Iceland aid: During the crisis and beyond

María Erla Marelsdóttir, director general of the Directorate for International Development Cooperation. Photo by: Ministry for Foreign Affairs of Iceland

In the face of Europe’s ongoing financial woes, Iceland is considered a success story. It has moved from the depths of economic and political crises in 2008 to steady recovery this 2012. And with the economy’s unwavering improvement comes a plan to increase aid spending in the coming years.

Iceland spent $48.41 million in aid in 2008, according to Organization for Economic Cooperation and Development data. This was the largest the county has allocated to overseas development since 2000. Budgetary constraints, however, forced Iceland to drastically cut its aid spending to $34.42 million in 2009 and $28.75 million in 2010. There are no official figures yet to the country’s total aid spending in 2011, but a fact sheet from the Icelandic International Development Agency suggests the figure would not exceed 0.19 percent of the country’s gross national income for that year.

The year 2011 did see the introduction of Iceland’s first-ever comprehensive aid strategy. María Erla Marelsdóttir, director general of the Directorate for International Development Cooperation, shared in a recent interview with an Icelandic magazine that the strategy enjoyed “universal support” from Parliament.  The four-year plan proposes increasing ODA spending to 0.28 percent of GNI by 2014. It also envisions meeting the United Nations-set target of spending 0.7 percent of GNI on aid by 2021.

This strategy, however, confirms a reduction in the number of Iceland’s bilateral partners. The country will focus on Malawi, Mozambique and Uganda while supporting peace-building efforts in Afghanistan and programs for Palestinian refugees. Iceland used to also provide bilateral aid to Namibia and Nicaragua.

On the multilateral front, Iceland has identified four key partner institutions: the World BankUNICEFU.N. Women and the U.N. University. In addition, the country plans to increase its contribution to humanitarian aid programs through nongovernmental organizations, the World Food Program and the U.N. Central Emergency Response Fund.

These choices in focus countries and institutional partners are in line with the three sector priorities defined in the strategy: natural resources, peace building and human capital.

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About the author

  • Ivy Mungcal

    As former senior staff writer, Ivy Mungcal contributed to several Devex publications. Her focus is on breaking news, and in particular on global aid reform and trends in the United States, Europe, the Caribbean, and the Americas. Before joining Devex in 2009, Ivy produced specialized content for U.S. and U.K.-based business websites.

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