EU aid spending surges amid COVID pandemic

Development aid from the EU increased by over 25% last year as funding for programmes to combat COVID-19 and support poorer countries surged, according to data published by the Organisation for Economic Cooperation and Development on Tuesday (13 April). [Shutterstock/ rafapress]

Development aid from the EU increased by more than 25% last year as funding for programmes to combat COVID-19 and support poorer countries surged, according to data published by the Organisation for Economic Cooperation and Development on Tuesday (13 April).

Foreign aid from official donors rose to an all-time high $161.2 billion in 2020, a 3.5% rise in real terms from 2019, boosted by additional spending mobilised to help developing countries grappling with the COVID-19 crisis, according to preliminary data collected by the OECD.

Four EU members – Denmark, Germany, Luxembourg, and Sweden – met or exceeded the target agreed by the UN of spending 0.7% of national income on aid. In some cases, this still meant a fall in aid spending in real terms because of the deep recessions brought on by the pandemic.

The EU institutions also increased sovereign lending by 136%.

Some member states saw substantial increases to their aid budgets to help developing countries respond to the pandemic. The largest increases were in Finland, France, Germany, Hungary, the Slovak Republic, and Sweden. However, official development assistance (ODA) fell in 13 countries, most notably in Greece, Italy, Luxembourg, and Portugal.

The figures offer some grounds for encouragement since national and EU aid budgets were expected to come under pressure in the wake of the major damage to public finances caused by the pandemic.

However, despite the modest overall increases, total ODA was equivalent to only 1% of the amount wealthy countries have mobilised over the past year in economic stimulus measures to help businesses and employees recover from the COVID-19 crisis.

Meanwhile, the global vaccine distribution facility COVAX remains severely underfunded, OECD Secretary-General Angel Gurría said in a presentation on Tuesday.

“This crisis is a major test for multilateralism and for the very concept of foreign aid,” said Gurría.

“We need to make a much greater effort to help developing countries with vaccine distribution, with hospital services and to support the world’s most vulnerable people’s incomes and livelihoods to build a truly global recovery,” he added.

Last week the G20, an international forum comprising 19 countries and the European Union, agreed to extend its Debt Service Suspension Initiative until the end of 2021, which could allow 45 developing countries to potentially save an additional $9.9 billion.

The G20 ministers also gave their endorsement for the International Monetary Fund (IMF) to propose a new Special Drawing Rights (SDR) worth $650 billion to help economies hit by the pandemic, and to explore ways in which wealthy countries could donate their allocations of the SDRs to developing countries.

[Edited by Zoran Radosavljevic]

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