17 Dec 2010

Academic worried by NZ plan to subsidise banks with Pacific aid money

11:26 am on 17 December 2010

The New Zealand parliamentary committee has been warned of the dangers of giving aid money to banks to facilitate economic growth in the Pacific.

The foreign affairs, trade and defence committee says New Zealand needs to put more money into supporting private enterprise because the current approach to foreign aid has failed.

It advocates that up to 37 million US dollars of the aid budget be made available through the banking system.

But Professor of development studies at Victoria University, John Overton, says lowering the risk for banks in this fashion represents a dramatic shift in aid policy and would need close scrutiny.

"Now these are pretty major changes in aid and again we have seen some signals in the past of New Zealand aid budget going into the hands of New Zealand and other companies to allow them to do business in the Pacific. Now that to me is a worrying trend."