Daily Times - Leading News Resource of Pakistan
Speculations concerning the misuse of aid remain a serious concern, which may explain the reluctance of international donors to be more generous. There are signs of suspicions within the US too
The overall circumstances in Pakistan are far from rosy. Besides lingering structural problems and persistent mismanagement, the current global economic downturn and the war against terror are all taking their toll on every sphere of our national life. The situation is being made worse still by the inability of pledged international help for Pakistan to fully materialise.
Economic growth has slumped drastically and foreign debt is rising. The energy crisis remains hard to overcome. Food insecurity and water scarcity are reaching alarming levels. Insecurity and random violence continue to plague all the provinces, making our country rather unattractive for foreign investment.
In this years budget, the government had to divert a major proportion of available resources towards defence and the rehabilitation and reconstruction of infrastructure in conflict-affected areas in Swat and FATA. Although many of the poor and internally displaced people have gone back home, their miseries are far from over. Yet, even UN appeals for humanitarian operations have been experiencing problems securing required funds for basic relief operations, and this need may become dire again if the ongoing security operations continue.
This current range of problems has led the prime minister and president to make fresh appeals to the international community to be more forthcoming with their assistance. During the past week, the prime minister has asked the head of the influential think-tank, the International Crisis Group (ICG), to highlight the problems confronting Pakistan as a frontline state in the war against terror. The president reiterated a similar request to a senior World Bank delegation.
This is not the first time that the president or the prime minister has called upon international donors and the Friends of Pakistan (FoP) to extend optimal assistance to the present democratic government. The FoP group was set up in New York on the sidelines of the UN summit with the support of the US, which wanted to marshal political and economic support to promote stability in Pakistan. Its prominent members included Australia, Britain, Canada, China, France, Germany, Italy, Japan, Saudi Arabia, Turkey, the UAE, the US and the European Union.
A lot of potential areas for support were identified including increased supply of oil on deferred payment basis, as well as the securitisation of remittances to help enhance our national foreign exchange reserves and to improve our overall credit rating. Pakistan had also sought a debt swap for conversion of existing foreign debt into development aid, which could have gone a long way in reducing the annual payments made to continue servicing loans. Acknowledging that increased trade is better than aid in the long run, the government asked for increased market access for Pakistani products into the US and European markets. There are some issues where exercising due care would be merited. For instance, increased access to European or US markets should not result in unthinking agricultural exports of food and cash crops that continue to exacerbate the growing food insecurity in the country. However, most of the identified areas for supporting Pakistan are largely sensible and seem to hold the promise of putting our country on a firmer path of sustainable development.
Unfortunately, however, the required amount of support has not materialised, despite another gathering of many of the above-mentioned donors in Tokyo last year. Due to aid delays, and the increasing pressure on the budget and domestic financing, Pakistan was compelled to resort to IMF borrowing again, after the previous government claimed that we had broken free of the shackles of harsh IMF conditions.
While increasing its loan support to $ 11.3 billion from an initial $ 7.6 billion, the IMF has urged donors to follow through on the $ 5.7 billion promised last year. In fact, both the IMF and World Bank admit that lacklustre donor support is hampering growth targets for Pakistan. The IMF has even directly stated that, while Pakistans economy may be showing some signs of recovery, delays by donors in handing over promised aid threaten the countrys ability to meet targets under its IMF loan programme.
Realising that Pakistan is facing an acute energy shortage and water crisis, the World Bank has announced that it is going to loan over $ 145 million for the Punjab Barrages Improvement project, and the new World Bank Country Partnership Strategy for the country promises $ 6 billion for various other projects.
These, however, are loans, not grants, which will have to be paid back. Both the World Bank and the IMF will also insist on curbing public expenditure and increasing revenue generation to ensure the deficit becomes more manageable.
Most probably, our decision makers will continue passing on the brunt of austerity measures to the masses. The perpetual pursuit of inequitable growth strategies, the lack of prioritisation and efficiency in terms of spending and the reluctance to effectively tax those with larger assets, such as landlords, or to take action against the plethora of other well-to-do tax evaders, are issues that the current government also shows no signs of tackling.
Moreover, speculations concerning the misuse of aid remain a serious concern, which may explain the reluctance of international donors to be more generous. There are signs of suspicions within the US too, which nonetheless remains more forthcoming with its bilateral aid because of its direct strategic interests. Even Senator Kerry, who was instrumental in increasing the US aid package for Pakistan, recently wrote a letter cautioning the USs special representative to Afghanistan and Pakistan that aid to Pakistan is in danger of being squandered and wasted.
To overcome the apparent trust deficit of donors, it is vital that the use of incoming international aid to Pakistan is made as transparent as possible, and is better targeted to reach its intended beneficiaries. Instead of focusing on accounting measures, due attention must be given to demonstrating the use of aid to alter ground realities, especially for those who have become direct victims of this ongoing war against militancy and terrorism.
