A document sent to DFID suppliers and seen by Devex highlighted the government’s warning of a “significant recession” and said this could impact the official development assistance budget.
U.K. ODA is set at a minimum of 0.7% of gross national income. If there is a significant recession, GNI is expected to fall, bringing the cash value of the ODA budget with it.
As the U.K. economy shrinks, some are worried the aid budget is likely to fall as well.
The DFID document states that: “All government departments are working through how their plans will need to change in the light of this [prospect of recession]. DFID is no exception. The Government’s 0.7% GNI target is directly linked to the performance of the UK economy.”
DFID would prepare for this by prioritizing “lifesaving aid” and fighting the coronavirus pandemic. “No decision has been taken, but we are considering the full range of our work,” the document added. “In the short term, we have paused some new decisions while we agree our future work with our Ministers while working in close cooperation with other aid spending Departments. We will set out more detail in the coming weeks.”
“This is an unprecedented crisis, and this is not the time to be cutting funding.”— Aleema Shivji, executive director, Humanity & Inclusion UK
The Conflict, Security and Stability Fund and Prosperity Fund, which both use some ODA, announced a freeze on some projects in March.
Development Initiatives, an NGO specializing in data analysis, predicted in April that the U.K. aid budget could fall by $529 million in the case of a shorter economic downturn in which the effects of the pandemic were controlled by the end of the year, based on the International Monetary Fund’s “World Economic Outlook” report. In the event of a longer downturn where the effects of the pandemic extend into next year, that figure would be much higher.
Meanwhile, the needs placed upon the aid budget are expected to increase. Civil society figures are urging the government not to cut program funding. Aleema Shivji, executive director of Humanity & Inclusion UK, told politicians at a May 15 meeting that DFID should push budget cuts into the next financial year.
“This is an unprecedented crisis, and this is not the time to be cutting funding,” she said. “What we need to have is top-up funding for the crisis response that’s not been pulled out of existing programs. Otherwise, all we will do is widen inequalities, increase the impact of conflict, and increase the impact on the world’s most vulnerable.”