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This paper reviews the major changes observed in the mechanisms used to channel aid to developing countries. As the most recent PRGF approach places the emphasis on the need for a coherent framework (PRSP), a number of pre-requisites on the management side of public expenditure must be met. The paper reviews some of the most important aspects of this process, in particular the need for a better monitoring of the budgetary process. It uses a principal-agent approach to compare the impact of internal and external (audit) controls on the efficiency of service delivery, and then draws policy implications.