Are international donors ditching Pakistan?

While the need for international support keeps growing, the donors resolve to do so seems to be inversely decreasing.

It doesn’t take much to realise that Pakistan is presently facing dire straits. The combined impact of a deteriorating security situation, the aftermath of a severe natural disaster and persistent economic mismanagement have made lives of ordinary citizens excruciatingly difficult.

Prominent bilateral and multilateral donors had decided to support democracy and compensate the losses which Pakistan has suffered as a frontline state in the war against militancy, through a joint platform dubbed the Friends of Democratic Pakistan (FoDP). The FoDP was convened after Pakistan appealed to major world powers for increased support, given that the country was facing a major deficit in external receipts and payments, despite having been compelled to begin borrowing money again from the IMF.

While the need for generous international support keeps growing, the donors resolve to do so seems to be inversely decreasing. A bulk of the promised donor pledges to bail out Pakistan have yet to materialise. Members of the FoDP have so far released only 28 per cent of the total commitments made at a forum almost two years ago. This is despite the fact that almost half of the aid pledges made by the FoDP donors were not fresh funds and only reconfirmed old commitments.

According to recent government statements, the FoDP has released $1.5 billion since April 2009, out of the initially pledged $6.2 billion that were to be given by June 2011. Later, the pledged amount was reduced to $5.4 billion. Moreover, analysis indicates that only 17 per cent was disbursed through public channels, while the rest of the funding was channelled through NGOs. The reluctance to provide funds through official sources indicates our government’s failure to address donor apprehensions.

Some decision-makers admit that half-hearted attempts by the government to undertake reforms in tax and power sectors have provided donors with a convenient excuse to become lacklustre in their support to Pakistan. Some FoDP countries have reportedly asked the US not to pressure the IMF into giving waivers to Pakistan when it misses out on any performance criteria targets, arguing that these repeated waivers only make authorities in Pakistan complacent.

It is quite unfair of the international community to expect Pakistan to meet stringent IMF targets, regardless of the tough ground realities. The government needs to initiate internal reforms, including more effective revenue generation through taxation, as it has one of the lowest tax-to-GDP ratios in the world. The country will not need any foreign assistance if the country’s rich pay their due taxes.

Our policy-makers must be less gullible, especially when deciding budgetary allocations. Recent experiences indicate that relying mostly on commitments made by donors for crucial expenditures like health, education and poverty alleviation is a bad idea, since lack of incoming funds leads to further neglect of the basic development needs of our citizenry.

Published in The Express Tribune, January 26^th, 2011.