The writer is a researcher. He can be contacted at ali@policy.hu
Speculations concerning the misuse of aid remain a serious concern, which may explain the reluctance of international donors to be more generous. There are signs of suspicions within the US too
The overall circumstances in Pakistan are far from rosy. Besides lingering structural problems and persistent mismanagement, the current global economic downturn and the war against terror are all taking their toll on every sphere of our national life. The situation is being made worse still by the inability of pledged international help for Pakistan to fully materialise.
Economic growth has slumped drastically and foreign debt is rising. The energy crisis remains hard to overcome. Food insecurity and water scarcity are reaching alarming levels. Insecurity and random violence continue to plague all the provinces, making our country rather unattractive for foreign investment.
In this years budget, the government had to divert a major proportion of available resources towards defence and the rehabilitation and reconstruction of infrastructure in conflict-affected areas in Swat and FATA. Although many of the poor and internally displaced people have gone back home, their miseries are far from over. Yet, even UN appeals for humanitarian operations have been experiencing problems securing required funds for basic relief operations, and this need may become dire again if the ongoing security operations continue.
This current range of problems has led the prime minister and president to make fresh appeals to the international community to be more forthcoming with their assistance. During the past week, the prime minister has asked the head of the influential think-tank, the International Crisis Group (ICG), to highlight the problems confronting Pakistan as a frontline state in the war against terror. The president reiterated a similar request to a senior World Bank delegation.
This is not the first time that the president or the prime minister has called upon international donors and the Friends of Pakistan (FoP) to extend optimal assistance to the present democratic government. The FoP group was set up in New York on the sidelines of the UN summit with the support of the US, which wanted to marshal political and economic support to promote stability in Pakistan. Its prominent members included Australia, Britain, Canada, China, France, Germany, Italy, Japan, Saudi Arabia, Turkey, the UAE, the US and the European Union.
A lot of potential areas for support were identified including increased supply of oil on deferred payment basis, as well as the securitisation of remittances to help enhance our national foreign exchange reserves and to improve our overall credit rating. Pakistan had also sought a debt swap for conversion of existing foreign debt into development aid, which could have gone a long way in reducing the annual payments made to continue servicing loans. Acknowledging that increased trade is better than aid in the long run, the government asked for increased market access for Pakistani products into the US and European markets. There are some issues where exercising due care would be merited. For instance, increased access to European or US markets should not result in unthinking agricultural exports of food and cash crops that continue to exacerbate the growing food insecurity in the country. However, most of the identified areas for supporting Pakistan are largely sensible and seem to hold the promise of putting our country on a firmer path of sustainable development.
Unfortunately, however, the required amount of support has not materialised, despite another gathering of many of the above-mentioned donors in Tokyo last year. Due to aid delays, and the increasing pressure on the budget and domestic financing, Pakistan was compelled to resort to IMF borrowing again, after the previous government claimed that we had broken free of the shackles of harsh IMF conditions.
While increasing its loan support to $ 11.3 billion from an initial $ 7.6 billion, the IMF has urged donors to follow through on the $ 5.7 billion promised last year. In fact, both the IMF and World Bank admit that lacklustre donor support is hampering growth targets for Pakistan. The IMF has even directly stated that, while Pakistans economy may be showing some signs of recovery, delays by donors in handing over promised aid threaten the countrys ability to meet targets under its IMF loan programme.
Realising that Pakistan is facing an acute energy shortage and water crisis, the World Bank has announced that it is going to loan over $ 145 million for the Punjab Barrages Improvement project, and the new World Bank Country Partnership Strategy for the country promises $ 6 billion for various other projects.
These, however, are loans, not grants, which will have to be paid back. Both the World Bank and the IMF will also insist on curbing public expenditure and increasing revenue generation to ensure the deficit becomes more manageable.
Most probably, our decision makers will continue passing on the brunt of austerity measures to the masses. The perpetual pursuit of inequitable growth strategies, the lack of prioritisation and efficiency in terms of spending and the reluctance to effectively tax those with larger assets, such as landlords, or to take action against the plethora of other well-to-do tax evaders, are issues that the current government also shows no signs of tackling.
Moreover, speculations concerning the misuse of aid remain a serious concern, which may explain the reluctance of international donors to be more generous. There are signs of suspicions within the US too, which nonetheless remains more forthcoming with its bilateral aid because of its direct strategic interests. Even Senator Kerry, who was instrumental in increasing the US aid package for Pakistan, recently wrote a letter cautioning the USs special representative to Afghanistan and Pakistan that aid to Pakistan is in danger of being squandered and wasted.
To overcome the apparent trust deficit of donors, it is vital that the use of incoming international aid to Pakistan is made as transparent as possible, and is better targeted to reach its intended beneficiaries. Instead of focusing on accounting measures, due attention must be given to demonstrating the use of aid to alter ground realities, especially for those who have become direct victims of this ongoing war against militancy and terrorism.
The writer is a researcher. He can be contacted at ali@policy.hu
