Analysis against Foreign Aid

Increases Debt Burden:

Foreign aid increases the debt burden on the economy. With more debt, a country is not viewed stable by the external world. Moreover, it increases the risk of default.

Increases Corruption:

In a developing country, if the government is not honest, then there is extreme possibility of corruption and wastage of resources. Corruption in foreign aid worsens the situation for any developing country which is already in need of finance.

Increases Inflation:

To retire debt and to pay interest on debt, the government increases money supply which increases inflation in the economy.

Increases Non-Development Expenditure:

The expenditure on retiring debt and paying interest on debt come under the bracket of non-development expenditure. A high non-development expenditure leaves little for expenditure on development.

Political Dependency:

A borrowing country will not only be indebted with money but also with political favors which it is supposed to provide for the loan providing country. Therefore, the foreign policy of a country remains in the hand of those loan providers and we remain at the mercy of their intentions.

Increases Stagnation:

Foreign aid increases stagnation. It decreases the desire and motivation to become independent. If a country becomes addicted to the foreign air, then it is very likely that in the long run, it will become dependent.