Donors’ pursuit of strategic agenda and conditions creates conflicts whereas recipient struggles with after effects of inappropriate strategy

Islamabad, September 25, 2012 (PPI-OT): Donors’ pursuit of strategic agenda and conditions creates conflicts whereas recipient struggles with after effects of the inappropriate strategy and waits for more aid to undertake expensive reforms, said Dr. Nadia Tahir, Associate Professor in Economics, University of Lahore, here on Tuesday. She was delivering a special lecture “Does Aid Cause Conflict” organized by Sustainable Development Policy Institute (SDPI). SDPI’s Senior Advisor, Ejaz Haider, chaired the proceedings.

Discussing various dimensions of official economic assistance, conflicts and development, Dr. Nadia said, “In case of Pakistan, aid failed to increase social sector spending and most peaks of aid were marked with inconsistent social sector allocations and low domestic savings,” which she said, has increased inequalities and social tensions.

She was of the view that strategically tied aid brings money and relaxes revenue constraints but it also takes away the power to pursue indigenous policymaking. It also indirectly weakens the need for reforms and shuns government’s responsibilities of social development and public service delivery. She explained that Pakistan has been a major aid recipient since decades but this aid failed to supple growth and development and instead increased inequalities and social tensions.

She also talked on use of aid for non-developmental purposes and said, reduction in military expenditure is least important interest of donors where aid money creates room for poor governments to import arms and fancy conflicts. The inflows of aid are highly correlated with arms imports and military expenditure in Pakistan, she added. She highlighted the disconnect between donors and recipient governments objectives and said, There is no ownership of aid agenda as public agenda is missing in aid paradigm which makes co-operation between donor and recipient difficult.

Joining as discussant on the lecture, Dr. Younus Jafri, Senior Advisor, Planning Commission of Pakistan talked of little share of aid assistance in overall foreign investment which currently stands at 10 percent. Dr Jafri said, expectation should not be made on role of aid in growth and development, which he said, has limited role and primarily aims at filling the gaps in human development, institutional building, enhancing capacities, facilitating entrepreneurship and supporting innovation.

He said, bilateral aid in early years mostly came in the form of military aid, but now multilateral aid mostly focuses on social sector and economic development. He said, emphasis should be made on developing human capital and exploring avenues of economic activity instead of relying on aid to stimulate economic activity.

Speaking on the occasion, Safia Aftab emphasized upon the need to have clear deliberations on various dimensions of aid. She discussed various aspects of policy aid, budgetary support and development assistance and said, there is wrong notion of forced conditionalities by International Financial Institutions in Pakistan. Instead, its government of Pakistan which is not adhering to aid agenda, she added. She said, Government committed several deliverables including implementing RGST to IFI’s but later backed out.

She showed reservation on comments made earlier on implication of assistance on social development and said, the very little amount that government is spending on social development is also because of pressures and bindings by donors to allocate adequate resources for social development in the country.

For more information, contact:
Faisal Nadeem Gorchani
Coordinator, Policy Advocacy and Outreach
Sustainable Development Policy Institute (SDPI)
38 Embassy Road, G-6/3 Islamabad, Pakistan
Postal Code: 44000
Tel: +92-51-2278134, (Ext: 113)
Fax: +92-51-2278135
Cell: 00-92-333-559 2210
Email: main@sdpi.org