Aid to developing countries falls over global recession

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Major donors' aid to developing countries fell by nearly 3 percent in 2011 due to global economic recession, breaking a long trend of annual increases, the Organization for Economic Cooperation and Development (OECD) said Wednesday.

"Disregarding years of exceptional debt relief, this was the first drop since 1997," the OECD said.

In 2011, members of the Development Assistance Committee (DAC) of the OECD provided 133.5 billion U.S. dollars of net official development assistance (ODA), representing 0.31 percent of their combined gross national income (GNI).

It was a 2.7-percent drop in real terms compared with 2010, the year it reached its peak, according to the organization's report. The decrease reflects fiscal constraints in several DAC countries which have affected their ODA budgets.

Within total net ODA, aid for core bilateral projects and programs (excluding debt relief grants and humanitarian aid) fell by 4.5 percent in real terms.

Bilateral aid to sub-Saharan Africa was 28.0 billion dollars, representing a fall of 0.9 percent in real terms compared with 2010.

By contrast, aid to the African continent increased by 0.9 percent to 31.4 billion dollars, as donors provided more aid to North Africa after the uprisings in the region.

The group of Least Developed Countries (LDCs) also saw a fall in net bilateral ODA flows of 8.9 percent in real terms to 27.7 billion dollars.

OECD Secretary-General Angel Gurría encouraged donors to meet their commitments, "The fall of ODA is a source of great concern, coming at a time when developing countries have been hit by the knock-on effect of the crisis and need it most. Aid is only a fraction of total flows to low income countries, but these hard economic times also mean lower investment and lower exports. I commend the countries that are keeping their commitments in spite of tough fiscal consolidation plans. They show that the crisis should not be used as an excuse to reduce development cooperation contributions."

The OECD data showed that in 2011, the largest donor was the United States by volume with net ODA flows amounting to 30.7 billion dollars, representing a fall of 0.9 percent in real terms from 2010. The ODA accounts for 0.20 percent of its GNI, lower than the 2010 level of 0.21 percent.

Denmark, Luxembourg, the Netherlands, Norway and Sweden continued to exceed the United Nations' ODA target of 0.7 percent of GNI.

In real terms, the largest rises in ODA were registered in Italy, New Zealand, Sweden and Switzerland. By contrast, ODA fell in 16 DAC countries, with the largest cuts recorded in Austria, Belgium, Greece, Japan and Spain.

Until 2011, aid had been steadily increasing for more than a decade. Net ODA rose by +63% between 2000 and 2010, the year it reached its peak. ODA has long been a stable source of development financing and has cushioned the immediate impact of previous financial crises

The OECD-DAC Survey on Donors' Forward Spending Plans for 2012 to 2015 suggests that global country programmable aid (CPA) may rise somewhat 6 percent in real terms in 2012.

From 2013, global CPA is expected to stagnate and could thus confirm earlier findings that it takes several years from the onset of a recession for the full impact to be felt on aid flows.

Based on donors' current projections, there may be a slow-down from 2013 that differs between regions, with CPA to countries in Latin America continuing to fall, while it may rise somewhat for South and Central Asian countries including Bangladesh, Myanmar and Nepal.

For Africa, the Survey projects few changes in CPA, though recent events in Sahel and North African countries may result in some reprogramming of donor efforts.

For countries in fragile situations (46 countries in 2011), the Survey projects little change in total CPA, with the largest increases expected in the Democratic Republic of Congo and Kenya, and the largest falls expected in Haiti and Afghanistan.

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