Aid from donor to recipient countries on per capita basis declined from the decade of the 1980s to the 1990s. The main reason cited for this decline was “aid fatigue syndrome”, which refers to the serious doubts about the effectiveness of aid for development emerged after years of increasing aid flow during the preceding decades.
Consequently, “aid effectiveness” became the subject of frequent meetings not only among donors but also between donors and recipients.
The international community has been seeking a new direction to increase the quantity and quality of foreign aid. At the 2002 Monterrey Conference on Financing for Development, the need to scale up official development assistance (ODA) in order to meet development goals was acknowledged.
In particular, the consensus document, otherwise known as the “Monterrey consensus”, encouraged development countries to increase ODA to 0.7 percent of gross national income.
This milestone in development cooperation was followed by the Paris Declaration on Aid Effectiveness in 2005. More than 100 countries promised to make an effort to enhance aid effectiveness by reinforcing the following principles;
managing for results
The declaration reaffirmed that donors and recipients are and should be mutually accountable for development results.
Looking at the recipient countries’ ability to absorb aid promptly, efficiently and effectively would be useful to identify ways and means to improve aid effectiveness. Increasing the volume of aid without the consideration for the aid absorptive capacity of the recipient country will not result in a positive impact on aid effectiveness.
This paper thus addresses the absorptive capacity for foreign aid in the Philippines covering the period 2003-2008. It looks at the aid absorption performance of the country by comparing the actual disbursement with the targeted and committed disbursement. It identifies bottlenecks to aid absorption from the side of both recipients and donor countries.
Results of the study show the following;
the Paris Declaration stresses that partnership between recipient and donor should be strengthened to increase aid effectiveness
as a recipient country, it is recommended that the Philippines prepare and implement a country-owned strategic plan for ODA
the Philippines should actively participate in consultative meetings with major donors to discuss programming of ODA from different bilateral and multilateral sources
the Philippines and the donor community should share and establish a common aid strategy at joint meetings or pledging conferences in the context of the Philippine