Leaders from the 30 countries in the Organisation for Economic Co-operation and Development’s Development Assistance Committee, or DAC, will meet virtually this month to discuss how to “do development better” to respond to the multifaceted COVID-19 crisis.
The DAC High Level Meeting is only held every two to three years, which is why DAC members should not miss the opportunity to show leadership in the continuing fight to end poverty, tackle inequalities, and put the world on a more inclusive and sustainable path. The fear is that no new substantive action will be taken.
Needless to say this year’s meeting comes at a particularly challenging time. For the first time in more than two decades poverty will increase again. The World Bank predicts as many as 150 million people may be pushed into extreme poverty by 2021 as a consequence of the pandemic.
As job losses escalate, half of the global workforce could end up without livelihoods, according to the International Labour Organization. Oxfam estimates that by the end of the year, 12,000 people per day could die from hunger linked to COVID-19. The climate crisis also increases the complexity of reducing inequality and ending poverty.
Over recent months, high-income countries, including those meeting in November, have been responding to the multiple crisis on the domestic level by doing “whatever it takes” to bail out companies and protect livelihoods. In DAC member countries such as France, Germany, Italy, Japan, and the United Kingdom, governments are spending over 10% of gross domestic product to prop up their domestic economies.
OECD's Development Assistance Committee has issued new rules that will count debt relief as official development assistance. Civil society members worry this will threaten ODA at a time when needs are rising as a result of COVID-19.
Yet, for many low- and middle-income countries, this is simply not an option. In recent years, many have been driven to international financial markets to be able to finance their development needs. Today, as the pandemic hits, they are struggling to pay off unsustainable debts and the failure of the international community to address the broken global tax rules has allowed billions of dollars to leak out of LMICs.
This month’s meeting presents a unique opportunity for donors to stop this downward spiral. What is clear is that they cannot afford to simply take stock of their achievements since they last met and then head home. Here are three decisions donors could make at the HLM:
1. Tackle an unprecedented crisis with unprecedented solidarity
Of course, the response to the coronavirus is putting huge pressure on donor countries’ public finances, even more so as a second wave is washing away any hope for a quick recovery in many European countries. Yet, it would be short-sighted to sacrifice development budgets. Furthermore, merely protecting them, as announced in previous statements, would still be insufficient.
OECD itself has said official development assistance is a crucial flow, especially in times of crises, to shift economies to a sustainable path, building health and social protection systems, and paving the way for further investment.
Repeating past commitments to reach the 0.7% — collectively DAC donors are falling short of $5.7 trillion — is good, but agreeing on a concrete action plan to get there would be even better. OECD Secretary-General Angel Gurría’s statement was crystal clear at the recent OECD annual Ministerial Council Meeting: More ODA is needed.
2. Deliver better aid
Concerns are rising that the U.K., one of the world's leading aid donors, could break with the internationally agreed rules.
In recent years, we have seen that a combination of a lack of ambition to boost budgets and the belief that private actors will be able to fill the gap needed to meet the Sustainable Development Goals has led to an increasing use of ODA to back the private sector. This is a risky approach, especially as evidence that it will deliver the results we need is still lacking.
Donors should not divert scarce ODA resources away from where we know they can work best. At this HLM, donors could indicate their plans on how to address growing concerns related to the engagement of private sector actors in development cooperation, notably what the private sector brings — its additionality — and its impact on recipient countries’ population and their livelihoods.
3. Move the goal posts on debt relief
ODA is a crucial resource in times of crisis, but it will never do the job alone. LMICs need fiscal space to invest in a sustainable recovery and the policy space to make sure those decisions are the most appropriate.
High-level representatives of high-income country governments can use the upcoming meeting to move the goal posts on key issues such as debt relief. Eurodad research has shown so far the G-20’s decision to suspend debt payments for some countries covers less than 2% of LMICs’ debt payments due in 2020. As a gathering of development ministers, the DAC can give a strong signal that deepening and broadening current efforts is needed.
At the same time, HICs have to deal with another problem they have created. A recent agreement allows donors to count debt relief as ODA. This risks a deviation of ODA from other key areas.
Similar to their commitment to keep their domestic economies upright, development ministers shouldn’t miss the opportunity to step up DAC’s leadership and do “whatever it takes” to make sure the world remains on track to reach the ambitious sustainable development goals and no-one is left behind.