Policy dialogue: ‘Pakistan’s development aid in 2009 was just 7% of what it lost to corruption’

Experts stress on accountability and clear policies to improve aid effectiveness.

ISLAMABAD: Accountability and clear development priorities can improve aid effectiveness in Pakistan, panellists and participants at a policy discussion said here on Monday.

The discussion was organised by the Institute of Social and Policy Sciences (I-SAPS) in collaboration with Oxfam to launch their report titled “Aid effectiveness in Pakistan: A citizen’s perspective”.

The report examines aid effectiveness according to the principles of the Paris Declaration, a 2005 international agreement to improve aid quality. It also presents recommendations to the government, donor agencies, civil society and citizens.

“There is an element of suspicion, a trust deficit between donors and recipients, which should be resolved through regular discussions,” said Punjab Planning and Development Secretary Arif Anwar Baloch.

Seemi Waheed of the National Management College said across-the-board accountability and supervision in government departments could help reduce trust deficit between government and donors.

The report pointed out that Pakistan’s aid dependency has decreased over the years in relative terms, but it still receives substantial aid. In 2009, Pakistan’s net Official Development Assistance (ODA) — the aid administered officially in concessional financial terms to promote economic development and welfare — was Rs218.3 billion. This, however, was only 7% of the total estimated amount Pakistan loses to corruption every year.

“This means that a reduction in corruption by a quarter degree can save an amount higher than the ODA received by Pakistan,” the report stated.

According to the report, Pakistan was given a “B” rating for operational development strategies it has put in place. It also said that the country has not done well to align its aid flows with national priorities.

The research team used the education sector as a case study to examine aid effectiveness in Pakistan.

During his presentation, I-SAPS Director Dr Salman Humayun said that the donor contribution for education is only 4.4% of Pakistan’s total national expenditure on education, half of which are World Bank loans. The debt created by these loans is a dark aspect of foreign aid.

“We need to understand the strings attached to the technical financial assistance,” Humayun said. “The liability for each student in Punjab’s public sector is Rs2,784 due to education loans.”

He said Pakistan pays Rs54.6 billion in annual interest on debt, which is more than the combined development budget of the four provinces.

Humayun put forth a recommendation of debt swap, whereby the government could reach an agreement with donors to spend the money on the education instead of repaying debts.

Oxfam Country Director Arif Jabbar Khan endorsed the idea, saying that debt swapping has been practiced in African countries before, but maintained that the government would need to collaborate with donors to convince them that the money will not be misused after swapping.

Published in The Express Tribune, October 10^th, 2012.