It’s official: the global recession has severely hit aid budgets

By Elise Legault, research officer, Education for All Global Monitoring Report

The OECD has just released foreign aid figures for 2011, and they show that for the first time since 1997, official development assistance (ODA) has decreased in real terms – by 3% compared with 2010. This drop is a clear result of the financial crisis, but because aid budgets tend to react to changes in the economic context with a time lag, 2011 is the first year where we can plainly see the effect.

Sixteen of the 23 members of the OCED’s Development Assistance Committee (DAC) reduced their aid, some of them drastically. Under severe budget pressure, Spain, which had become an important donor in the past decade, made cuts of over 30%. Japan cut its aid by 10%. Other key donors such as Canada, Norway and France also made cuts, albeit more modest. In the case of France, the drop is most likely due to the change of status of the island of Mayotte into a department in 2011, which now makes it ineligible to receive aid. In 2010, Mayotte had received the equivalent of over US$600 million, 7% of all French ODA.

On the other hand Australia, Germany, Sweden and Switzerland managed to continue increasing their aid budgets despite the crisis. The United States and the United Kingdom made negligible cuts, but in the latter’s case this was following a large increase in 2010.

What does this mean for education? Aid figures per sector for 2011 will not be released until later in the year, but the decrease in overall aid suggests education will suffer. There is no indication that the sector will receive a larger share of total aid, and we already know that the World Bank, the most important donor to basic education, massively decreased its support after a boost in 2009 and 2010. Its disbursements are expected to grow again in 2012 however.

While the drop in aid in 2011 does not come as a surprise, it is worrying. In donor countries, aid rarely represents more than 1% of total spending, so cutting it can hardly represent an efficient way of reducing budgets. In some of the poorest countries, however, aid cuts could have a devastating impact. Many developing countries depend on donor support to reach development goals such as Education for All. They have also suffered directly from the financial crisis, through pressure on their own budgets, decreases in exports earnings and drops in foreign investment.

This entry was posted in Aid, Developing countries, Donors, Finance, Governance. Bookmark the permalink.

2 Responses to It’s official: the global recession has severely hit aid budgets

  1. Pingback: Why Jim Kim Should Resign From the World Bank » Counterpunch: Tells the Facts, Names the Names

  2. Pingback: Why Jim Kim Should Resign From the World Bank

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