Delivering increased aid

OECD Observer

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Development aid prospects are brighter since the International Conference on Financing for Development at Monterrey in March 2002.

Several member countries of the Development Assistance Committee (DAC) at the OECD, which delivers some 95% of global bilateral aid, have pledged to increase their aid as part of a drive to achieve the Millennium Development Goals and cut global poverty in half.

According to OECD calculations, these commitments would raise DAC official development assistance (ODA) by 31%, or by US$16 billion, in real terms, by 2006. This would increase ODA from 0.22% of gross national income in 2001 to 0.26% in 2006, still below the UN recommended target of 0.7%.

EU members decided at their Barcelona Council meeting before Monterrey to raise EU bilateral aid to at least 0.33% of GNI by 2006, with EU members already above the UN target of 0.7% maintaining their performance. Some EU members made subsequent individual commitments exceeding the Barcelona target. If all such commitments are realised, then EU ODA would average 0.41% of GNI in 2006, higher than the EU average of 0.39% predicted at Barcelona.

The United States, for its part, has announced the creation of a Millennium Challenge Account, devoted to projects in nations that govern justly, invest in their people and encourage economic freedom. The account is to have an annual budget of US$5 billion by 2006. The US also recently committed an additional US$15 billion in funding over five years for an Emergency Plan for AIDS Relief. Though still subject to Congressional assent, these two initiatives would push US ODA to around 0.15% of GNI by 2006 from 0.11% in 2001.

Canada has committed to doubling its ODA by 2010, Norway to increasing its ODA to 1% of GNI by 2005 and Switzerland to raising its ODA to 0.4% of GNI by 2010. Japan, in contrast, is reducing its ODA budget due to fiscal constraints.

©OECD Observer No 237, May 2003

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