Select Committee on International Development Minutes of Evidence

Further supplementary memorandum submitted by the Department for International Development


  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

    —  food aid

    —  emergency and distress relief

    —  debt forgiveness

    —  support to national and international NGOs

    —  promotion of development awareness

    —  administrative costs

    —  acquisition of equity by an official body

    —  investment loans

    —  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).

Department/Agencies Information
Home OfficeDrug-related assistance
FCODrug-related assistance
Contributions to UN agencies from other government departments
Administration costs
Contribution to British Council
Commonwealth Foundation
Pacific Community
CDC Capital Partners plcEquity/loan investments
Administration costs
ECGDDebt relief
Inland RevenueTax rebates through covenants
(data collected via survey of NGOs)
Gift Aid
ECAdministrative costs related to EC aid expenditure that is attributed to the UK
DEFRAContribution 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 ODA2000 % of total 2001 (provisional) %
DFID expenditure6760
Attribution of EC spending13 13
Official debt cancellation- -
Official debt re-organisation2 8
Other government departments5 5
CDC Capital Partners plc4 0
Promissory note deposits (for World Bank and Regional Development Bank subscriptions) 914
Total net ODA2974m3235m

  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

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