This paper reviews, in non-technical terms, the case for and against using tests of learning for measuring annual educational progress within programs of “progress-based aid.” It addresses three questions about testing in developing countries. One, are valid and reliable measures of student learning currently available in developing countries? Two, are existing tests used in developing countries capable of registering the changes in educational results called for under “progress-based aid”? And three, do developing countries have the technical and administrative capacity to undertake annual assessments of learning? The paper includes a brief description of existing national, regional and international testing activities in developing and transition countries, a discussion of some technical topics related to testing and assessment, and various options for using learning assessments in the context of “progress-based aid.”