass‐through of up to 25% (and even more for food prices). A fast response by monetary authorities can mitigate the adverse effects of exchange rate shocks.

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.