ACCRA ACTION AGENDA ON AID: LITTLE PROGRESS IN CHANGING DEEPLY FLAWED GLOBAL AID SYSTEM

ACCRA ACTION AGENDA ON AID: LITTLE PROGRESS IN CHANGING DEEPLY FLAWED GLOBAL AID SYSTEM

The Accra Action Agenda (AAA) endorsed by ministers at the 3rd High Level Forum on Aid Effectiveness inAccra , Ghana makes little real progress towards making aid more developmental.

The AAA fails to address the most essential concerns with the greatest impact on development in the Third World : democratic ownership of aid, policy conditionalities, tied aid and the foreign debt burden. The AAA instead gives undue attention to technical procedures in aid delivery and management to divert from its glaring inattention to the development issues that matter the most.

The Paris Declaration of 2005 raised the promise of improving the global aid regime. However the AAA supposedly aimed at deepening implementation of the declaration underscores the deep-seated resistance of donors to genuine reforms in the aid system. Donors have effectively still reserved the right to set conditionalities. They have not committed to eliminating tied aid. They have avoided making concrete, measurable and time-bound commitments to building democratic ownership of aid and development policies. Donors have completely avoided the vital issue of crushing debt burdens.

Yet “free market” policy conditionalities have gravely harmed Third World agriculture, stifled industrial progress, and worsened poverty and unemployment. Tied aid has assured donor country benefits at the expense of local needs. Ownership has been claimed more by donors and recipient country elites than grassroots communities. And debt service by the Third World is many times the amount they receive in official development assistance (ODA)

It is an opportunity that the AAA has been compelled to at least acknowledge these issues and it is welcome that civil society organizations (CSOs) have an increased presence compared to previous years. However this opportunity will be meaningless and the CSO presence will be mere tokenism if there are no clearly defined and effective reforms in the aid system.

AidWatch Philippines and IBON Foundation are among the CSOs participating in the 3rd High Level Forum that demand clearly defined and time-bound commitments to accomplish various targets by 2010. At the minimum this includes: 1) a broad but clear definition of ownership such that citizens, CSOs and elected officials are central to the aid process at all levels; 2) measurable commitments on the predictability of aid flows by 2010; 3) elimination of tied aid by 2010, with food aid and technical assistance no longer donor-defined; 4) development and implementation of new standards for transparency by 2009 including making information available to the public; and 5) an end to policy conditionality.

ODA clearly remains donor-driven with the main objective of serving donor foreign and economic policy interests. Developmental outcomes, if any, are oftentimes just incidental and only to the extent that donor commercial, political and diplomatic interests are not threatened. In Accra for instance, the United States used its clout to dilute language on ownership and conditionalities while Japan opposed proposals to untie aid. Recipient governments in turn comply rather than jeopardize aid flows and possibly important resources for development.

The challenge remains for the people and governments of underdeveloped countries to reject false aid that does not genuinely reduce poverty, advance gender equality, uphold human rights and promote environmental sustainability. Aid must also not be a matter of charity from rich to poor countries but of people achieving their right to development with all the resources at the world’s disposal.

AidWatch Philippines is a national network of grassroots-based non-government groups working on ODA issues in the country. It has over 150 members in more than 50 provinces nationwide, including 10 national networks, and regional formations.

AidWatch Philippines aims to deepen relationships and develop various levels of collaboration between NGOs on aid-related issues and concerns. It also looks forward to constructive engagement with official government and donor agencies on the basis of fundamental development principles.

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Civil Society, Donors, Gov’t Commit to Make Aid More Effective in Combating Poverty

Civil society groups met today with representatives of government and major donor agencies to discuss how to work together in ensuring that official development assistance (ODA) is effectively used to reduce poverty in the country.


In a multi-stakeholders’ consultation organized by AidWatch Philippines on July 18, major donor agencies the World Bank and Asian Development Bank (ADB), and government representatives agreed with civil society groups that the country’s aid system should undergo major changes to help combat poverty. The meeting identified issues related to the principles of the Paris Declaration, a set of reforms aimed at improving aid in reducing poverty and inequality in recipient countries.

World Bank country director Bert Hofman and ADB senior specialist Claudia Buentjen gave keynote speeches on development effectiveness in the Philippine context.

Government representatives included the National Economic Development Authority (NEDA), members of the Congressional Oversight Committee on ODA (Cocoda), Commission on Audit, Departments of Agrarian Reform and Social Welfare and Development, and local government units. NEDA Project Monitoring Staff director Roderick Planta shared the evaluation of the implementation of the Paris Declaration in the Philippines .

Over 60 civil society organizations from participated in the multi-stakeholders’ meeting. Representatives of the Canadian International Development Agency and UNICEF were also present.

The July 18 multi-stakeholders’ meeting is the culmination of a series of island-wide consultations on aid effectiveness organized by AidWatch. Such multi-stakeholder process involving broad civil society formation, government and donors is considered one of the most advanced practices in the aid process.

AidWatch Philippines is a national network of grassroots-based non-government groups working on ODA issues in the country. It has over 150 members in more than 50 provinces nationwide, including 10 national networks and regional formations.
AidWatch Philippines aims to deepen relationships and develop various levels of collaboration between NGOs on aid-related issues and concerns. It also looks forward to constructive engagement with official government and donor agencies on the basis of fundamental development principles.

