Michael de Laine

By Michael de Laine, The Copenhagen Voice, 30 March 2009

Denmark is still one of only five countries to exceed the UN target for development aid contributions, but its aid spending in 2008 was little changed from 2007, OECD statistics show. The current outlook suggests that 8.3-12.5% must still be added to current forward spending plans if donors are to meet their current 2010 commitments.

Denmark is again one of only five countries to exceed the United Nations (UN) target for development aid contributions, 0.7% of gross national income (GNI). But Denmark’s aid spend in 2008 was US$ 2.750 billion, at 2007 prices and exchange rates, only 0.3% higher than the US$ 2.562 billion aid given in 2007, statistics released today by the Organisation for Economic Co-operation and Development (OECD) show.

Allowing for price rises and exchange rate differences, Denmark actually spent US$ 2.800 billion last year on development aid, or 0.82% of GNI.

The other countries exceeding the UN target are Luxembourg (0.92% of GNI), the Netherlands (0.80%), Norway (0.88%) and Sweden (0.98%). The largest donors in 2008, by volume, were the United States (which spent US$ 26.01 billion), Germany (US$ 13.91 billion), the United Kingdom (US$ 11.41 billion), France (US$ 10.96 billion) and Japan (US$ 9.36 billion).

In 2008, total net official development assistance (ODA) from members of the OECD’s Development Assistance Committee (DAC) rose by 10.2% in real terms to US$ 119.8 billion - the highest dollar figure ever recorded. It represents 0.30% of members’ combined GNI.

In 2008, preliminary data show that net bilateral ODA from DAC donors to Africa totalled US$ 26 billion, of which US$ 22.5 billion went to sub-Saharan Africa.

Excluding volatile debt relief grants, bilateral aid to Africa and sub-Saharan Africa rose by 10.6% and 10% respectively in real terms. (The increases including debt relief were 1.2% and 0.4% respectively.)

In 2008, net ODA by the United States was US$ 26 billion, representing an increase of 16.8% in real terms. Its ODA/GNI ratio rose from 0.16% in 2007 to 0.18% in 2008.

The United States’ net ODA levels increased to practically all regions, particularly sub-Saharan Africa (+38.3% in real terms to US$ 6.5 billion). Net ODA also increased substantially to the group of least developed countries (+40.5% in real terms to US$ 6.9 billion), and humanitarian aid also rose significantly (+42.5% in real terms to US$ 4.4 billion) due mainly to increased relief food aid.

Japan’s net ODA was US$ 9.4 billion, representing an increase of 8.2% in real terms over 2007. Its net ODA/GNI ratio rose from 0.17% in 2007 to 0.18% in 2008. The increase is mainly due to a rise in contributions to international financial institutions. This reverses the downward trend in Japan’s ODA since 2000 (excluding peaks in 2005 and 2006 due to high levels of debt relief).

On a gross basis (i.e. without any deductions for loan repayments), ODA reached US$ 133.9 billion in 2008, reflecting an increase of 9.1% in real terms. The largest donors of gross ODA were the United States (US$ 26.9 billion), Japan (US$ 17.4 billion), Germany (US$ 15.9 billion), France (US$ 12.4 billion) and the United Kingdom (US$ 11.8 billion).

In 2005, donors committed to increase their aid at the Gleneagles G8 and UN Millennium +5 summits. The pledges made at these summits, combined with other commitments, implied lifting aid from US$ 80 billion in 2004 to US$ 130 billion in 2010, at constant 2004 prices.

While a few countries have slightly reduced their targets since 2005, the bulk of these commitments remain in force. However, reduced growth in 2008 and the prospect of economic contraction in 2009 lower the dollar value of commitments expressed as a percentage of national income.

Overall, the current commitments imply an ODA level of US$ 121 billion in 2010, expressed in 2004 dollars, or an increase of US$ 20 billion from the 2008 level.

Some further increases in aid can be expected. A new survey of donors’ forward spending plans suggests an 11% increase in programmed aid between 2008 and 2010, including larger disbursements by some multilateral agencies.

Debt relief may also increase slightly as the debt of the remaining heavily indebted poor countries is treated in the Paris Club.

However, the current outlook suggests that at least US$ 10-15 billion must still be added - equal to 8.3-12.5% - to current forward spending plans if donors are to meet their current 2010 commitments.

The 2008 ODA data as well as forward spending plans suggest that with some further effort, most donors are within reach of their 2010 targets. The countries that have already met the UN ODA target of 0.7% of GNI are expected to continue to do so.

Most other DAC members are expected to meet, or nearly meet, their 2010 targets. However, there are likely to be large shortfalls in a few countries. For example, ODA in 2008 from Austria, Italy and Greece, excluding debt relief, is well under half their ODA/GNI target for 2010.

The current global financial crisis is having a serious impact on low income countries. World trade is experiencing its largest decline since 1929 and commodity prices, particularly for the exports of low income countries, are falling.

While expressing satisfaction with Denmark’s aid performance, Danish Minister of development Cooperation Ulla Tørnæs said, “The OECD members’ inability to reach the 0.7% of GNI target is of great concern, not least when seen in the light of the pressure on aid budgets that can be expected in coming years. I am therefore very pleased that international development aid actually rose from 2007 to 2008.”

She said the consequences of the global economic crisis are far worse in developing countries than in industrialised countries and will make reaching the UN goal of halving global poverty by 2015 even more difficult.

“It is therefore vital that the rich countries keep their promise of real increases in development aid in the coming years,” Tørnæs said.”This is the most important international development policy priority in 2009 - an enormous challenge that I will do all in my power to contribute to finding a solution to.”