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27/09/2016

NGOs criticise accounting ‘loopholes’ behind apparent rise in foreign aid

Development Policy

NGOs criticise accounting ‘loopholes’ behind apparent rise in foreign aid

UNHCR refugee tents on show at the 2015 Aidex development trade fair in Brussels.

[MattTempest/Flickr]

Campaigning groups have blamed ‘accounting loopholes’ behind an apparent increase in global development aid, saying much of the extra money ended up being spent at home by rich countries.

The accusation came as the Organisation for Economic Cooperation and Development (OECD) published its annual report on official development assistance for 2015, which shows a global total spend of just over $131 billion by rich donor countries.

In fact, that figure is down on the total of $135.2 billion for 2014, but the OECD said it is an increase in real terms, when inflation, the strength of the dollar and currency fluctuations are taken into account.

But behind the headline figure, a look at the small print reveals that much of the increase came from a big boost in spending – often by rich EU member states – on the domestic costs of housing refugees, so-called ‘in donor refugee costs’.

That figure almost doubled, from $6.6 billion in 2014, to some $12 billion in 2015.

Whilst not objecting to funding for refugees who have arrived in Europe, the NGOs criticised the fact that under OECD rules, such money can  now be taken from the official development assistance (ODA) budget, even when it is spent domestically.

Some of the EU states most affected by the refugee crisis recorded huge increases in ODA spending in 2015.

For example, Germany’s ODA budget increased by 25.9%, the Netherlands’ by 24.4%, Sweden’s by 36.8%, Greece’s by 38.7% and Austria’s by 15.4%.

The OECD makes clear that most of these increases were spent on “in-donor refugee costs”.

The European Network on Debt and Development (Eurodad), claimed these countries were now the biggest recipients of their own aid.

Spending on refugees and migrants inside a donor country can now come from their ODA budgets – despite the widespread assumption that development aid was targeted solely at water, health, food and education projects in the developing world.

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Member states have deployed their development aid budgets to tackle the root causes of the migration crisis. But the effectiveness of these programmes in stemming the flow of migrants to the EU has yet to be seen. EurActiv France reports.

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A coalition of NGOs, including Eurodad, Oxfam, ONE, Save the Children, Bond and others, are now calling on donor states to ensure that such spending diversions “do not mean the poorest people lose out on vital public services like education or healthcare”.

Jeroen Kwakkenbos, policy and advocacy manager at Eurodad, said, “These are accountancy loopholes.

“Right now the immense diversion of aid to address the domestic costs of the refugee crisis has dramatically increased the latest figures.

“But this could only be the start. The decisions made in February at the OECD risk even more aid being diverted to our own corporations through ‘tied aid’.

“While it is very important that we care for refugees arriving on our shores, our own costs should not be classed as international development aid, and money to cover this must come from other sources.

“We must stop raiding the aid budgets to solve our own problems at the expense of the poorest people which desperately need more and better aid.”

Security costs, such as policing, can also now be met out of the ODA budgets, according to the rules.

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All eyes are on the International Conference on Financing for Development in Addis Ababa this week, but the EU is still failing to meet its development targets. EurActiv France reports

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Although the OECD figures show an increasing number of countries meeting the target of spending 0.7% of Gross National Income on development aid, Eurodad argues they are “distorted” by domestic refugee spending.

CONCORD, the European Confederation of Relief and Development NGOs, said the figures showed only five EU countries had reached the 0.7% target – Denmark, Luxembourg, the Netherlands, Sweden and the UK.

“Unfortunately, official figures today confirm that despite some positive exceptions, the EU once again missed its overall aid target in 2015. The figures are a real blow to the credibility of the EU and its member states at precisely the moment they should be demonstrating their commitment to implementing the promises they made to provide sufficient, high quality sustainable development financing for Agenda 2030,” said Amy Dodd, the director of Concord’s UK Aid Network.

Sweden sees costs of migration crisis almost quadruple

The costs of the wave of asylum seekers arriving in Sweden due to the refugee crisis will be much greater than previously expected, forcing the government to earmark more money in the coming years.

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Further Reading

Is EU development aid working?

The EU remains the biggest donor of humanitarian and development aid assistance in the world. But budgetary constraints faced by its member states, the refugee crisis and the deterioration of the international security context have put Europe’s international solidarity to the test.

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