Which aid is provided with conditions that the recipient spends on goods or services from the donor country?

Which aid is provided with conditions that the recipient spends on goods or services from the donor country?

• A. Grants
• B. Tied aid
• C. Budget support
• D. Interest-free loan

Answer: (B)

Tied aid is aid that comes with conditions requiring the recipient to spend the funds on goods or services from the donor country. This linkage to procurement from the donor is what defines tied aid. That condition is what makes it the best answer here: the assistance isn’t just given for use anywhere, it must flow back to the donor’s economy through purchases of its products or services. Grants are typically unconditional, or at least not restricted to buying from the donor. Budget support provides general cash to the recipient’s government budget with broad spending flexibility. An interest-free loan is a loan with no interest, focusing on repayment terms rather than procurement conditions.

Tied aid is aid that comes with conditions requiring the recipient to spend the funds on goods or services from the donor country. This linkage to procurement from the donor is what defines tied aid. That condition is what makes it the best answer here: the assistance isn’t just given for use anywhere, it must flow back to the donor’s economy through purchases of its products or services.

Grants are typically unconditional, or at least not restricted to buying from the donor. Budget support provides general cash to the recipient’s government budget with broad spending flexibility. An interest-free loan is a loan with no interest, focusing on repayment terms rather than procurement conditions.