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ISSUES IN FOREIGN ASSISTNACE

INTRODUCTION Donor countries have pledged not only to scale up aid commitments in order to reach the development targets defined by the Millennium Development Goals, but also to monitor aid effectiveness through the harmonisation of donors policies.

FRAGMENTATION WHAT Fragmentation is? When Foreign Aid is disintegrated among many small donors in a country issue of fragmentation arises. There is indeed a growing concern that aid efficiency is undermined by FRAGMENTATION and a general lack of co-ordination among the donors community. Harmonisation, along with scaling up and PREDICTABILITY, is seen as a prerequisite for aid to deliver its promises. The Paris declaration makes harmonisation and cooperation one of its main commitments by stipulating that donor actions must be more harmonised, transparent and collectively effective. By signing the declaration, donors commit to implement common arrangements and recognize that excessive fragmentation of aid at global, country or sector level impairs aid effectiveness. There is more to fragmentation than a simple increase in the number of actors. A large number of these partnerships actually carry little money. Developing countries often bear the administrative costs of aid with few benefits attached. The rapid growth in the fragmentation of aid donors is seen to be a burden for recipient countries. Although, too much fragmentation is not the issue; but too little competition among the donors is main concern.
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(Kharas, 2008); (Fielding and Mavrotas, 2008) Economists underlined that even when disbursed aid is problematic because frequently unpredictable: in a recent paper Celasun and Walliser (2008) show that between 1990 and 2005, there is a significant absolute difference between aid promised and aid given, equal to 3.4 per cent of each sub-Saharan African nations GDP (in the case of countries like Sierra Leone the swings have been equivalent to 9 per cent of GDP).

For making well the predominant fragmented scenario; emphasis should be on the theory that likeminded donors, both bilateral and multilateral can work on sector-wide approaches. This approach has a good precedence in Vietnam PROLIFERATION A proliferation of donors and projects has made the governance of aid more problematic in the recipient countries. VOLATILITY (UNPREDICTABILITY) Foreign assistance is usually considered to be too volatile and has important consequences for recipients in terms of macro-economic cost, the magnitude of the phenomenon being dependent on both aid and recipients institutional characteristics.

Aid volatility is usually considered to be too high, and is known to be higher than for domestic revenues.1 1. A direct consequence of volatility is that recipient governments find it difficult to plan ahead. 2. Situation is even more complicated when aid is not only volatile but also unpredictable. 3. In particular aid VOLATILITY prevents consumption smoothing and may trap recipients in poverty if they cannot finance projects that require sustained income flows; consequently, 4. It may complicate the macro-economic management of recipient countries. LACK OF PREDICTABILITY

(Kharas, 2008); (Fielding and Mavrotas, 2008) Economists underlined that even when disbursed aid is problematic because frequently unpredictable: in a recent paper Celasun and Walliser (2008) show that between 1990 and 2005, there is a significant absolute difference between aid promised and aid given, equal to 3.4 per cent of each sub-Saharan African nations GDP (in the case of countries like Sierra Leone the swings have been equivalent to 9 per cent of GDP).

According to preliminary data, a recent Survey on the Implementation of the Paris Declaration (OECD-DAC, 2008a) showed that in any average country only 45 percent of aid arrives on time, as scheduled by donors. This lack of predictability means that government authorities in developing countries will have difficulty planning or responding to citizens' needs if funding does not arrive when new hospitals and classrooms were promised (see "Managing Aid Surprises" on p. 34).

(Kharas, 2008); (Fielding and Mavrotas, 2008) Economists underlined that even when disbursed aid is problematic because frequently unpredictable: in a recent paper Celasun and Walliser (2008) show that between 1990 and 2005, there is a significant absolute difference between aid promised and aid given, equal to 3.4 per cent of each sub-Saharan African nations GDP (in the case of countries like Sierra Leone the swings have been equivalent to 9 per cent of GDP).