Effectiveness of Aid Hard to Assess If Recipients Don't Improve Public Finance Management Systems

Article excerpt

The debate about the effectiveness of foreign aid in boosting the development of poor countries is probably interminable. There are so many variables and, perhaps more important, so much high emotion, involved.

But when you examine efforts to analyse aid effectiveness fairly objectively, you realise, with some dismay, that a whole lot of very basic things are not being done by donor countries - and more particularly aid recipient countries - so that in a real sense the more esoteric debates are premature.

Let those wait until the fundamentals have been done before we get into those debates, surely.

From tomorrow the Organisation for Economic Development and Co-operation (OECD) is holding the Third High-Level Forum on Aid Effectiveness in Accra, Ghana, to examine some of those basics.

It will bring together donors, recipients, civil society and others, to assess how effective aid has been and how to make it more effective.

One of its main specific tasks will be to monitor the Paris Declaration on Aid Effectiveness that much the same group of countries adopted in March 2005. The declaration agreed on 12 measures to increase aid effectiveness, with targets for 2010.

In a report to be discussed in Accra, the OECD surveyed 54 aid-receiving countries and has judged that "some progress" has been made towards the targets but that much more remains to be done.

That looks on the face of it a rather generous assessment. The taxpayers who have to fork out the billions of dollars that go into aid would probably pass a gloomier judgment.

Take the third measure that aid flows should be recorded in the recipient country's budget. Elementary, one might have thought. Some generous country is giving you money for nothing which is intended to help lift your wretched people out of poverty.

Rule No 1 would seem to be, record it in the budget so that Parliament (if there is one) or the people can see where it's going. …