Further supplementary memorandum submitted
by the Department for International Development
DEBT RELIEF
AND OFFICIAL
DEVELOPMENT ASSISTANCE
Official Development Assistance (ODA) is an
internationally agreed statistic for measuring aid flows to developing
countries. It is defined as those flows to countries on Part I
of the DAC List and to multilateral institutions for flows to
Part I aid recipients which are:
(i) provided by official agencies, including
state and local governments, or by their executive agencies; and
(ii) each transaction of which:
a. is administered with the promotion of
the economic development and welfare of developing countries as
its main objective; and
b. is concessional in character and conveys
a grant element of at least 25 per cent (calculated at a rate
of discount of 10 per cent).
2. The types of aid expenditure covered
by this definition are:
— project and programme aid
— technical co-operation (that is,
the provision of know-how in the form of personnel, training,
research and associated costs)
— ODA grants in associated financing
packages
— emergency and distress relief
— support to national and international
NGOs
— promotion of development awareness
— acquisition of equity by an official
body
— contributions to recognised multilateral
institutions (UN agencies, EC, World Bank, regional development
banks, Global Environmental Facility, Montreal Protocol, Commonwealth
and international research organisations) for purposes described
above.
3. Most ODA reported by the UK comes from
DFID's budget. However there are elements of DFID expenditure
which do not count as ODA. Annex 1 sets out the structure of UK
ODA and its source. The table below details the information collected
from other government departments to complete the ODA calculations
(that is, the middle 5 items bracketed as ODA in Annex 1).
ODA FROM
OTHER GOVERNMENT
DEPARTMENTS[5]
| Department/Agencies
| Information |
| Home Office | Drug-related assistance
|
| FCO | Drug-related assistance
|
| Contributions to UN agencies from other government departments
|
| Administration costs |
| Contribution to British Council
|
| Commonwealth Foundation |
| Pacific Community |
| CDC Capital Partners plc | Equity/loan investments
|
| Administration costs |
| ECGD | Debt relief |
| Inland Revenue | Tax rebates through covenants
|
| (data collected via survey of NGOs)
|
| Gift Aid |
| EC | Administrative costs related to EC aid expenditure that is attributed to the UK
|
| DEFRA | Contribution to CAB International
|
| |
4. Debt relief—either forgiveness or other actions
to relieve repayment burdens—is and always has been subject
to the same tests as new loans and grants ie it counts as ODA
where it fulfils the criteria set out in the first paragraph above.
These criteria apply regardless of whether the loan was ODA or
non-ODA to start with. The basic principles have not changed since
the 1970s. Any aid loan repayments that are made are added to
our budget and recycled; as such forgiveness does not affect net
ODA.
5. The treatment of the forgiveness of loans not originally
reported as ODA varied in earlier years. Up to and including 1992,
where forgiveness of non-ODA debt met the three criteria for ODA,
it was reportable as ODA. From 1990 to 1992 inclusive it remained
reportable as part of a country's ODA, but was excluded from the
DAC total. From 1993, forgiveness of debt originally intended
for military purposes no longer qualified as ODA, whereas forgiveness
of other non-ODA loans (mainly export credits) counted as ODA
both in country data and in total DAC ODA in the same way as it
was until 1989.
6. One form of relief that is excluded is debt written
off because of an inability to repay (ie "bad" debt).
This is because it fails the developmental motive criterion for
ODA.
7. Initially debt relief counted as ODA in the years
in which loan repayments would otherwise have been due. It was
agreed in the DAC in 1999 that debt forgiveness would count as
ODA in full in the year in which the commitment to cancel was
made. For HIPC this means that from Decision Point to Completion
Point, flow relief (which is granted only on an annual basis)
is counted as ODA year by year. When Completion Point is reached,
the stock of debt is irrevocably forgiven and that commitment
counts as ODA in full in the year in question. The UK has reported
over £300m as ODA under HIPC in recent years. It is estimated
that a further £1200m could be reported as HIPC ODA over
the next five years.
8. For the elements of ODA as outlined in Annex 1, the
following table gives a breakdown of the UK ODA totals in 2000
and 2001.
| Source of ODA | 2000 % of total
| 2001 (provisional) % |
| DFID expenditure | 67 | 60
|
| Attribution of EC spending | 13
| 13 |
| Official debt cancellation | -
| - |
| Official debt re-organisation | 2
| 8 |
| Other government departments | 5
| 5 |
| CDC Capital Partners plc | 4
| 0 |
| Promissory note deposits (for World Bank and Regional Development Bank subscriptions)
| 9 | 14 |
| Total net ODA | 2974m | 3235m
|
| | |
9. Similar figures for other donors are not readily available,
however OECD data suggests that debt relief by Italy and France
in 2000 was around 15 per cent and 10 per cent of net ODA respectively,
while that for Germany, Japan and the Netherlands was similar
to the UK at 3-5 per cent.
10. Future figures for other donors are not available,
but for bilateral HIPC debt relief alone (ie excluding contributions
to the IMF/IDA trust funds), the proportion of debt relief within
the net ODA total for the UK is estimated to be around 10 per
cent in the period 2002-2004.
Department for International Development
June 2002
5
CDC Capital Partners plc send regular quarterly returns, the EC
figures come directly from Brussels each March/April and DFID's
Statistics Department writes to departments/agencies requesting
the other data in March each year. Back
| 
