Aid spending falls 4 % — OECD

BY: Enoch Darfah Frimpong

Government spending on development aid plunged by four per cent in 2012, after dropping two per cent the year before, the Organisation for Economic Cooperation and Development  (OECD) said in a statement.

In 2012, the 25 member countries of the OECD’s Development Assistance Committee provided $125.7 billion in net official development assistance, representing 0.29 per cent of their combined gross national income.

Since 2010, ODA has fallen by six per cent in real terms and this year’s fall is the largest since 1997.

The OECD blamed the decrease on the continuing financial crisis, especially in the euro area, which has prompted many EU member state governments to tighten their development budgets.

In addition, aid has noticeably shifted from the poorest countries toward middle-income nations in the Far East and South and Central Asia, albeit most likely in the form of “soft loans,” the organisation noted in its statement.

OECD Secretary-General, Angel Gurría, is concerned about this downward trend and how it is affecting the poorest countries, precisely those who most need aid.

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“It is worrying that budgetary duress in our member countries have led to a second successive fall in total aid, but I take heart from the fact that, in spite of the crisis, nine countries still managed to increase their aid,” he said.

Data for 2012 show that although total net ODA fell, along with a fall in core contributions to multilateral institutions, aid for core bilateral projects and programs actually rose by two percent in real terms.

However, bilateral aid to sub-Saharan Africa fell by almost eight percent in real terms compared to 2011; aid elsewhere on the African continent fell by almost 10 percent; and bilateral net ODA to least-developed countries fell by 12.8 per cent in real terms.

The largest donors in 2012, by volume, were the United States, the United Kingdom, Germany, France and Japan.

Net ODA rose in real terms in nine countries, with the largest increases recorded in Korea (+17.6 per cent), Australia (+9.1 per cent), Luxembourg (+9.8 per cent), Austria (+6.1 per cent) and Iceland (+5.7 per cent).

By contrast, it fell in 15 countries, with the largest cuts recorded in Spain (-49.7 per cent), Italy (-34.7 per cent), Greece (-17 per cent) and Portugal (-13.1 per cent) — the four countries most severely affected by the eurozone crisis.

Erik Solheim, the OECD-DAC chairman, will continue to encourage DAC members to live up to their commitments.

“Maintaining aid is not impossible even in today’s fiscal climate,” he said in a statement.. “The UK’s 2013-14 budget increases its aid to 0.7 per cent of national income, which gives hope that we can reverse the falling trend.”

Indeed, on the basis of the OECD-DAC survey on “Donors’ Forward Spending Plans,” a moderate recovery in aid levels is expected in 2013.

Gurría said he hoped the trend would be reversed before the 2015 deadline for achieving the Millennium Development Goals: “This is essential if aid is to play its part in helping achieve the goals,” he said.