NEW YORK -- A pledge by wealthy nations, to be announced officially this week in Prague, to provide substantial economic aid to poor nations, is an important step in the right direction. To be truly effective, however, economic aid should be part of a more general aid package -- including cancellation of debt -- that should also include fair trade and technical assistance to improve the health and education status of recipient countries.
Recipient countries themselves should produce detailed antipoverty programs for schools, health and rural development. Efforts to comply with these requirements may take months or even years for the countries involved. A few of them have threatened to withdraw their applications in frustration over those requirements. Rich nations should understand that many countries are underdeveloped precisely because they do not have the expertise to develop those programs by themselves. Thus, giving them debt relief is necessary, but aid must consist of more than just that..
In many cases, lending agencies, notably the World Bank and the International Monetary Fund, demand that recipient nations adopt measures such as trade liberalization, free flow of capital, and austere government budgets that leave them in worse economic shape than before the adoption of such measures and place inordinate burdens on the poor sectors of the population. In addition, many countries spend more on interest payments than on health and education. Several development experts consider the lending agencies' policies counterproductive, adding to poverty rather than reducing it.