The new development paradigm strongly reconfirms and redefines the importance of M&E because of some newly incorporated principles. First, increased value is attached to results-orientation, iterative learning and evidence-based policy-making. Realisation of these principles is conditional upon a strong and well-functioning M&E system. A second major principle is an increased role and responsibility for the national government in elaborating and managing the entire M&E system. At the same time, donors are expected to increasingly rely and align to national M&E systems and arrangements. So far, however, a narrowly confined ‘technocratic’ approach to M&E has been adopted, largely neglecting its institutional and political embeddedness. While the fact that politics are part and parcel of M&E has been acknowledged before in the context of projects and programmes, it seems that when moving to the sectoral and national level (where interests and stakeholders are multiplied) the interaction among ‘politics’ and ‘M&E’ is disregarded. This paper elaborates a conceptual framework that furthers the understanding of the interlinkages among politics and M&E in a context of upwardly moving aid modalities. Bringing in case-study material from Rwanda, it argues that a narrow technocratic approach to M&E risks worsening political constraints and even undermines M&E’s technical soundness. Yet, there exist ways of escaping this downward spiral. ‘Smart’ M&E that acknowledges the institutional and political embeddedness of M&E has the leverage to stimulate public discussion, to bring more ‘sensitive’ issues into the bargaining area, to shift debates on a more factual basis and to eventually open up closed political opportunity structures.