Aid to developing countries nearly always comes with conditions attached; Southern governments must adhere to donor and IFI conditions in order to receive development finance. Even if fiduciary conditions are necessary to ensure that money will not be misappropriated, IFIs and other donors impose economic policy conditions on developing countries, which go as far as determining fiscal and monetary choices, pushing for privatisation of essential services, or other controversial policies such as trade liberalisation. Conditions imposed by foreign donors undermine the democratic ownership of development by the recipient countries. They deprive poor nations and people of choosing their own development path. All too often, they also have a harmful impact on the poor.
Civil society organisations (CSOs) have campaigned to stop development agencies imposing economic policy conditions as part of aid. After much debate, donors have agreed to change the nature of conditions, to agree with developing countries on a limited set of mutually agreed conditions drawn from national development plans. They also committed to make public all conditions.
Despite there has been an encouraging decrease in the number of conditions attached to development aid, indirect conditions such as aid allocation systems based on performance against policy reforms (i.e. World Bank CPIA) (LINK), informal influence of the IFIs in negotiations prior to financing agreements which take place at closed doors, non-legally binding benchmarks, or donor-driven technical assistance are still common place. This practice of “conditionality through the back door” reduces the transparency of the conditions themselves and constrains developing countries’ policy space to conduct inclusive national debates on the policy choices which are most appropriate to their context and which respond to their people’s needs and aspirations. Eurodad calls IFIs and European donors to:
• Phase out all policy conditionality. Only fiduciary conditions, which are negotiated in a transparent and inclusive manner with mechanisms for public monitoring, ought to be attached to development aid. Donors and developing countries as signatories of human rights covenants and conventions should work together to meet their international obligations.
• Ensure that all technical assistance is demand-driven; ensure that it reflects a broad range of policy options; and source locally where possible