How Denmark plans to spend more on aid

Denmark has long been one of the half-dozen donor countries that consistently met or exceeded the United Nations target of spending 0.7% of gross national income on overseas development assistance. But in September, when official figures were leaked early, they showed that in 2022, Denmark slipped below 0.7% — for the first time in five decades, local experts told Devex. “Everybody in the development community was in shock,” said Laust Leth Gregersen, director of policy, advocacy, and media at Oxfam Denmark. “I think the government was in shock too.” Opposition parties called a parliamentary hearing and grilled the country’s minister for development cooperation and global climate policy, Dan Jørgensen. The minister explained that the reduction was not the result of an intentional policy decision, but rather due to several unplanned developments. Denmark’s economy had performed better than expected, thereby raising GNI — and as a result, an increase in ODA would have been needed to stay above the target. In addition, spending to support the approximately 37,000 Ukrainian refugees in the country, which is counted as part of foreign aid, was lower than expected, in part because so many of them found jobs. Together, those two factors pushed Denmark’s ODA down to 0.67% of GNI, government sources said. The result was an embarrassment for the Danish government, and it has reacted strongly. Jørgensen pledged the government would make sure aid spending did not fall below the target again, and when the national aid budget for 2024 came out, also in September this year, it included an increase in foreign aid spending of just over 2.5 billion Danish kroner — 10% of the total aid budget, equivalent to around $370 million — to make up for previous shortfalls. The document shows that Denmark is also anticipating a significant drop in estimated refugee costs. That reduced cost, together with the additional spending, will mean that 18.2 billion kroner will go directly to “development assistance to developing countries.” That’s 4.9 billion more than in 2021 — a 37% increase. Much of that additional money will focus particularly on green development assistance, which will make up approximately 6 billion kroner, a third of the total budget, up from around 4 billion in 2023. Humanitarian assistance will also see a significant rise, from 2.7 billion to almost 4 billion kroner. One of the smaller increases is a decision to significantly boost funds to the Danish development finance institution, the Investment Fund for Developing Countries. But it is also a move that has attracted significant criticism in Danish civil society.