"To some extent, an oil discovery should diminish the rationale for continued aid aimed at a country's economic and social development," they wrote.
"[However], oil discoveries lead to corruption, conflict, pork barrel spending and the withering economy in the non-oil sectors. Donors could use the incentive of foreign assistance, for all its flaws, to help the recipients avoid these pitfalls, improve governance, and manage the economy to offset the fallout from a rising currency."
"Because major western companies stand to win contracts, aid is a way to ensure hefty profits for companies in donor countries," the article notes.
Arezki and Banerjee's arguments are based on the forthcoming IMF working paper, Aid vs. oil; can the two mix?, which they authored. The two say that oil discoveries are likely to further deepen relationships between donor and recipient countries.
While the support
The National Budget Framework Paper (NBFP] for 2014/15 financial year shows that donor project support will get Shs 2.6tn, up from the Shs 2.5tn the country received this financial year.
Speaking to journalists at
"Resource mobilisation still lags far behind in
She said the ideal for
"Oil is a finite resource and once it's extracted, once it is sold, you won't get it back. Having oil wealth doesn't necessarily mean growth."
The IMF paper says aid should help build capacity for enhanced management of oil revenues.
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