Official development assistance rises, although few countries meet UN target

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After declining for more than five years, official development assistance (ODA) by members of the Organization for Economic Cooperation and Development’s (OECD’s) Development Assistance Committee (DAC) rose by $3.6 billion, or 9.6 percent in real terms in 1998. According to the OECD’s DAC Journal: Development Cooperation 1999 Report (see box for list of DAC members), this shift was due to decisions by several countries to stabilize or rebuild aid programs, as well as to short-term measures adopted to deal with the Asian financial crisis.

The 1992–93 recession cut tax revenues and increased welfare payments, prompting DAC members to reduce their public expenditures and slash aid budgets. Consequently, from 1992 to 1997, aid to the developing world from DAC member countries fell by 21 percent in real terms—the largest decline since the committee was established in 1961, the report states. The 1998 increase brought DAC members’ ODA to $52 billion (see chart). Despite the rise, however, the report warns that the ratio of ODA to GNP in DAC members has fallen to about 0.25 percent, well below the 0.33 percent average the group maintained during the 1970s and 1980s. In dollar terms, this means that there is $20 billion less a year than there would have been if previous levels had been maintained.

In 1998, 15 of the 21 DAC member countries reported an increase in net ODA disbursements in real terms, the report says. Denmark, the Netherlands, Norway, and Sweden were, however, the only countries to meet the UN’s ODA target of 0.7 percent of GNP. The main elements of ODA from the Group of Seven countries are

• a rise of $1.3 billion from Japan, reflecting loans disbursed to countries affected by the Asian crisis;

• an increase of $1.9 billion from the United States, reflecting larger deposits of promissory notes with multilateral development banks and increases in food and emergency aid, especially to Africa;

• $2.3 billion in aid from Italy, reflecting increased flows to multilateral agencies and higher net loan disbursements;

Development Assistance Committee

The members of the Development Assistance Committee are Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, Luxembourg, the Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, the United Kingdom, the United States, and the Commission of the European Communities.

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• an 8.6 percent...