REMOVAL OF VAT ON OIL URGENT WITH NEW WAVE OF PRICE HIKES

In the wake of a new wave of price hikes of petroleum products and basic goods, the removal of the 12% value-added tax (VAT) on oil products is urgent in order to give immediate relief to millions of poor Filipinos, according to independent think-tank IBON Foundation.


IBON executive editor Rosario Bella Guzman pointed out that the recent round of oil price hikes is more than enough reason to remove the VAT on oil products, particularly in the wake of the recently released official poverty figures showing that the number of poor Filipinos is increasing.

It has been estimated that if the 12% VAT on oil products were removed, pump prices could go down by P4 a liter and liquefied petroleum gas (LPG) by P60 per 11-kg cylinder. “These could help the millions of poor Filipinos through savings on their fuel bills,” Guzman pointed out. “Fuel-intensive local establishments would also benefit through lower production costs.”

In 2006, the government earned P49.15 billion from VAT on crude and petroleum products. This could easily be offset through revenue measures that are less burdensome to Filipinos, such as plugging tax leakages. In 2006, government lost P82 billion in uncollected corporate income taxes and an average of P57 billion annually in uncollected VAT.

“In the wake of the worsening poverty problem, such measures that would give the quickest relief to a greater number of Filipinos are important,” said Guzman.

On Achieving Paris Declaration on Aid Effectiveness:RP’S PROBLEMS WITH AID GO BEYOND LACK OF TRANSPARENCY, ACCOUNTABILITY

Independent think-tank IBON Foundation said that a recent international study which showed that the Philippines lacks transparency and accountability in aid disbursement only confirmed what broadband scandal whistleblower Rodolfo Noel Lozada Jr. described as a “dysfunctional” official development assistance (ODA) system.

The Baseline Study and Survey of the Government of the Philippines’ Compliance with the Paris Declaration Commitments was made by the Harmonization Committee on Aid Effectiveness, which includes the NEDA. The Paris Declaration is a set of reforms aimed at improving the effectiveness of aid in reducing poverty and inequality in recipient countries.

IBON said that the anomalous infrastructure projects such as the national broadband network (NBN), funded by Chinese loans and is now under Senate inquiry, is an example of how the country’s foreign aid system is easily subverted by political influence-peddling.

Another example is the North Luzon Railways Project (NorthRail) deal whose two components are meant to be financed largely with US$960 million in concessional loans from China allegedly involved some US$50-100 million in “commissions” to high-ranking government officials. The ZTE-NBN fiasco in turn allegedly involved US$130 million in kickbacks out of a US$329 million deal.

Anomalies like these are ultimately shouldered by the Filipino people through illegitimate debt service burdens for projects with unjustifiably low or even negative social and economic returns. Political influence over loan decisions has been aggravated by procedural changes in early 2007 which weakened the control of the NEDA-led Investment Coordination Committee (ICC) over foreign-assisted infrastructure projects.

The Paris Declaration was adopted by the Development Assistance Committee (DAC), a group of bilateral donors, under the Organization for Economic Cooperation and Development (OECD) in 2005.

According to the research think-tank, the country needs to institute deeper reforms beyond the Paris Declaration to correct flaws in the ODA system.

For one, aid remains oriented towards furthering donor foreign policy interests more than the country’s considerable development needs, as in the case of Japan and the US. Aid from multilateral agencies has also continued to have attached explicit and implicit conditionalities inimical to the interests of the Filipino people.

Donors have also used aid to advance their foreign policy interests at the expense of the country. Japan, overwhelmingly the country’s largest donor, has effectively been using its past and current yen loan packages as leverage for the ratification of the Japan-Philippines Economic Partnership Agreement (JPEPA). Government economic managers themselves have argued that non-ratification of the JPEPA could antagonize the country’s biggest aid source. The 27th and 28th yen loan packages have been reported to be worth at least P67 billion.

The US, in turn, has been taking advantage of its being the country’s largest source of grant aid to revive, expand and deepen its military presence especially in Mindanao but also in conflict-affected areas across the country. There has been US$460 million in US aid over the 2004-2007 period, not yet including some US$20 million yearly in P.L. 480 loans to purchase US food surpluses.

The biggest loans of the World Bank and Asian Development Bank (ADB) have had “free market” policy conditionalities attached to them since at least the 1980s. These have required changes in overall macroeconomic and sectoral policy frameworks, as well as gone into very specific implementation details.

The World Bank’s US$250-million Development Policy Loan (DPL) in 2006 for instance was essentially given because of the government’s harsh fiscal austerity including cutbacks on social services, the imposition of new taxes, and continued power sector privatization.

IBON believes that the Paris Declaration also has its basic flaws, among these is its narrow focus on aid delivery and management outside of a development, human rights, gender and social justice framework. A broader conception of aid accountability and demand for results is needed.

There are also key developmental issues not in the Paris Declaration. This includes the removal of policy conditionalities, measures to address debt burdens, the need to increase grant aid, de-linking aid from donor foreign policy interests, and sanctioning donors for aid projects that violate human rights and have other adverse impacts.

The inclusion of important concerns such as tied aid and the accountability of donors is welcome in principle, but according to IBON, the commitments here are unclear with time frames and targets conspicuously ambiguous