Foreign aid spending by OECD-DAC donors rose to all-time high in 2013

Official development assistance spending should continue to increase this year and stabilize later on, according to the annual survey conducted by the Organization for Economic Cooperation and Development. Photo by: Carl Dwyer

Spending on official development aid rose by 6.1 percent in 2013 to reach $134.8 billion, the highest level ever recorded by the Organization for Economic Cooperation and Development and despite the fact that many donors are still suffering setbacks stemming from the 2008 global financial crisis.

This also represents a rebound after two straight years of declining ODA, as several governments tightened their foreign aid budgets. According to the OECD-DAC annual survey, ODA spending should continue to increase this year and stabilize later on.

“It is heartening to see governments increasing their development aid budgets again, despite the financial constraints they are currently facing,” OECD Secretary-General Angel Gurría said in a statement. “However, assistance to some of the neediest countries continues to fall, which is a serious concern.

Gurría was referring to some of the poorest countries in sub-Saharan Africa, where ODA is falling, mostly due to an increased focus from some donors on middle-income countries with huge numbers of poor people like India.

Up to 17 of OECD-DAC’s member countries spent more on foreign aid in 2013, while 11 saw a decline, and only five — Denmark, Luxembourg, Norway, Sweden and the United Kingdom — met the U.N. goal of spending at least 0.7 percent of GNI on ODA. The United Kingdom upped its aid spending the most, 27.8 percent, thus meeting the globally agreed aid target for the first time in its history.

As for allocations, bilateral aid to sub-Saharan Africa actually decreased 4 percent and reached just $26.2 billion. Foreign aid to least developed countries rose by 12.3 percent, but most of that money was debt relief for Myanmar, Asia’s new “donor darling,” after decades of military rule formally ended in late 2010.

Clarify what’s aid — NGOs

Most nongovernmental organizations welcomed the OECD-DAC report, although some had reservations.

CONCORD, the largest network of European aid groups, reminded that EU aid spending is still off track to reach the 0.7 percent target by the 2015 deadline set by the United Nations, and urged OECD-DAC members to agree on a final definition of ODA so loans and risk-mitigating financial instruments, such as financial guarantees, cannot be reported as aid in the future.

Tim Roosen, coordinator at Action for Global Health, agreed and noted it’s “worrying” that the real increase in aid spending has been in the form of “nongrant” ODA such as loans, which poor countries have to pay back — with interest — thereby accumulating even more debt.”

Oxfam celebrated that donors had increased their aid spending over the last years, but stressed that most of Europe’s wealthiest governments are not keeping their promises to end global poverty and economic inequality, especially in the cases of Belgium, France, the Netherlands and Portugal, which have slashed their ODA budgets.

The organization claimed that the European Union still has a €42 billion ($57.9 billion) funding gap to meet the bloc’s 0.7 percent goal by 2015.

“Unlike aid, other sources of development finance like foreign direct investment or loans are not designed to get people out of poverty,” Natalia Alonso, head of Oxfam’s EU office, said in a statement.

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    Carlos Santamaria

    As associate editor for breaking news, Carlos Santamaria supervises Devex's Manila-based news team and the creation of our daily newsletter. Carlos joined Devex after a decade working for international wire services Reuters, AP, Xinhua, EFE and Philippine social news network Rappler in Madrid, Beijing, Manila, New York and Bangkok. During that time, he also covered natural disasters on the ground in Myanmar and Japan.