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policies. However, if countries fail to implement such policies, the logical
thing for us is to concentrate the dialogue on their ability to implement. In
this respect assistance for capacity building is crucial. If a country over a
longer term shows no will to improve its ways, it will have an effect on the
level of funding to that country.
When the will is there, and the problem is rather capacity, it’s different.
Many countries have obvious difficulties in this field, and one of the areas
we focus a lot on these days is therefore their capacity to manage public
resources. There is a widespread need for more knowledge and better systems
for public resource management in many countries, and there is also a
need for better coordination of all the different attempts by donors to assist.
When it comes to failure to meet IMF benchmarks in the short term, we
are wary of stop-go reactions that may have a detrimental effect on what we
are trying to achieve. We do see the need to give clear signals, but at the
same time we have to remember that we are supposed to be dealing with
responsible governments and that all of us are interested in the long-term
results. Therefore we have to concentrate on the efforts that countries make
to reach these objectives. We should be flexible regarding the means used
to reach them and the time frames, as long as the countries demonstrate the
will to do so.
GBA: For Sweden it’s absolutely clear today that development is not
possible when a country is implementing bad economic policies. I am quite
adamant on this point. We are not going to throw away money on bad
economic policies.
So, what would you suggest if a country is implementing such a policy? Withdrawal?
Our policy has, of course, more variety to it than that. But, if a country
implements a policy leading to high inflation, continuous devaluations and
imbalances in the economy, resulting in misallocations of resources in the
society, aid cannot affect the situation very much. What you can give in such
a country is technical and competence developing assistance as well as, by
different means, give support to reform processes. We would, however, not
give any budgetary or balance of payments support.
Assessing the direction of economic policies and reforms in a country is not
always easy. The discussion around the structural adjustment policies over the
last twenty years is a case in point. Sweden has not always followed the lead
of the Bretton Woods institutions. From our own development experience,
we know that for an economic policy to work, a number of things have to be
done in the right way – a certain way for every specific situation. It is necessary
to be humble when assessing other countries, but there must at least exist
a will to implement policies for a general economic balance, which also makes