A report by Concord, a European non-governmental organisation (NGO), reveals that a growing number of European countries have been unable to release their pledged assistance to developing nations as a direct outcome of Europe's continuing financial crisis. The European Union (EU) countries had pledged 0.7 percent of their gross domestic product for development aid and the shortfall in assistance disbursements is being estimated in billions of euros. In 2011 calendar year, eleven EU countries cut their assistance while an additional nine intend to cut aid in the current year. In addition, Concord maintains that this declining trend is likely to continue for the foreseeable future. These findings were supported by Anti-poverty Group, ONE, which further revealed that slashing of aid budgets by struggling eurozone countries including Greece, Spain and Italy was expected. However, the two biggest eurozone economies namely France and Germany also slashed their foreign aid budgets. Austria, France, Germany, Greece, Italy, the Netherlands and Spain met less than a quarter of their promised assistance increases, while Belgium, Britain, Luxembourg and Sweden disbursed between 50 percent and 75 percent of their pledged financial assistance. Money earmarked for developing nations, to the tune of 9 billion dollars, has instead been diverted to refugees at home and/or on debt relief. Spokeswoman for the European Commission Catherine Ray stated that the EU's executive arm was in agreement that member states should increase their assistance. "In times of crisis, the EU should not forget about the poorest in the world. It's very important that the EU member states increase their aid budget as they promised to do every year," she added. It is not surprising that the eurozone governments are linking the extent of support for developing nations to the state of their domestic economy. To support the poor in Africa or Asia instead of ensuring that the taxpayers are enabled to meet their basic needs is a sure remedy for social unrest. As matters stand today, daily protests in the financially struggling economies of Europe are becoming increasingly difficult to contend with; and if the public is aware that however small a part of their scarce resources is going out of the country for fighting poverty in other countries the negative fallout is likely to be significant. Be that as it may, there are several developing countries in the world that have enhanced their dependence on foreign assistance to meet their budget deficit targets. Pakistan is a case in point and it is pertinent to note that our external debt and liabilities stood at 60.3 billion dollars in 2012 - a rise of 20.1 billion dollars in comparison to 2008's to 40.2 billion dollars. Analysts point to the failure of the government to implement agreed reforms under the International Monetary Fund 2008 Stand-By Arrangement (SBA) as the reasons for (i) refusal of multilaterals and bilaterals to extend pledged programme assistance and (ii) tensions with the United States that account for delays in reimbursements under the Coalition Support Fund and releases under the Kerry-Lugar bill. This, they argue, explains why for the second year running foreign assistance has not increased as much as was budgeted by this country's economic managers. At present, there is talk of going back to the IMF to enable the country to pay off its scheduled repayments under the SBA - a decision that would entail even more stringent conditionalities with obvious political fallout that the incumbent government can ill-afford as it is scheduled to hold general election within the year. In this context, the issue of electricity loadshedding would pale into insignificance as our major macroeconomic indicators go into the red. One would urge the government to focus on macroeconomic stabilisation policies for its remaining period in power. However, this appears unlikely given the demands of the coalition partners whose support is critical to sustain the Prime Minister as the leader of the house.
Comments
Comments are closed.