Pakistan has received over $200 billion in foreign aid since inception. It is a staggering number, especially when a significant chunk of this aid is in loans. That explains the persistent existential concern of external debt repayment that the country grapples with. Given the high figure and even higher stakes, the question arises if it is even worth it.
A recent study by the Pakistan Institute for Development Economics (PIDE) answered in the negative. Many other studies and narratives have begun to question the utility of aid. They support the claim that aid doesn’t contribute much to the country’s development, at least in the long run. If the cost of loans is taken into account, the aid has been counter-productive and rather harmful for the economy.
But who cares about the long haul in the first place? After all, aren’t we all dead in the long run? In any case, before we are dead, we will continue to be mired in this economic quagmire of woes after woes, if the state does not rethink foreign aid.
While the narrative on the subject is ample, certain nuances seem to be overlooked in impassioned discussions and sometimes get lost in translation. It may appear as a glass half-empty approach, but now even the figures refuse to show sunshine and rainbows. The net resource transfer in the 21st century exceeds $50 billion in the negative. It means that Pakistan pays more to creditors than it spends at home.
While many academics put the onus of this counter-intuitive aid on external elements, majorly donors, the state has an equal hand in its destruction. However, instead of rectifying the problems, it chooses to hide the facts behind the veil of secrecy.
Stirring the murky waters
The state remains unforthcoming and downright evasive when it comes to aid transparency. Apart from a few annual publications on disbursements by the Economic Affairs Division, information about the aid inflows is scant.
We also have a portal or a database regarding details of NGOs, but this information is ostensibly too sensitive to share it with public. What kind of nuclear codes this portal may contain, sadly we are never to acquaint with this precious information. The pervasiveness of this sensitivity isn’t limited to NGOs only. Project details, progress (in terms of finances especially,), outcomes and impact are selective and sometimes not even accurate. There are significant discrepancies in official data, reported in different publications even when the source agency of that data is the same. Situation on the donor agencies is not so different. Most of the agencies do not report aid data regularly.
The net resource transfer in the 21st century exceeds $50 billion in the negative. It means that Pakistan pays more to creditors than it spends at home
While major agencies like the World Bank and Asian Development Bank have a dedicated portal to declare aid data, including budgets and progress, the others do not have a regime for disclosing information. The OECD provides a portal containing aid data, but that information is limited. Moreover, it doesn’t have data about Chinese aid. Lack of proper information about the Chinese aid, particularly about where it went and how it went, poses a dilemma because China is Pakistan’s donor. We are unable to gain any information about a significant portion of our aid, which means the odds of accountability for any of these projects are rare.
While there should be international obligations for aid transparency, the governments should take this responsibility themselves. Otherwise, there might be suspicions that they have something to hide or doubts over their intentions.
While aid monitoring is crucial, an even imperative part of aid transparency is impact assessment and evaluation. Without analysing the aid’s gains and outputs from the spending, there is no possibility of improving the way we do development. The outcome and results data should not only be analysed alongside financial data to make value for money reckonings, but the findings should warrant public disclosure. Again, donor agencies should be encouraged to publish such reports in detail, but the government should have its own mechanism to execute impact evaluations. After all, it is the public money going in to pay off those loans.
The Boomerang Effect
Now comes the more alarming side of Pakistan’s foreign aid equation. While the donors are criticised for their intentions to benefit from aiding the poor, those countries’ dysfunctional systems are responsible for making the loans expensive as well.
Project delays and overruns, bidding irregularities, faulty designs and sometimes thoughtless execution render the cost of loans way higher than the estimates. From delaying bidding to favour the desired firm or hiring black-listed firms to awarding unjustified payments to consultants, we have all the feathers in our proverbial cap!
If you have any qualms about these claims, just read the Auditor General’s performance reports of any mega project or program. One recent example is the Neelum-Jhelum hydropower project. The project, initially envisaged at Rs. 100 billion, ended up costing over Rs.510 billion. Along with the insanely increased cost, the project has faced two shutdowns requiring repairs after mere three years of working. Ever since its inception, the project was marred by irregularities, delays and overruns.
Moreover, funds for several capacity building programs are more focused on foreign trips and expensive stays than the actual capacity building. While the public officers revel in the luxurious stays and scenic trainings, none of the stakeholders realise they would ultimately be paying for these trips in the form of enhanced taxes and inflation.
Blaming others for our shortcomings can never be the solution. The donor agencies may have an ulterior agenda, but we sure have none, be it ulterior or overt. And that means only one thing: accumulating millions in debt with no visible outcomes, running off to take more loans to repay the previous ones and then taxing the public to set some of them off.
Passing the buck may work sometimes but it surely would be a disaster after that. It is about time both the Pakistani government and public start to think about the long haul and put the blame where it belongs. It is time to make Obama’s foreign policy punch phrase our permanent policy mantra: “Don’t do stupid sh*t.” It will work for pretty much every realm under the sun, at least in Pakistan.