Multi-lateral Aid By Georgina and Hayley

Definition Multilateral aid is given by the government of a country to an international agency, such as the World Bank, the international Monetary Fund or the European Development Fund. These organizations are usually governed by the contributing countries

Examples of Multilateral aid in operation In 1996 the International Development Agency (IDA) received project aid amounting to $37,472 million, the largest share of which went to Africa, with45% of the project portfolio and 35% of committed funds, followed by South Asia, with 15% of the portfolio and 32% of the funds). Eastern Europe and Central Asia received 15% of the project portfolio and 6% of the funds. In 1996, the IMF and World Bank launched the Heavily Indebted Poor Countries (HIPC) initiative to provide relief for low-income member countries, in order to release funds from servicing debts (paying the interest on loans) for development and schemes to fight poverty. The Cologne Debt Initiative, or HIPC2, agreed by members of the Group of Eight (G8)industrialized nations in 1999, sought to expand and speed up the process. ByApril 2001, 22 such countries were benefiting from debt relief of about $20billion provided by the IMF, World Bank, and other creditors.

Strengths Multilateral aid is better for being untied and for enhancing a global or in the case of the EU a regional commitment to universal values and solutions. At best it can concentrate expertise, experience and best practice in one place – and then deploy it universally and evenly. It offers the prospect of streamlined support – because in principle it’s more capable of making long-term, predictable commitments than bilateral aid. There is also, unlike bilaterals, some accountability to developing countries. Multilateral aid is getting better. Last year of our multilateral aid, 10% went to the UN, 44% to the EU and 21% to IDA World Bank Funding. Management and institutional reforms are starting to work. In the last few years, the multilaterals have begun to put in place new aid allocation policies and new management systems based solely on results; and they have started to make clear commitments to the MDGs, and to new ways of working at the country level.

Weaknesses So where does multilateral aid slip up? First, the international system remains ambivalent about it. It’s asking, ‘what long-term role do we want the multilateral organisations to be playing? What is our vision for it?’ Second, it’s still not as efficient as it should be. Too often, corporate governance fails to secure the next stage of reforms that we all want. New policies and approaches are not being applied consistently in every country, and it continues to depress me that the quality of work in so many organisations is so dependent on the individual in charge, and not on the corporate standard. Third, some multilaterals are still too dominant in the policy debate, imposing heavy policies and conditionality, and not providing the space for countries to agree their own ways of monitoring progress with their own citizens.