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'Don't allow donors to dictate terms'
By Feizal Samat
The country representatives of the World Bank, the ADB and the IMF, the world's largest multilateral donor agencies, had a stark message for Sri Lanka yesterday - don't allow donors to dictate terms on development.

"Don't allow donors to own projects. Be careful of bad advice. Often it has been proved that home-spun projects succeeded more than donor-driven ones," was the underlying theme from Peter Harrold of the World Bank, John R Cooney of the ADB and Jeremy Carter of the IMF.

This was clearly one of the central points of their presentations at the annual sessions of the Sri Lanka Economists Association (SLEA) held at the BMICH. The widely-held view across Sri Lanka - particularly amongst civil society and grassroots NGOs - is that the country is trapped between the dilemma of needing foreign aid in return for uncomfortable economic prescriptions like privatisation and cutbacks in public spending on health or education.

But what the three representatives said was a lot of food for thought and makes sense, according to some economists. Mr. Harrold, who spoke on foreign aid issues in development, said that the main problem was the lack of skill in preparing projects. "When officials can't come up with a proper project, then they tend to rely on donors, who then dictate terms. Governments and ministers must put their foot down and take ownership of projects away from donors," he said.

In Sri Lanka it was extremely clear that projects where donors have had a bigger hand in the designing didn't work as good as government-designed ones. "This is clearly seen. The trend must change … dictate your own terms. Donors will fund good projects. They are unlikely to turn away a well-designed, local project (even if it means not dictating terms)," the World Bank country director noted.

Donors have pet things to try out and given the chance - when asked by governments to help design projects - they try to test these out in countries, he said on an issue - endorsed by his colleagues - which should generate a lot of debate. The argument of the three was that donors came into the picture - on development decisions - mainly because government agencies lacked expertise in preparing projects and also the general local tendency to believe that foreigners have better solutions.

The three representatives had the same concern on many issues as to why Sri Lanka has failed and will fail in the future unless changes are made. They are political interference, massive government bureaucracy, weak decision-making processes, lack of commitment and so on.

There were too many projects in the country, Mr. Harrold said noting that if one drives down to the south there are so many offices of government projects but people have seldom got services like water, power or basic infrastructure. "A vast amount of the funds to the south hasn't been utilised for the people's benefits. The money is spent on bureaucracy and project offices."

Foreign aid utilisation from an average of US $500 to 600 million that Sri Lanka gets annually from overall contributions is low and so far there is US$ 2.5 billion worth of aid undisbursed or unutilised, raising questions as to why Sri Lanka needs to depend on the US $3 billion expected from the Tokyo meeting when that money is already here or has always been, an economist at the meeting commented.

Mr. Harrold, saying there were far too many projects, urged the government to cancel low-priority projects and divert resources to the important ones. "If this happens probably half the project portfolio would have to be cancelled … (such is the waste)," he said, adding however that these are hard decisions because "comfortable" (project) jobs have to be axed.

IMF senior representative Carter also warned of bad advice from donors and urged the government to "put donors in their place." ADB's Cooney said that the dominance of donors in the country's development agenda was not a healthy sign for Sri Lanka.

He also made an interesting point. "Much of the contents of a letter written by Dr Anton Balasingham to the Prime Minister some weeks ago (when the LTTE suspended peace talks) about the lack of services and that the people were not getting their basic needs … is what we have also been always saying. Because of an inefficient bureaucracy, the people are not getting services (in the north) even if allocations have been made."

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