Well-informed sources told Business Recorder that in order to ensure that foreign assistance is complementary to national development efforts it needs to be aligned with national procedures. For that purpose, EAD prepared a draft of the Foreign Assistance Policy Framework but even after the passage of two and a half years EAD has been unsuccessful in forwarding the draft to the Cabinet. "Donor refusal to extend budgetary support given the failure of the government to implement economic reforms is the main reasons behind this", sources said.
According to the Foreign Assistance Policy Framework, the national budget is the main policy instrument of the Government and forms the centre of the national development process in Pakistan. Therefore, the Government of Pakistan prefers general budget support over other forms of assistance as this modality is more likely to increase national ownership and strengthen national institutional capacity and reduce transaction costs in the medium term.
The draft of Foreign Assistance Policy Framework states that the government recognises that not all development partners are able to provide assistance in the form of budget support. In such cases, the government prefers if development partners make use of pooled funding arrangements and programme-based approaches. Parallel implementation and management systems and structures must be avoided. The government will decline any or all offers of assistance where it considers transaction costs unacceptably high, alignment to government priorities to be insufficient, or conditionalities to be excessive.
In order to facilitate effective budget planning and execution, all external resources have to be recorded in the national budget. All disbursements to the government have to be made through the Government budget system, whereby the Government will ensure timely provision of funds from receiving to spending agencies.
In principle, a development assistance proposal is considered unacceptably tired, if more than 15% of the total financial volume is earmarked for goods and services that are defined in source and nature by the development partner offering the assistance. The government will decide on a case-by-case basis with a view to the type and quality of technology required for the specific project or programme and the price of the offered goods and services in comparison to international market rates.
Data available with Business Recorder shows that from July to December, 2012 Pakistan received $171.03 million from multilaterals while $113 million was disbursed from bilateral donors. The World Bank remained the major loan provider by releasing $86.2 million to Pakistan while UK by releasing $41.2 million was the major bilateral donor from July to December 2012.
Pakistan received $78.6 million from Asian Development Bank (ADB), $8.9 million from Australia, $4.48 million from European Union, $12.8 million from Germany, $6.23 million from Islamic Development Bank (IDB), and Japan released $23.8 million. Data reveals that US, the major grant provider to Pakistan in 2011-12, released around $13.6 million to Pakistan during the first six months of 2012-13.