EU aid increases, bucking global trend

Aid spending by EU member states increased in 2018, bucking a global trend. [MattTempest/Flickr]

Development aid spending by EU members saw a slight increase to $87 billion in 2018 (€77 billion) compared to 2017, according to new data published by the Organisation for Economic Co-operation and Development (OECD).

That bucked a trend of global aid spending falling for the second year in a row, the OECD’s Development Assistance Committee (DAC) reported, in its preliminary Official Development Assistance (ODA) figures for 2018.

The EU’s aid programmes also saw a 1.9% decrease.

Donor refugee costs across the EU descreased by $3.4 billion, including falls of $2 billion and $700 million for Germany and Italy, signaling the fact that the impact of the refugee crisis on European countries continued to recede in 2018, after peaking in 2015 and 2016.

“This picture of stagnating public aid is particularly worrying as it follows data showing that private development flows are also declining,” said OECD Secretary-General Angel Gurría.

“Donor countries are not living up to their 2015 pledge to ramp up development finance and this bodes badly for us being able to achieve the 2030 Sustainable Development Goals,” he added.

Overall ODA in 2018 totaled $153 billion under new methodology which changes the way that loans, which currently make up around 17% of total bilateral ODA, are counted. These were previously on a ‘cash basis’, meaning that the full face value of a loan was included. Under the new rules only the ‘grant portion’ – the amount the loan provider gives away by lending below market rates – counts as aid.

However, when comparing total ODA using the previous ‘cash-flow’ methodology, total ODA amounted to $149 billion, a fall of 2.7% in real terms compared to 2017.

Denmark, Luxembourg, Sweden and the United Kingdom were still the only EU countries to meet or exceeded the 0.7% target.

2018 ODA rose in 17 donor countries, with Hungary the EU country with the largest increase. 12 countries saw a fall in aid spending, with the largest declines in Austria, Finland, Greece, Italy and Portugal.

The calculation and definition of development aid remains an inexact and complex science, with countries allowed to classify a range of private finance instruments and security costs as aid.

Last month, the Overseas Development Institute introduced a ‘Principled Aid Index’, devised to try and cut through the fog, ranking 29 countries in the Organisation for Economic Co-operation and Development according to three benchmarks: ‘needs’, ‘global cooperation’ and ‘public spiritedness’.

Luxembourg claims the top spot, followed by the UK, Sweden, Ireland and Norway. Those at the bottom of the index –  Slovakia, Greece and Austria – are deemed to focus their development budgets on either commercial or geopolitical interests.

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