Relevance of aid to our development
Tuesday, 6 November 2007
Syed Fattahul Alim
THE World Bank President Robert Zoellick has left after his short visit to Bangladesh. Whenever such a high profile visit from a donor country or agency takes place, the question that instantly comes to mind is what the country has gained out of the visit. Was there any fresh commitment for aid and, if that is the case, what new conditions the country would have to fulfil to get that aid? Not surprisingly, the press, the intelligentsia and members of the civil society who have the occasion to meet such dignitaries direct their queries accordingly. These are a telltale sign of many of the developing and least developed economies. Bangladesh is no exception to that syndrome.
Predictably, the incumbent World Bank president Robert B. Zoellick, who replaced his scam-ridden predecessor, did really give some assurances to Bangladesh. He reaffirmed the Bank's commitment to provide Bangladesh with a budgetary support of US$ 205 million, including emergency flood assistance of US$ 75 million in the fiscal year. The chief executive of the World Bank gave the assurance at a meeting with Finance Adviser Dr Mirza Azizul Islam at his Planning Ministry office immediately after his arrival in Dhaka.
Dr Aziz quoting the WB president informed the press that Zoellick was on a fund-mobilisation tour and that Bangladesh would get enhanced fund support if the World Bank could mobilise more funds.
However, the Finance Adviser, as expected, sought enhanced budgetary support, as transitional support beyond the development support credit (DSC). Understandably, he asked for this assistance keeping in mind the skyrocketing price of food products and petroleum in the international market as well as the impact of flood, which may leave their negative impact on the budget by widening the deficit.
The finance adviser apprised the World Bank president of the country's need for enhanced fund support to maintain macroeconomic stability as well as keeping the budget deficit within the target.
So far as the World Bank's enhanced role in Bangladesh is concerned, Mr. Zoellick showed interest in the country's agriculture, power sector and its preparations to face the climatic changes. Regarding agriculture, the World Bank president sought Bangladesh's own opinion about the issue. About fighting climatic change, however, the WB boss expressed interest in taking up a project in the coastal zone of Bangladesh.
Other current issues that drew the attention of the new head of the global lending agency were how Bangladesh was dealing with the problem of inflation.
It must be kept in mind that the head of the World Bank was not on a business tour in Bangladesh with any specific objective. Therefore, his remarks on various subjects were not specific recommendations on the issues he was asked to comment on. The queries he himself made were more or less of exploratory nature, for it was also his first ever visit to the country as the head of the multilateral lending agency. Which is why when he was asked to give his opinion on the various subsidies the government has been providing or about the adjustment of power tariff, Robert Zoellick waxed philosophical and pointed to the global trend of upward adjustment of tariff on power and other utilities.
In fact, the 11th Word Bank chief on the last leg of his visit to the South Asia, if anything, was more interested in the global lending agency's own agenda in the region than in the specific concerns of Bangladesh.
At this point one may like to honestly ask, why is all this furore over the World Bank president's brief tour in Bangladesh? Can World Bank, or any other international aid agency for that matter, help a densely populated and poverty-stricken developing country like Bangladesh out of its present predicament? Is there a single instance that a post-colonial, third world nation in the southern hemisphere has been able to solve its problem of development with the aid provided by the World Bank, Asian Development Bank (ADB), International Monetary Fund(IMF) or by the bilateral donors? If there is no such strong case for comparison before us, why should the governments concerned take such visits by highly-placed representatives of international bureaucracy so seriously?
The finance adviser, however, stressed the continued importance of foreign aid, especially from such large donor agencies like the World Bank. In this context, he reminded us that nearly half of the country's development budget still comes from foreign aid and pointed to the possible economic consequences in case it opted out of the aid regime. In that case Bangladesh would have to cut its development expenditures by half, he cautioned.
The finance adviser's concern, however, is centred on meeting the expenditures of annual development budgets of the country. But the whole issue of development is not purely a matter of keeping balance sheet of accounts in order. The relation between aid and development, on the other hand, is a far bigger issue and debates over it are raging globally.
Apart from the classical arguments raised from the perspective of political economy against aid as a means to address the problem of development, the efficacy of the present aid regime is being brought under serious scrutiny even from within the house of aid giving agencies themselves. The syndrome of perennial dependency that the present regime of foreign aid has created among many developing and Least Developed Countries (LDCs) is an issue of concern for development thinkers. The third world economies that got addicted to aid in this manner, however, have not been able to graduate themselves from their status of underdevelopment.
Besides dependency, corruption is another malady that is endemic in the third world governments that are fond of aid. As it takes two to tango, it would not be fair to blame the recipient governments only for all the sin of corruption they are supposed to have been committing.
Recently, especially after the reports of sleaze at the highest office of the global lending agency came to light during the tenure of its immediate past president, the moral authority of these organisations to talk down to the recipients of aid has begun to be questioned.
The Nobel Peace laureate Dr. Muhammad Yunus, during his meeting with the Robert Zoellick, even questioned the global lending agency's efficacy in addressing the problem of poverty, the main obstacle to development in the developing world. Dr. Yunus pointed to the fact that international agencies like World Bank are more interested in developing the physical infrastructures of the countries that receive aid than people that inhabit there. On this score, he said that only 1.0 per cent of this international development agency's fund is assigned for poverty alleviation.
Returning to our own case, time has come for a soul searching. Granted aid is a vital component of our development budget. But it has been so since Bangladesh became independent. Nation could not wean from aid dependency during all these years. What is then the use of aid, if it cannot aid us in getting out of the syndrome of underdevelopment meaningfully?
The government leaders as well as the development thinkers need to have a rethink of the whole issue of aid and its relevance to our socio-economic development.
