Aid to be linked with reforms

International aid to Pakistan expected to be linked to reforms strengthening of the accountability mechanism.

ISLAMABAD: Donor countries and  international financial institutions are expected to link the future aid to Pakistan with internal reforms that envisage strengthening of the accountability mechanism, broadening the tax base and transparent utilisation of assistance, when they will meet on Friday in Brussels under the banner of ‘Friends of Democratic Pakistan’ (FoDP).

Foreign Minister Shah Mahmood Qureshi, who left for the Belgian Capital on Wednesday to lead a Pakistan delegation at the 3rd ministerial meeting of the FoDP, will be asked to give a timeframe for these broad-based reforms, The Express Tribune has learnt.

“Transparency and the accountability are some of the major concerns the government of Pakistan will have to address,” remarked a Western diplomat. He said that the donor countries and the international financial institutions would translate their pledges into reality only after the Pakistan government gives them a clear roadmap.

The government will have to initiate internal reforms including broadening its tax base, as the global community alone cannot help address Pakistan’s economic woes, the diplomat added. Pakistan has one of the lowest tax-to-GDP ratios in the world. Recently, top US officials including Secretary of State Hilary Clinton remarked that Pakistan would not need any foreign assistance if the country’s rich pay their due taxes.

The FoDP, which was formed in September 2008 to help Pakistan in its efforts to revive the economy and fight terrorism, pledged $5.4 billion with a commitment of releasing $2.5 billion in 2010.

However, the forum, which comprises 23 countries including the United States and the European Union, and five multilateral financial agencies, has so far provided less than a billion dollars to Pakistan.“We need guarantees that every penny we give is spent transparently,” said an American diplomat while speaking on the condition of anonymity. On Monday, Western diplomats in a meeting with Prime Minister Yousaf Raza Gilani in Islamabad raised serious questions of his government’s credibility to utilise the aid transparently.

However, the prime minister tried to address their apprehensions, insisting that the government has an effective system in place to ensure the transparent utilisation of aid.

Published in The Express Tribune, October 14^th, 2010.