Do we (still) need aid?

The question of whether our country can do away with foreign aid came up recently in the context of President Duterte’s outbursts against the United States, European Union and United Nations, traditionally major sources of external assistance to the Philippines. “If you think it’s high time for you to withdraw your assistance, go ahead,” he taunted, reacting to criticisms on his war on illegal drugs. Describing such aid as “crumbs,” he went on: “We will not beg for it…. How do you look at us? Mendicants?”

The foreign assistance we get may now look like crumbs to some, but it wasn’t always that way. At its peak in 1991, official development assistance (ODA) we received in the form of grants and concessional loans amounted to one-fifth of our gross domestic product (GDP). In those days, the total amount of ODA pledged to the country was a closely watched figure that came out of the regular pledging session held by our donors, because those foreign funds mattered a great deal for the economy’s overall growth.

Last week, our external donors (aka “development partners,” the politically correct term now used) joined top government officials along with hundreds of other stakeholders in Davao City for the Philippines Development Forum (PDF) 2016. The evolution of this regular gathering over the past decades mirrors how the country itself has evolved in its dependence on assistance from foreign nations and institutions. In the 1980s, it was known as the “annual pledging session” wherein donor agencies would announce the amount and nature of their committed assistance to the Philippines for the coming year. Held alternately in Paris, Tokyo and Manila then, it was a closed-door meeting between our top economic managers and some two dozen high-level representatives of bilateral and multilateral donor institutions. Later, two representatives from civil society were regularly invited, initially as observers, subsequently as direct participants in the discussion.

Officially billed as the annual CG (Consultative Group) Meeting, it was chaired by the World Bank for the Philippines (CG chairs can differ elsewhere) and cochaired by the Philippine secretary of finance. The meeting’s substance drew (as it still does) from the government’s six-year Philippine Development Plan (PDP) and its accompanying Public Investment Program (PIP), the best guide to the country’s assistance requirements. The National Economic and Development Authority (Neda), as the development planning agency, takes stock of the plan’s financing requirements and the government’s internal resource outlook, giving the public “financing gap” that donors are then invited to help fill. From 20 percent at its peak, the ODA/GDP ratio is now below 5 percent. Crumbs? Some say that the term is apt for the antiquated and discarded hardware we get as military assistance, but in the case of ODA, these “crumbs” have been rather critical.

The true value of foreign assistance to us became evident in the aftermath of Supertyphoon “Yolanda.” Foreign aid agencies lost no time in coming to the assistance of the disaster victims for immediate relief, and subsequent restoration, reconstruction and rehabilitation. When government efforts were hampered by inadequate institutional capacities, political wrangling and bureaucratic inefficiencies that include cumbersome procurement processes, our development partners were able to respond more promptly. To this date, the government is still being faulted for long delays in mobilizing substantial resources allocated to the reconstruction and rehabilitation in the Yolanda areas.

Outside of disasters, these same hurdles that get in the way of prompt and timely use of public resources have led many a government agency to turn to foreign development partners for help even on things that the government could actually well afford. I’ve witnessed this firsthand in my current role heading a foreign-assisted project helping our government. While we are certainly far less dependent on foreign assistance now than two decades ago, perhaps we shouldn’t be too quick to declare, then, that we can do away with ODA.

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