There has been a clear shift in the policy of many donors in the health sector-away from discrete project assistance towards more broad-based sectoral support. This paper, based on interviews with officials in a number of bilateral and multilateral agencies, explores whether this shift in policy has been matched by similar changes in the form or range of aid instruments. The paper develops a framework for examining current practice in relation to the different objectives that donors seek to promote through technical and financial assistance. In particular, it looks in some detail at the advantages and disadvantages of budgetary support compared to more traditional forms of project assistance. It concludes that the debate should not be about whether one form of aid is better than another. Ideally, they should be complementary and the forms, channels and systems used for managing aid need to be assessed in relation to how they help to achieve the mix of development objectives that are most appropriate to the country concerned. The review demonstrates that this is a complex task and that to achieve an effective balance is not easy. The final section summarizes the main themes emerging from the discussion and suggests some preliminary conclusions and proposals for future action.