What if a drought or other unforeseen shock keeps the government from achieving progress?
Sharp changes in international interest rates or terms of trade and natural disasters such as droughts can interfere with development programs. The COD Aid contract should contain contingencies for adverse shocks that interfere with measuring and verifying the outcome indicator. However, COD Aid funds should never be disbursed except against progress measures. If emergency programs are necessary to assist a government, they should use a different aid mechanism rather than compromise the credibility of the COD Aid agreement.
