November 30, 2008 / 3:23 PM / 9 years ago

INTERVIEW-Boost quality of aid, if not quantity - U.N.

By Amran Abocar

DOHA, Nov 30 (Reuters) - Donor states should improve the quality of aid to developing countries even if the global financial crisis means they do not increase their aid levels, a senior U.N. official said on Sunday.

With some nations slipping into recession and others perched on the cusp, the United Nations and aid partners fear states will cut back on aid commitments. Italy has already said it will cut its development budget and others may follow suit.

Salil Shetty, director of the U.N.’s Millennium Campaign which has set goals to halve extreme poverty and boost life expectancy by 2015, said the financial crisis can force a rethink on aid.

"Since we’re talking about hard times, can we at least improve the quality of aid?" Shetty told Reuters.

"...Most of these countries give money to the wrong places for the wrong things. It’s not going to the poorest countries for meeting the goals. Half of it goes for political interests, for opening up markets and other things.

Shetty spoke on the sidelines of a U.N. meeting on financing for development which was overshadowed by the financial crisis and a standoff between rich and developing states on reforming Bretton Woods institutions such as the IMF and World Bank. [ID:nLT676278]

The credit crunch has frozen lending markets, forced trillions of dollars in government bailouts and sent a raft of nations into recession. The crisis has hit poorer nations through trade, aid and an inability to access credit markets.

Shetty said that poorer nations needed to have more control over how to spend aid funds and they in turn needed to curb corruption and boost transparency -- rather than having it tied to conditions that benefit the donor country.

"(They say) if you want the money, then you have to buy my goods and services. Basically you give with one hand and take from the other hand. So don’t give it, keep it then," he said.

Donors should also send fewer delegations to inspect the outcome of their funding, Shetty added. "In Tanzania, they have calculated the finance ministry spends something like six months in a year just meeting donor missions".

According to World Bank estimates, 40 million people will be dragged into poverty in 2009 as a result of the global financial crisis and related economic meltdown.

Shetty said poor countries, who are primarily responsible for meeting so-called Millennium development goals, should not be allowed to get away with citing the financial crisis as reason to slash social expenditures.

"Just like rich countries are making an excuse, we don’t want poorer countries to make excuses," he said. "They have an equal responsibility to make sure that (Millennium goal) investments are protected, ring-fenced and increased because it is the poor who can’t bear the shocks of even small changes." (Editing by Dominic Evans)

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