DFID Annual Report 2008 - International Development Committee Contents

4  DFID's expenditure on development assistance

DFID's performance against commitments on Official Development Assistance expenditure

38.  DFID's Annual Report 2008 indicated that UK Official Development Assistance (ODA) is projected to rise to £9.1 billion by 2010-11 which will represent 0.56% of Gross National Income (GNI). This is in line with the EU's commitment for member states' ODA collectively to reach 0.56% of GNI in 2010 and keeps the UK on track to reach its commitment of 0.7% GNI by 2013—two years ahead of the EU's collective commitment to 0.7% GNI by 2015.[53]

39.  However, statistics published by the Development Assistance Committee of the Organisation for Economic Co-operation and Development (OECD DAC) in April 2008 showed that UK net ODA fell by 29.1% in 2007, due to decreased debt relief, from US$12,459 million in 2006, down to US$9,921 million in 2007. As a percentage of GNI, UK aid excluding debt relief also fell slightly. ODA including debt relief went down from 0.51% of GNI in 2006 to 0.36% in 2007. Excluding debt relief, the decrease was more marginal: 0.369% in 2006 down to 0.357% in 2007.[54]

40.  In written questions to DFID we queried a discrepancy in the Annual Report in the figures for debt relief in 2006-07: one part of the report says it was £1.5 billion and elsewhere the figure is £2 billion.[55] DFID admits that the lower figure is a misprint but is confident that the correct figures were provided to the DAC. We explored the problem of conflicting statistics in more detail with the Permanent Secretary and were able to clarify how the confusion had arisen.[56]

41.  It is essential that DFID provides clear, up-to-date and unambiguous information about development expenditure in its Annual Reports. We accept the potential difficulty which can arise when other reporting bodies, notably the OECD Development Assistance Committee, work to calendar rather than financial years and thus new statistics become available shortly after DFID's Annual Report is published. However it is important for our scrutiny of DFID's expenditure that we are given robust information on which to base our evaluation.

Progress towards the 0.7% target

42.  In July, we asked the DFID Permanent Secretary, Nemat Shafik, how confident she was that DFID could maintain its progress towards the 0.7% target. She told us

I am very confident in the current CSR [Comprehensive Spending Review] period that we are on the right trajectory. I think the next CSR is too unknown to know […] we will not know what GDP is at that stage, but we also will not know what the state of the economy is at this stage […] for the next three years we are pretty confident that we are on track. Thereafter, I think we have to see.[57]

The EU reaffirmed its commitment that each member state will devote 0.7% of Gross National Income to Official Development Assistance by 2015 at the Doha Financing for Development Conference in December.[58] The Secretary of State was optimistic about the prospects of the UK fulfilling the 0.7% pledge by the earlier date of 2013:

[…] the Prime Minister himself stated on 17 October [2008]—this is, of course, after the immediate financial crisis. He stated: 'By 2013 the United Kingdom Government will reach our target of spending 0.7% of national income on aid. We have clearly laid out our plans to reach this goal and we are encouraging our partners to do likewise.' That is the clearest and most authoritative statement of British Government policy on this issue.[59]

We welcome confirmation from the Secretary of State, echoing the Prime Minister, that the UK will maintain its progress towards the goal of 0.7% of Gross National Income to be allocated to Official Development Assistance by 2013.

43.  However, some other donors are failing to fulfil their commitments. Even before the deterioration in the world economic situation, it was clear that a number of G8 countries were not on track to meet the 0.7% target. The Africa Progress Panel, which was set up to monitor progress on the funding commitments made at the 2005 Gleneagles Summit, said in June 2008 that, without major changes in aid levels, most G8 countries would be "well below" the target of doubling aid to Africa between 2004 and 2010.[60] The OECD DAC concluded that commitments made at Gleneagles and subsequent summits indicated that overall aid levels would need to rise from $80 billion in 2004 to $130 billion in 2010 but for this to be realised, core development programmes would have to double over the next three years. In publishing its development expenditure statistics for 2007, the DAC said "Overall, most donors are not on track to meet their stated commitments to scale up aid and will need to make unprecedented increases to meet the targets they have set for 2010".[61] DFID's 2008 Autumn Performance Report reinforces this point: it quotes the DAC secretariat's recent conclusion that "non-debt ODA is currently not on track to achieve the $130 billion target, and […] the target may be missed by over $30 billion if the trend continues."[62]

44.  The latest forecasts from the International Monetary Fund are that global growth will shrink by 0.5% in 2009 followed by a gradual recovery in 2010.[63] Shrinking economies in donor countries, many of which are now in recession, will mean that the funding available for Official Development Assistance is also likely to reduce because the commitments were made as percentages of gross national income rather than in money terms. We will explore the implications of this for financing for development in our current inquiry into Aid Under Pressure.

45.  The UK must continue to press its donor partners to maintain their commitment to reach 0.7% of gross national income to be devoted to development expenditure by 2015. The impact of the global economic downturn on developing countries will mean that they need more help more urgently than was previously the case. We believe that the UK should continue to lead by example and that the opportunity should be taken at every international meeting on development to seek renewed pledges which are backed up by action.

53   DFID Annual Report 2008, para 1.28; see also DFID Press Release, 'UK keeps aid promises to the world's poor' 2 October 2008 Back

54   OECD DAC Statistics on net ODA 2007 and press release 4 April 2008 "Debt relief is down: other ODA rises slightly" Back

55   Ev 49, response to Question 10 Back

56   Qq 55-56 Back

57   Qq 52-53 Back

58   See Doha Declaration at http://www.un.org/esa/ffd/doha/press/brockmannpressconf.pdf Back

59   Q 118 Back

60   Africa Progress Panel 2008 Report, p 15 Back

61   OECD DAC press release 4 April 2008 Back

62   2008 DFID Autumn Performance Report, p 35 Back

63   International Monetary Fund, World Economic Outlook Update, January 2009, see www.imf.org/external Back

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