Aid on the rise

OECD Observer

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Donor countries in the OECD Development Assistance Committee (DAC) increased their official development assistance (ODA) by almost 5% in real terms in 2002 to US$57 billion, raising ODA to 0.23% of gross national income (GNI). This marked the beginning of a recovery from the all-time low of 0.22% of GNI seen in each of the past three years.

The rise included a 12% increase in US aid to US$12.9 billion (0.12% of its GNI), reflecting additional and emergency funds in response to the 11 September 2001 terrorist attacks and new initiatives in health and humanitarian aid.

Aid from European Union countries rose 3% in real terms to US$29.1 billion, representing 0.34% of their combined GNI and including significant increases of 34% in Greece and 32% in Italy. On the other hand, there were falls in Austria and Spain, both down 16%, largely due to the fact that their 2001 figures had been boosted by exceptional debt relief operations.

Canada, meanwhile, increased its aid by 32%, including substantial debt forgiveness. Five countries – Denmark, Luxembourg, Netherlands, Norway and Sweden – met the UN target for ODA of 0.7% of GNI. Three other countries have also announced their intention to meet the 0.7% target: Ireland by 2007, Belgium by 2010 and France by 2012. The broader outlook for aid is positive.

Following commitments from most donors at the International Conference on Financing for Development at Monterrey, Mexico, in 2002, aid volume is expected to increase by about 30% in real terms by 2006. A meeting in late April of high-level officials from the OECD DAC countries, who, between them, account for about 95% of total ODA, welcomed this trend and stressed the need to continue to improve aid effectiveness, so as to speed progress towards the Millennium Development Goals.

For more on the work of the DAC, visit: www.oecd.org/dac and www.oecd.org/development

©OECD Observer No 238, July 2003

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