Dear all,

The annual OECD donor profiles are out: http://www.oecd.org/dac/development-cooperation-report/. You’ll find individual profiles for all DAC donors, as well as profiles for non DAC members (BRICS and other major providers like Saudi Arabia, UAE, Turkey) and private foundations. There’s a lot in their which I hope can be helpful for your work!

The OECD also published an interesting chapter on ODA trends in 2020, and what to watch in 2021, including on how ODA will be used to partly pay for Covid-19 vaccines, debt relief, SDR reallocations and climate finance (so things the RG is already watching ;). See some key highlights from the chapter below.

All the best,

Julie

ODA in 2020

-          Total ODA from DAC donors reached $161bn in 2020 (+7% from 2019). This is the highest ODA’s ever been, but this is nowhere close to respond to needs nor to the 0.7% target, and is limited compared with donors’ domestic responses to the crisis (ODA budgets are equivalent to only 1.37% of DAC countries’ fiscal measures in response to Covid-19)

-          The rise in ODA budgets from some countries (mainly Canada, France, Germany, Norway, Sweden, Switzerland) offset cuts in other countries (mainly Australia, Italy, Korea and the United Kingdom).

-          The proportion of ODA provided as loans also increased, along with tougher lending terms – this trend is driven by France (+63%), Germany (+69%), Italy (+55%), Japan (+11%) and the EU (+136%).

-          ODA increases benefited middle-income countries the most.

-          Initial estimates indicate that DAC donors disbursed $12bn targeting COVID-19 related activities specifically in 2020, of which only $ 3.2bn went to the health sector.

-          Both bilateral and multilateral ODA increased in 2020 (8% and 9% respectively), including a spike in bilateral budget support

-          Humanitarian aid increased by 6% from 2019 to 2020, which was far from enough to respond to 2020 humanitarian appeals

-          Interesting to note that the OECD’s analysis now features the new metric Total Official Support for Sustainable Development (TOSSD) which was estimated at $296bn in 2019.

What to watch in 2021: ODA’s role in financing vaccines, climate action, debt relief, SDR reallocations

While some OECD countries have signalled that their ODA budgets may decrease in 2021 as they grapple with their own pandemic and economic recovery efforts, ODA contributions could be boosted by contributions to:

-          Vaccines: the paper unpacks ODA’s role in the global health response to COVID-19, and clarifies to what extent ACTA-A contributions are ODA-eligible (100% of contributions to the COVAX AMC, 53% of contributions to CEPI, 100% of contributions to therapeutics & diagnostics). As for bilateral dose donations, a calculation to value the ODA eligibility of vaccine doses is being discussed at the DAC.

-          Climate finance: Given the growing interlinkages between the climate agenda and the growth of ODA, the OECD anticipate more ODA will be spent to fight the climate crisis (“this level of global attention on climate could have positive spillover effects for ODA in 2021. However, development finance and climate finance have distinct roles and aims. A complete conflation of these budgets and efforts would likely not succeed in achieving either of the critical climate or development agendas”).

-          Debt relief: $ 541 million of debt relief was reported as ODA in 2020. Though the DSSI has been extended, debt suspension activities do not meet the criteria to be counted as ODA. However, activities under the Common Framework which go beyond suspension to debt treatment could contribute to ODA.

-          SDRs: no clarity yet: “The reallocation of SDRs to developing countries will involve complex operations. The ODA accounting of such operations will be determined as soon as more detail becomes available.”

-          They conclude by saying that “Maintaining or improving ODA/GNI ratios will require increased volumes, sustained political will, and can be supported by employing specific mechanisms” (i.e. Multi-annual allocations, Budget balancing mechanism (averaging ODA/GNI ratio over time, e.g. Denmark) or Borrowing from future years (e.g. the Netherlands)). “While it is clear that ODA alone cannot meet these rising demands, development co-operation providers are being called upon to do more to respond to the unique challenges facing the world today.”

Julie SEGHERS
Global policy lead on aid and development finance

Advocacy advisor on OECD

Oxfam International