Development aid is untied

OECD Observer

A high-level meeting of the OECD’s Development Assistance Committee in April adopted a recommendation on untying aid to least developed countries. This means that loans and grants for a wide range of projects will no longer be dependent on the contracts being carried out by companies from the donor country.

The agreement represents “a very concrete signal … of the DAC’s commitment to the reform of aid practices”, said DAC chairman Jean-Claude Faure.

The meeting also adopted a policy statement on poverty reduction, pledging to help developing countries meet the challenge of a comprehensive approach to development and poverty reduction; globalisation; the digital age; and diseases such as AIDS.

Figures released ahead of the meeting showed that Denmark’s official development assistance (ODA) rose to a record 1.06% of gross national product (GNP) in 2000. The provisional figures also showed that Luxembourg boosted its aid to 0.7% of GNP from 0.66% in 1999, raising the number of countries reaching the UN target to five. The others are the Netherlands (0.82% of GNP), Norway (0.80%) and Sweden (0.81%).

Total DAC ODA fell in 2000 to 0.22% of GNP from 0.24% a year earlier. Aid in dollar terms fell to 53.1 billion dollars from 56.4 billion in 1999, but most of the drop was due to lower exchange rates for most currencies against the US dollar. Ten recipient countries also moved from the ODA list to the official aid list, so their aid was no longer included in the 2000 ODA totals.

• See Spotlight on Development, OECD Observer No 223, October 2000. 

©OECD Observer 226/227, Summer 2001 

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