ISLAMABAD, Aug 18: Some economic experts have asked the PPP-led coalition government to conduct an independent and comprehensive public review of all the foreign aids and loans Pakistan has received so far before seeking any further financial assistance from any country or institution.

Speaking at a seminar on “Promoting aid effectiveness: enabling participatory democracy” jointly organised by the Actionaid Pakistan and Sustainable Development Policy Institute (SDPI) here on Monday, they said the aid-borrowing process, conditionalities by the donors and aid-utilisation should be made democratic, accountable, transparent and subject to parliamentary debates.

Muhammad Ali Shah from the Pakistan Fisher Folk Forum (PFF) said the financial aid offered by international financial institutions and developed countries was usually misperceived as grant. However, in fact all types of financial aids are basically loans on which the receiving states paid back heavy interest rates.

Sharing the experiences of mega development projects such as the World Bank-funded Left Bank Outfall Drain (LBOD) and the Asian Development Bank-sponsored Sindh Coastal Community Development Project, he said the aid was usually provided in the name of development but these projects had impacted negatively on the lives and livelihood of local communities especially the poor and the marginalised.

He said these projects had badly affected natural resources, agriculture and ecology causing widespread migration and displacements. The resistance to existing exploitative culture of such foreign aids needed to be democratised.

Dr Aly Ercelan of Pakistan Institute of Labour Education and Research (PILER) stressed the need for democratisation of state structures by embracing a range of initiatives in law, policy and public action. He said these initiatives must reflect the principles of a federation, commencing with debate and discussion of all aid in the Senate, National Finance Commission (NFC) and Council of Common Interests (CCI).

Dr Ercelan said provincial autonomy required approval of federal finances by provincial assemblies which would provide an opportunity for informed consent by citizens and not just their once-upon-a-time-elected public representatives. An honest review of the existing debt-load would call for debt cancellation and adequate compensation for massive human displacement and ecological destruction, he noted.

He said it was unfortunate that the way the financial aid was currently offered, planned and implemented, external grants and loans generally failed to promote rights-based development. He said most projects and programmes were irrelevant to poverty eradication because they did not significantly reduced economic, social, political and cultural exclusion and inequity. Even when apparently relevant, aid projects were unnecessarily costly and hence were rather a burden than a gift.

The broader problem, he said, was the distortions created by the aid regime as these distortions diluted if not negated democratic structures and processes in the receiving countries like Pakistan. He said there were several reasons which were all associated with lack of democratic accountability in governance.

“Since indirect taxes and public borrowing, with regressive burdens on the poor, are the economic basis of the government, all aid sustains old inequalities and produces new ones,” Dr Ercelan observed.

A teacher of economics and social activist Aasim Sajjad Akhtar said the political economy of ‘aid’ remained one of the most under-specified issues in political and intellectual circles of post-colonial countries like Pakistan despite its overwhelming significance for working people.