A report by the Pakistan Institute of Development Economics (PIDE) reveals that foreign aid to Pakistan, despite commitments exceeding $200 billion, has failed to deliver sustainable economic growth.
The report, titled “Foreign Aid Donors and Consultants Analysing Pakistan’s Foreign Aid Inflows and Their Outcomes,” highlights that while about $155 billion has been disbursed from the committed amount, there’s little evidence that these funds have significantly improved Pakistan’s economy.
PIDE finds that the aid has not met key criteria for effective foreign aid, as outlined in the influential Millikan-Rostow report.
These criteria include the ability to transfer resources without creating future liabilities, avoiding source-tied aid, promoting sustainable economic development, increasing the marginal savings rate to drive capital formation, and supporting development programmes that enable productive use of additional capital.
The PIDE report notes that Pakistan’s aid programmes fail to meet these benchmarks.
According to Mettis Global, the research acknowledges some positive outcomes in specific sectors, such as the United Nations-led vaccination efforts, which have improved public health.
However, it also points out that this success has led to greater dependency on external sources for vaccines, raising questions about the long-term sustainability of such programmes.
Overall, the report suggests that despite the significant amount of foreign aid received, Pakistan’s economy has not experienced the desired transformation.
Even when examining Official Development Assistance (ODA) by sector, the improvements are marginal and do not lead to substantial aggregate economic growth.
This finding raises concerns about Pakistan’s reliance on foreign aid and underscores the need for more effective and sustainable economic policies.
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