Aid to n Ghana and others drops due to global recession
By: Masahudu Ankiilu Kunateh
Major donors’ aid to developing countries including Ghana fell by nearly 3% in 2011, breaking a long trend of annual increases. Disregarding years of exceptional debt relief, this was the first drop since 1997. Continuing tight budgets in Organisation for Economic Co-operation and Development (OECD) countries will put pressure on aid levels in coming years.
OECD Secretary-General Angel Gurría encouraged donors to meet their commitments, “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. Aid is only a fraction of total flows to low income countries, but these hard economic times also mean lower investment and lower exports. I commend the countries that are keeping their commitments in spite of tough fiscal consolidation plans. They show that the crisis should not be used as an excuse to reduce development cooperation contributions.
In 2011, members of the Development Assistance Committee (DAC) of the OECD provided USD 133.5 billion of net official development assistance (ODA), representing 0.31 per cent of their combined Gross National Income (GNI). This was a -2.7 % drop in real terms compared to 2010, the year it reached its peak. This decrease reflects fiscal constraints in several DAC countries which have affected their ODA budgets.
The Chair of the OECD’s Development Assistance Committee, J. Brian Atwood observed that, “While I am disappointed that some countries have failed to maintain their commitments, the overall level reflects the growing awareness that global challenges – from disease to security threats to climate change – cannot be resolved without development progress.”
The quality of the aid is also important – making it more effective through stronger partnerships with developed and developing countries is crucial. The new Global Partnership forged in Busan and the OECD’s new Development Strategy, to be released in May, set a new path to future development. .
Within total net ODA, aid for core bilateral projects and programmes (i.e. excluding debt relief grants and humanitarian aid) fell by -4.5% in real terms.
Bilateral aid to sub-Saharan Africa was USD 28.0 billion, representing a fall of -0.9% in real terms compared to 2010. By contrast, aid to the African continent increased by +0.9% to USD 31.4 billion, as donors provided more aid to North Africa after the revolutions in the region.
The group of Least Developed Countries (LDCs) also saw a fall in net bilateral ODA flows of -8.9% in real terms to USD 27.7 billion.
In 2011, the largest donors were the United States, Germany, the United Kingdom, France and Japan. Denmark, Luxembourg, the Netherlands, Norway and Sweden continued to exceed the United Nations’ ODA target of 0.7% of GNI. In real terms, the largest rises in ODA were registered in Italy, New Zealand, Sweden and Switzerland. By contrast ODA fell in sixteen DAC countries, with the largest cuts recorded in Austria, Belgium, Greece, Japan and Spain. G7 countries provided 69% of DAC ODA; EU countries, 54% of DAC ODA.
The United States continued to be the largest donor by volume with net ODA flows amounting to USD 30.7 billion, representing a fall of -0.9% in real terms from 2010. As a share of GNI, ODA was 0.20%, a decrease from the 2010 level of 0.21%. US bilateral ODA for Africa rose to a record level of USD 9.3 billion (+17.4%), and its aid to LDCs amounted to USD 10.0 billion (+6.9%).
ODA from the fifteen EU countries that are DAC members was USD 72.3 billion in 2011. As noted above, this represented 54% of total net ODA by all DAC donors. DAC-EU members’ ODA was 0.45% of their combined GNI, above the DAC average of 0.31%. ODA volume rose or fell in real terms in DAC-EU countries as follows
• Austria (-14.3%): mainly due to a decrease in debt forgiveness grants;
• Belgium (-13.3 %): as bilateral debt forgiveness grants fell compared to 2010;
• Denmark (-2.4%);
• Finland (-4.3%);
• France (-5.6%);
• Germany (+5.9%): reflecting an increase in bilateral grants;
• Greece (-39.3%): following the country’s severe fiscal crisis;
• Ireland (-3.1%);
• Italy (+33.0%): because of an increase in debt forgiveness grants as well as an upsurge in refugee arrivals from North Africa;
• Luxembourg (-5.4%);
• Netherlands (-6.4%): reflecting the decision to fix the 2011 ODA budget at 0.75% of GNI;
• Portugal (-3.0%);
• Spain (-32.7%): because of severe cuts in bilateral aid resulting from the financial crisis;
• Sweden (+10.5 %): as Sweden continued to allocate 1 % of GNI to ODA;
• United Kingdom (-0.8%): a slight fall after exceeding its target in 2010; however, the UK remains on track to achieve an ODA/GNI ratio of 0.7% by 2013.
Total net ODA by all 27 EU member states was USD 73.6 billion in 2011, representing 0.42% of their combined GNI, down from 0.44% in 2010. Grants by EU Institutions to developing countries and multilateral organisations with a developmental focus totalled USD 12.6 billion, representing a fall of 6.4% in real terms compared to 2010, due mainly to the extension of policy dialogues for budget support operations with some countries.
Net ODA rose or fell in other DAC countries as follows:
• Australia (+5.7%): reflecting an increase in bilateral grants;
• Canada (-5.3%);
• Japan (-10.8%): after a significant rise in ODA in 2010;
• Korea (+5.8%);
• New Zealand (+10.7%): reflecting the overall scaling up of its aid towards an ODA level of $NZ 600 million;
• Norway (-8.3%);
• Switzerland (+13.2 %): reflecting the scaling up of its ODA to reach 0.5% of GNI by 2015.
In 2011, DAC countries’ gross ODA (i.e. without deducting loan repayments) amounted to USD 147.7 billion, a fall of -2.0% in real terms compared to 2010. The largest donors were the United States, Japan, Germany, France and the United Kingdom.
Net ODA rose or fell in non-DAC OECD members as follows:
• Czech Republic (+4.2%);
• Estonia (+21.1%);
• Hungary (+16.2%);
• Iceland (-18.2%);
• Israel (+14.9%);
• Poland (+5.6%);
• Slovak Republic (+10.1%);
• Slovenia (+1.7%);
• Turkey (+38.2%).
Net ODA – ODA/GNI in 2011
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