World Bank eyes reduced conditions for aid | Inquirer Business

World Bank eyes reduced conditions for aid

Lender wants to lessen ‘policy interventions’
/ 11:32 PM November 29, 2011

The World Bank has acknowledged the need to change the way industrialized countries extend aid to middle-income ones like the Philippines, including avoiding intervening in domestic policies of recipient nations.

The multilateral development institution—one of the biggest sources of financial assistance for the Philippines—said it recognizes that allowing recipients to identify the areas where financing should be used is one of the needed reforms in the area of aid.

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“The more countries develop, the more they are willing and able to take charge of their future—and the less desire they have to be told what is best for them,” the World Bank said in a statement.

The bank said it supports the global agenda of reforming the way aid is given. The agenda is the highlight of a forum in Busan, South Korea, that runs from November 29 to December 1 and that is being attended by an estimated 2,000 delegates from donor and recipient countries.

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The World Bank said reforms in the area of aid is necessary to make developmental funds become more effective in accelerate growth of countries and reducing poverty.

It has been a practice in the past for donors to dictate policies that recipients should implement. Policy recommendations by donors were considered requirements for recipients to actually get the aid. This practice, however, has become less frequent and more unpopular among recipient countries, especially with their improving economic performance.

Besides avoiding policy interventions, other aid-related reforms cited by the World Bank are the need for donor countries to strengthen their cooperation so they can come up with standards on making aid more efficient, and enhancing transparency in the extension of aid.

Meantime, the Asian Development Bank, another major source of financial assistance especially for Asian countries, agreed with the need to undertake reforms in the way aid is given.

In particular, ADB pushed for the granting of aid in such a way that will help reduce income inequalities and that will achieve “inclusive growth.”

ADB said the global agenda of improving the effectiveness of financial aids must highlight the need to tweak the objective of aid from economic growth of a recipient country to “inclusive growth” and poverty reduction.

“Aid effectiveness means ensuring that aid benefits people who need it most—the poor and vulnerable. For developing countries in Asia and the Pacific, aid effectiveness should be part of the broader development effectiveness agenda and focus on making growth more inclusive and help reduce poverty among the most vulnerable,” the ADB said.

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TAGS: aid, lending conditions, World Bank
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