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Value of global aid overstated

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Tuesday, 21 May 2013

Value of global aid overstated

The Organisation for Economic Co-operation and Development (OECD) has admitted it needs to comprehensively reassess how global aid figures are measured amid criticism that the value of assistance given is overstated by billions of dollars each year.
Leaving out the interest repayments that donors receive from developing countries inflates the value of official development assistance (ODA) loans by $5 billion (€3.8 billion) each year, according to analysis from Development Initiatives (DI), an independent research group based in Bristol.
Some donors, including Japan and Germany, receive hundreds of millions of dollars each year in interest repayments on the loans they give, DI reported.
Net ODA figures subtract repayments made by recipients, but, according to current OECD rules, only account for principal repayments. Instead, interest repayments are recorded only as a memo item in OECD statistics.
Japan, for example, actually receives more from developing countries than it gives when interest repayments – which totalled $2.6 billion in 2011 – are taken into account. The Japan International Cooperation Agency (Jica) points out that Japan in the past provided a lot of loans and therefore receives a lot of interest repayments.
Not all donors give loans. However, since 2007 growth in ODA loans has outstripped growth in overall ODA. The UK deals in grants, although there is speculation that the government is thinking about setting up a bilateral development bank to move into loans as well.
The issue of how to define concessionality will be the subject of a meeting in Paris in June, bringing together the IMF, World Bank, aid donors and recipients.

Source: Euractiv