Where did it all go?

Lots of cash ... where did it all go?

Lots of cash … but … where did it all go?

Over the years there have been a number of comments made by influential people about the need to wean Kyrgyzstan away from a state of Dependency … relying on Foreign Aid, Humanitarian Assistance whether from International Donor Agencies and/or foreign governments.

Over the years since Independence, the country has benefited greatly from assistance from abroad … in the form of Grants – which are basically gifts which do not require repayment – or Loans – which do.

This has led to a number of criticisms …

  • that it encourages a state of dependency – from which it is difficult to break free …

… although it has to be admitted that even in the days of the Soviet Union, the Kyrgyz SSR also benefited greatly from subsidies from the Central Government in Moscow … ;

  • that such ‘aid’ does not come without strings attached …

… in the early days following Independence, the government received, and followed, advice from a variety of International Finance Institutions – notably the World Bank and the International Monetary Fund – and this advice was sometimes perceived as conditions being imposed by the donors … or, at least, as incentives to implement certain measures so that the funds could be released;

In some cases the funding was (and still is) in the form of bilateral aid – granted by one government to another.  This form of ‘aid’ is often criticized because it is often the case that much of the aid is used to benefit the donor – perhaps by funding the purchase of goods or services from the donor country … indeed, this tendency has not gone unnoticed … and it has encouraged a more than cynical approach towards donors among many … especially those who look back at the Soviet period with, what could be called, ‘rose coloured spectacles’ and who retain a suspicions towards the West.

… such conditions, (or incentives), can also be perceived as exerting pressure on the country … in order, perhaps, to benefit the donor rather than the recipient.

This led to an interesting situation during the debate over the draft new law imposing new obligations on non-governmental organizations, their reporting and activities, and declaring those that received their funding from abroad as ‘Foreign Agents’; a Soviet style synonym for ‘spies’ and saboteurs – a ‘Fifth Column’ working within the country against the national interest.  Some opponents of the proposed new law, tongue in cheek, posed a question … would the government of the Kyrgyz Republic, as the largest beneficiaries of foreign funding, register itself as a ‘Foreign Agent’.

  • the aid that comes in the forms of loans (as opposed to grants) is seen (rightly) as a liability that will hang around the necks of the Kyrgyz for years to come …

… and not just the Kyrgy, but all the citizens of Kyrgyzstan (whatever their ethnicity) … and their children

  • that it is not always obvious what has happened to the funds received …

… the country has seen considerable assistance which, in turn, has received considerable publicity.  It is public knowledge that is gratefully applauded … but, at the same time, the benefits are not felt at grass roots level … they are not obvious.  There is so much speculation about corruption, that this fosters a growing suspicion that the funds have been creamed off and found their way into private pockets rather than the public purse.

Given all the aid that Kyrgyzstan has received … perhaps it is understandable that some people ask … Where did it all go?

 

 

The other day I came across an interesting article the Akchabar, (Bright white or Brilliant White), Financial Portal, about what the government has done with three and half billion dollars of aid.   It was in Russian, and I thought it was worth a wider audience … hence this postcard.

It concentrated on the period from 2010 until 2015 … the period since the last revolution … which is understandable.  As such, it didn’t delve into what happened in the Akaev and Bakiev periods, which was probably wise as it might be difficult and controversial to get a clear picture.

It is also true, as the article puts it, that the largest volume of aid – that three and a half billion dollars – has come in this period … the result of some 95 international agreements.  The vast majority, (just over three billion – about 86% of the total), is in the form of Loans, (which will need to be repaid at some point in the future), and just under half a billion as Grants.

In 2010, the country received just 72 million dollars in loans and another 57 million as grants.  That rose to a peak with loans of over 850 million and grants of over 80 million in 2013, but it’s fallen back since then and in 2015 the respective figures were 650 million and 61 million.    All this is adding to the national debt – which, until 2009 seems to havered around two billion, but has grown to over three and a half billion in the period that Akchabar was reviewing.

It seems that about 40% of the credit comes from the International Financial Institutions, (the World Bank, IMF, European Bank, Asian Development Bank, Islamic Development Bank and so on), with the balance coming foreign governments, (China, Russia, Japan, Switzerland, Germany, the USA, the United Kingdom, Turkey, Denmark and the Netherlands – the article didn’t actually say that his list was in order of the size of the funds allocated to the country … but I think it is).

Most of the funds seem to be allocated to large infrstructure projects, in transport (40%) and the energy sector (43%) … with just 14% of the funding going towards projects addressing issues and trying to improve the business environment.

I remember talking to one consultant who said that he much preferred working on infrastructure projects rather than the more intangible projects … because they practical, building something that would last a long time and were so large that they probably wouldn’t happen without donor support … whereas with many of the social and economic projects, once the funding comes to an end … so, all to often, does the benefit the project brought to society.

 Only a meagre 3% being allocated to projects in the ‘social sphere’ …

… which seems to raise the question of why the Foreign Agents Law was seen as being so important.

If there is some concern locally about the efficient and effective use of donor money … then it should be noted that the donors are also deeply concerned.   and keep their various projects under supervision.

However, having said that, the projects tend to assume a ‘life of their own’ … and it can be difficult to bring one ‘to heel’ …

… especially as, apart from altruistic aspirations – the hope that the project will ‘do good and make a difference’, it has to be recognized that, in a way, the ‘donor industry’ is exactly that – an industry in it’s own right – providing work and fighting within its own parent organizations for status and budget … and no-one likes to admit inadequacies … yet alone defeat.

 

It’s not exactly an in depth article, although it does go into some more detail … and, IMHO, it’s worth looking at, raises some good issues … and would be a good ‘jumping off point’ for further analysis.

 

For the record: Although I did include a link to the article above, I should point out that it does explicitly say “Использование материала допускается только при наличии гиперссылки на akchabar.kg.” – use of the material is allowed only if there is a hyperlink to akchabar.kg …

 

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There is one comment. to “Where did it all go?”

  1. ian
    April 27th, 2016 at 08:33
    1

    To be honest, I wrote this postcard a couple of days ago … then the news website Zonoza published this article, (yesterday actually, but I only discovered it this morning):

    Grantee or a foreign agent who and what gives money to Kyrgyzstan

    It’s really about the proposed Foreign Agents law and how Kyrgyzstan has benefited from ‘aid’ received from abroad, highlighting some grants that the country has received and the levels of loans.

    It’s in Russian … but Google Translate renders an understandable version.

    Well worth looking at!

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