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Official development assistance

The Addis Agenda reaffirms ODA commitments contained in the Monterrey Consensus and Doha Declaration, including the commitment by many developed countries to achieve the target of 0.7 per cent of ODA/GNI and 0.15-0.2 per cent of ODA/GNI to the least developed countries. The Addis Agenda also includes new commitments to reverse the recent decline in ODA to least developed countries (LDCs), to encourage ODA of 0.2 per cent of GNI to LDCs, and to recognize those countries that allocate at least 50 per cent of ODA to LDCs. It further highlights the importance of ODA for the poorest and most vulnerable countries – beyond income-group-based ODA allocation that only considers narrow economic averages. It commits to prioritizing the allocation of concessional international public finance to those with the greatest needs and least ability to mobilize other resources. 

ODA trends

ODA by members of the Organization for Economic Cooperation and Development (OECD) Development Assistance Committee (DAC) totalled $142.6 billion in 2016, representing a rise of 8.9 per cent from 2015 in real terms. This continues a long-term rising trend in ODA, which has doubled in real terms since the adoption of the Millennium Declaration in 2000. However, since 2010, the increase in ODA has to a large extent been due to humanitarian aid and in-donor refugee costs, with the share of in-donor refugee costs increasing from 2.7 per cent in 2010 to 10.8 per cent in 2016. Net ODA also includes net debt relief grants, which were responsible for the spike in ODA in 2005 and 2006.

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Total net ODA to LDCs amounted to USD 43 billion in 2015, marking an 8 per cent increase in real terms (adjusting for inflation and the appreciation of the US dollar) over 2014. However, preliminary data available for 2016 show that bilateral net ODA to LDCs decreased by 3.9 per cent in real terms compared to 2015, to USD 26 billion in 2016. Bilateral ODA to landlocked developing countries (LLDCs) remained stable in 2015, at USD 15 billion, while ODA to small island developing states (SIDS) increased to USD 3.1 billion, compared to USD 2.7 billion in 2014.

A Survey on Donors’ Forward Spending plans through 2019 suggested country programmable aid (CPA) to the LDCs should rise in this period. The survey also projects that global CPA should remain stable up to 2019, with a continued upward trajectory for LDCs. (CPA is a proxy for aid that goes to recipient countries and that is programmable at the country or regional level). ODA to SIDS – which had dropped steadily between 2010 and 2014 before rising in 2015 – is projected to remain stagnant through 2019, calling for special attention and monitoring given their structural vulnerabilities.

Meeting ODA commitments

ODA from the 28 countries in the DAC averaged 0.32 per cent of gross national income in 2016, up from 0.30 per cent of GNI in 2015. Only six countries (the United Kingdom, Germany, Denmark, Sweden, Luxembourg and Norway) met the target of 0.7 per cent of GNI of ODA.

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ODA to LDCs averaged 0.09 per cent of gross national income in 2015, falling short of the lower bound of the United Nations target of 0.15 per cent. The number of OECD-DAC members providing at least 0.15 of their GNI in ODA to LDCs declined from eight in 2014 to seven in 2015. Five donors meet or exceed the upper bound of 0.2 per cent of donor GNI. In total and including imputed multilateral ODA, ODA to LDCs comprised 45 per cent of overall ODA on average in 2014 and 2015. It falls short of 50 per cent however – Member States have expressed appreciation to those donors that do allocate half of their ODA to LDCs in the Addis Agenda.

Modernization of ODA measurement

OECD DAC members agreed at the December 2014 High-level Meeting (HLM) to update methodologies to measure ODA loans, switching from a cash-flow basis to a grant equivalent system for the reporting of ODA loans. Under the new rules, only grants and the ‘grant portion’ of concessional loans will be considered as ODA. In the past, the face value of ODA-eligible loans was counted. In addition, the discount rate used to calculate concessionality is differentiated by country groups, so that a concessional loan to LDCs will count for more ODA than an equivalent loan to a middle-income country. The purpose of these reforms is to more accurately reflect the provider effort.  For transparency purposes, reporting and publishing of the current headline figure of ODA loans on a cash-flow basis will continue alongside the new grant equivalent based reporting system, and the grant-equivalent system will become the standard for reporting of data from 2018.

The OECD DAC also agreed to change reporting of private sector instruments (such as loans, guarantees, mezzanine finance and equity) and agreed to a set of principles at the February 2016 HLM. In addition, the 2016 HLM clarified boundaries of what can be counted as ODA in peace and security efforts, approving ODA-eligibility of development-related training for military staff on a limited number of topics.  

Total Official Support for Sustainable Development is a separate measure and is discussed here