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Aid to developing countries

20 May 2010

With the crisis still unfolding, can governments meet their agreed development aid targets? Total net official development assistance (ODA) from donor countries in the OECD Development Assistance Committee came to $119.6 billion in 2009, which is a real increase of 0.7% from 2008. If debt forgiveness is excluded, the real increase jumps to 6.8%. In fact, development aid rose by some 30% in real terms between 2004 and 2009, and continued to grow during the crisis, unlike other financial flows to developing countries, which have fallen sharply. Nonetheless, more aid effort is needed.

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One reason is mounting pressure to meet the 2015 deadline for fulfilling the internationally-agreed Millenium Development Goals, covering the likes of poverty, mortality, gender, education and the environment. It was to help reach these goals that donors made specific promises to increase their aid at the G8 Gleneagles and Millenium +5 summits in 2005. The pledges they made at these summits implied increasing ODA by $50 billion between 2004 and 2010. Half of that was earmarked for Africa. That was before the recession. Although most donors will meet the targets they set for 2010, others have postponed or reduced their pledges, so overall targets will not about $11 billion of the increase envisaged in 2005 and is thus most affected by the shortfall.

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