Dialogue criticises IFIs for ‘aid business’

Wednesday, September 6, 2006

Tanim Ahmed - New Age
http://www.newagebd.com/2006/sep/06/nat.html

Loans and grants of the World Bank, Asian Development Bank and other international financial institutions are counter-productive for Bangladesh.
Politicians and activists also said the multilateral lending agencies take away more in kickbacks than what they give in loans.
They made the observations at a dialogue on the political economy of aid and its contingent conditions organised by non-governmental organisation Voice in Dhaka on Tuesday.
The Workers Party of Bangladesh general secretary, Saiful Huq, said although poverty had reportedly decreased in Bangladesh, inequality continued to increase. ‘It only means that the poorest sections are becoming poorer.’

Indicating that the trend was due to the conditions set by such lending agencies, including the World Bank and the International Monetary Fund, Saiful said the national dependence on foreign funds had decreased remarkably in recent times compared with the situation of even a decade or two ago.
He referred to the World Bank’s flood action plan that had turned into a disaster and in fact worsened water stagnation.
Pointing out that the agencies spend only between 20 and 25 per cent on the target group and the rest was spent on logistics and support services, Saiful said it was basically because of this the establishment still hankered after foreign funds. ‘It is easier to embezzle money from those funds.’
According to a paper by Abul Barakat, general secretary of the Bangladesh Economic Association, that the dialogue presented, only 25 per cent of foreign aid and loans went to the target group, while the rest went to auxiliary and support services.
Among them 25 per cent of the funds went back to foreign countries through payments for foreign consultants and contractors. Bureaucrats and politicians apparently misappropriated 7 per cent of the foreign funds.
Golam Mahmud, a central leader of a faction of Bangladesher Samajtantrik Dal, citing the example of Phulbari said the general people had a heightened awareness of the problems of the system. ‘They know quite well what is good and what is not.’
He suggested there should be similar movements questioning the conditions tagged with foreign aid.
Aminur Rasul Babul, head of secretariat for the non-governmental organisation Campaign for Good Governance, said foreign loans were invariably attached to numerous conditions that have and will prove suicidal for Bangladesh.
He said the conditions were intended to liberalise the essential public services that the government provides. ‘Initiatives are on to gradually liberalise and eventually privatise such essential utilities as water and power supply, railway and even roads and highways.’
Other speakers at the dialogue pointed out neo-liberal policies, promoted by the lending agencies, have proved suicidal for Bangladesh.
They referred to propositions such as the closure of Adamjee Jute Mills and the Asian Development Bank’s involvement with Asia Energy for the open-pit coal mine at Phulbari.
Arup Rahee, executive director of Lokoj, moderated the session.