THE World Bank President Robert Zoellick has left after his short visit to Bangladesh. Whenever such a high profile visit from a donor country or agency takes place, the question that instantly comes to mind is what the country has gained out of the visit. Was there any fresh commitment for aid and, if that is the case, what new conditions the country would have to fulfil to get that aid? Not surprisingly, the press, the intelligentsia and members of the civil society who have the occasion to meet such dignitaries direct their queries accordingly. These are a telltale sign of many of the developing and least developed economies. Bangladesh is no exception to that syndrome.
Predictably, the incumbent World Bank president Robert B. Zoellick, who replaced his scam-ridden predecessor, did really give some assurances to Bangladesh. He reaffirmed the Bank's commitment to provide Bangladesh with a budgetary support of US$ 205 million, including emergency flood assistance of US$ 75 million in the fiscal year. The chief executive of the World Bank gave the assurance at a meeting with Finance Adviser Dr Mirza Azizul Islam at his Planning Ministry office immediately after his arrival in Dhaka.
Dr Aziz quoting the WB president informed the press that Zoellick was on a fund-mobilisation tour and that Bangladesh would get enhanced fund support if the World Bank could mobilise more funds.
However, the Finance Adviser, as expected, sought enhanced budgetary support, as transitional support beyond the development support credit (DSC). Understandably, he asked for this assistance keeping in mind the skyrocketing price of food products and petroleum in the international market as well as the impact of flood, which may leave their negative impact on the budget by widening the deficit.
The finance adviser apprised the World Bank president of the country's need for enhanced fund support to maintain macroeconomic stability as well as keeping the budget deficit within the target.
So far as the World Bank's enhanced role in Bangladesh is concerned, Mr. Zoellick showed interest in the country's agriculture, power sector and its preparations to face the climatic changes. Regarding agriculture, the World Bank president sought Bangladesh's own opinion about the issue. About fighting climatic change, however, the WB boss expressed interest in taking up a project in the coastal zone of Bangladesh.
Other current issues that drew the attention of the new head of the global lending agency were how Bangladesh was dealing with the problem of inflation.
It must be kept in mind that the head of the World Bank was not on a business tour in Bangladesh with any specific objective. Therefore, his remarks on various subjects were not specific recommendations on the issues he was asked to comment on. The queries he himself made were more or less of exploratory nature, for it was also his first ever visit to the country as the head of the multilateral lending agency. Which is why when he was asked to give his opinion on the various subsidies the government has been providing or about the adjustment of power tariff, Robert Zoellick waxed philosophical and pointed to the global trend of upward adjustment of tariff on power and other utilities.
In fact, the 11th Word Bank chief on the last leg of his visit to the South Asia, if anything, was more interested in the global lending agency's own agenda in the region than in the specific concerns of Bangladesh.
At this point one may like to honestly ask, why is all this furore over the World Bank president's brief tour in Bangladesh? Can World Bank, or any other international aid agency for that matter, help a densely populated and poverty-stricken developing country like Bangladesh out of its present predicament? Is there a single instance that a post-colonial, third world nation in the southern hemisphere has been able to solve its problem of development with the aid provided by the World Bank, Asian Development Bank (ADB), International Monetary Fund(IMF) or by the bilateral donors? If there is no such strong case for comparison before us, why should the governments concerned take such visits by highly-placed representatives of international bureaucracy so seriously?
The finance adviser, however, stressed the continued importance of foreign aid, especially from such large donor agencies like the World Bank. In this context, he reminded us that nearly half of the country's development budget still comes from foreign aid and pointed to the possible economic consequences in case it opted out of the aid regime. In that case Bangladesh would have to cut its development expenditures by half, he cautioned.
The finance adviser's concern, however, is centred on meeting the expenditures of annual development budgets of the country. But the whole issue of development is not purely a matter of keeping balance sheet of accounts in order. The relation between aid and development, on the other hand, is a far bigger issue and debates over it are raging globally.
Apart from the classical arguments raised from the perspective of political economy against aid as a means to address the problem of development, the efficacy of the present aid regime is being brought under serious scrutiny even from within the house of aid giving agencies themselves. The syndrome of perennial dependency that the present regime of foreign aid has created among many developing and Least Developed Countries (LDCs) is an issue of concern for development thinkers. The third world economies that got addicted to aid in this manner, however, have not been able to graduate themselves from their status of underdevelopment.
Besides dependency, corruption is another malady that is endemic in the third world governments that are fond of aid. As it takes two to tango, it would not be fair to blame the recipient governments only for all the sin of corruption they are supposed to have been committing.
Recently, especially after the reports of sleaze at the highest office of the global lending agency came to light during the tenure of its immediate past president, the moral authority of these organisations to talk down to the recipients of aid has begun to be questioned.
The Nobel Peace laureate Dr. Muhammad Yunus, during his meeting with the Robert Zoellick, even questioned the global lending agency's efficacy in addressing the problem of poverty, the main obstacle to development in the developing world. Dr. Yunus pointed to the fact that international agencies like World Bank are more interested in developing the physical infrastructures of the countries that receive aid than people that inhabit there. On this score, he said that only 1.0 per cent of this international development agency's fund is assigned for poverty alleviation.
Returning to our own case, time has come for a soul searching. Granted aid is a vital component of our development budget. But it has been so since Bangladesh became independent. Nation could not wean from aid dependency during all these years. What is then the use of aid, if it cannot aid us in getting out of the syndrome of underdevelopment meaningfully?
The government leaders as well as the development thinkers need to have a rethink of the whole issue of aid and its relevance to our socio-economic development.