Based on study of (a) the Heavily Indebted Poor Countries (HIPC) debt relief initiative, (b) the linking of aid to policy conditionality and (c) transactions-cost arguments in favour of programme aid, this article argues that major elements in the new aid agenda may not be well-based empirically. This is partly because of inadequate knowledge, but particularly because the evidence often conflicts with political preferences. As a result, it is likely that large amounts of aid resources are being misdirected. Ways are suggested of narrowing the gap between evidence-based and “political” decision-making. In the meantime, donors should avoid diverting more aid into debt relief, should roll back their reliance on policy conditionality, and should exercise pragmatic caution in the expansion of programme assistance.
