UK aid budget gets de facto $800 million cut for 2022

The United Kingdom’s aid budget is to be effectively cut by £580 million ($800 million) in 2022, after it was revealed that canceling debt owed by Sudan will count toward the nation’s reduced target of spending 0.5% of national income on aid.

In a move met with grave condemnation from development experts, a total of £861 million will be deducted from U.K. government aid spending to charge for Sudanese debt relief, according to a freedom of information request by the Jubilee Debt Campaign. Total U.K. aid spending is expected to be £10.9 billion in 2021.

The move is in line with aid spending rules but showed the U.K. risked becoming “a country that manipulates [international] rules to reduce its support for its poorest partners in the face of the worst economic crisis in a lifetime,” according to Ian Mitchell, a senior policy fellow at the Center for Global Development.

The move “confirms our worst fears of the Treasury’s intentions towards the aid budget,” echoed Ranil Dissanayake, a policy fellow at CGD. Both he and Mitchell sounded the alarm last month on the prospect of further U.K. aid cuts, highlighting Sudanese debt relief as just one accounting item that could be charged against the aid budget at the cost of real spending. Dissanayake added that damage to the aid budget could turn out worse than he predicted in September.

A U.K. Treasury response to the FOI, seen by Devex, confirmed that the U.K. would cancel Sudan’s bilateral debt and that, “this will be cancelled in two tranches: £580m in 2022 as a result of HIPC [Heavily Indebted Poor Countries initiative] Decision Point and the remainder at HIPC Completion Point, the date for which is yet to be confirmed.”

It confirmed that all Sudan’s debt will be counted as ODA. “As with all ODA eligible spend,” it read, “debt relief to Sudan will count towards the meeting of the UK’s annual ODA [0.5%] target.”

Heidi Chow, executive director of Jubilee Debt Campaign, called the debt “fictitious.” The amount was £173 million when Sudan defaulted in 1984, with the rest of the tally made up of annual 11% interest charges levied by the U.K. Chow said it “should have been written off long ago.”

Dissanayake said there was “no sense in which this was money the UK was expecting back at the time” it committed to the 0.5% target. He said: “There is no net worsening of the UK’s real fiscal position as a result of this cancellation that justifies a real cut in our outlay on development aid … If we could afford 0.5 when the cut was announced, we can still afford to spend that much on ODA today — this debt cancellation does nothing to change that.”

The fall from an aid spending target of 0.7% to 0.5%, has caused a £4.5 million budget shortfall, leading to the closure of numerous projects. It followed a £943 million aid cut in 2020 as the value of the then 0.7% budget fell amid economic fallout from the pandemic. Asked for comment on the story, a spokesperson for the British government said “The U.K. is and will remain a world leader in international development” and that the country would return to the 0.7% target “when the fiscal situation allows.”

Andrew Mitchell, former international development secretary, said the move was “neither morally right nor is it in our country's national interest.” Preet Gill, shadow international development spokesperson said that “with mere days until COP 26, this latest revelation highlights [that] the [aid] retreat under the Conservative government will continue under the new foreign and development secretary.”

Update, Oct. 22, 2021: This article was updated to include a comment from the U.K. government.