Value of aid from OECD countries declines

In 2011 OECD countries spent 3% less on aid in real terms than the previous year. The first drop in 15 years is attributed to the global financial crisis. The biggest cuts were recorded in Greece, Spain and Iceland. With grim economic prospects and only a few countries on track, EU is unlikely to meet the collective 0.7% GNI target by 2015.

“The fall of ODA is a source of great concern, coming at a time when developing countries have been hit by the knock-on effect of the crisis and need it most.” said OECD Secretary-General Angel Gurría, encouraging the donor countries to keep up their aid pledges.

OECD countries offered 133.5 billion USD in net official development assistance (ODA) in 2011. Despite the increase in cash, after taking inflation into account, the real value of aid fell by almost 3% - for the first time since 1998. Over the last 10 years, ODA in OECD countries rose by 63%, but the trend has been halted by the fiscal struggles of some of the European countries and the general global economic downturn. World’s largest donors remain United States, Germany, the United Kingdom, France and Japan with European Union delivering over half of DAC (OECD Development Assistance Committee) ODA.

While aid to North African countries increased after the recent political events in the region, the Least Developed Countries received almost 9% less in comparison to the previous year.

If the predictions that ‘the golden era for overseas aid is over’ are true and the decade of growing ODA cash flows is through, the issues of aid and development effectiveness as well as policy coherence for development become more important than ever. This puts extra pressure on the Global Partnership for Effective Development Cooperation – to be forged by June this year – to deliver on the commitments of the recent Busan High Level Forum on Aid Effectiveness.

Read more:
- Development: Aid to developing countries falls because of global recession, OECD
- Why the golden era for overseas aid is over - for now, Larry Elliott, The Guardian Economics Blog, 4.04.2012