Globe, Latin America

Developing countries receive another blow as foreign aid is cut

The governments of the world’s richer nations have invested billions in rescuing banks and other economic institutions in the wake of the financial crisis. But countries are finding themselves further and further off the target of donating 0.7% of their GDP to developing nations by 2015 as laid out in the UN’s Millennium Goals.

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Miriam Valero


Since the beginning of the global financial crisis, the world’s richer countries have invested billions from their budgets in rescuing banks and economic institutions.

As huge sums of money are put into jump-starting the economy, cut backs must be made on other items on the budget, upon which many citizens’ lives urgently depend.

One fundamental investment that developed nations had maintained, until it was reduced drastically last year, is the payment of the Official Development Assistance aid (ODA).

This cut means that 2011 was the first year since 1997 that there was a decrease in  aid money that was given to developing countries.

In total, countries belonging to the Organisation for Economic Cooperation and Development (OECD) put aside 0.31% of their total GNP as aid, a figure much lower than the 0.7% agreed upon in the UN’s Millennium Goals to be met by 2015. Furthermore, if this figure is compared with the aid laid out in 2010’s budgets we see a decrease of almost 3%.

A recent report from the OECD calls on nations not to use the financial crisis as an excuse for to reduce development cooperation contributions, which benefit more than 130 countries and are vital to the social and economic development of their recipients.

Greece and Spain registered the biggest fall in aid contributions, down 39.3% and 32.7% respectively, which were attributed to their current fragile economic situations.

However, looking at Spain’s General State Budget for this year, the cuts have been even more drastic. Compared to 2011, the country will cut over half of its Developmental Cooperation budget, around 65.4%.

According to data from the OECD, Belgium follows Spain and Greece in the list of  countries with the biggest drop in aid contributions at a 13% cut, with Japan next at 10%. In total, 14 EU countries reduced their aid in 2011, according to a report issued in June by anti-poverty organisation ONE.

Along with Spain and Greece, Canada is the other country that has reduced its giving most severely. Cuts of 7.5% will see an end to the bilateral agreements it has with eight developing countries; affecting some of the world’s poorest nations, including Ethiopia. The US is still the country with the largest aid budget; however, it too saw its ODA also fall by 0.9% in 2011.

Acute effects

In contrast to these countries mentioned above, Italy, one of the countries worst hit by the crisis, is the nation which most increased its aid contributions in 2011 according to the OECD, with an increase of 33% in giving.

This rise comes from an increment in the cancelling of third-world debt and the resurgence of the arrival of refugees from North Africa.

Along with Italy, a group of countries has proven that it is possible to achieve the UN’s Millennium Goals of 0.7%, despite the current economic climate. Sweden, Denmark, the Netherlands and Luxembourg reached the target in 2011, four years before the agreed date of 2015.

However, according to international non-governmental organisations, a more realistic prediction for 2015 is that developed countries will donate 0.44% of their GDP to developing countries, 0.3% less than had originally been promised.

As such, organisations have alerted of the pressure that this drop in aid would put upon many nations of the world.

ONE comments that these cuts will make the day that Africa no longer relies on hand-outs even further off; while Oxfam states that “the first decrease in aid in 14 years will cost lives and must be reversed” given that “hundreds of thousands of people who live in poverty will be without the medicines necessary to survive and will see many more children drop out of school”.

According to their calculations, the $3.4 billion lost last year in developmental cooperation “could have paid for a year’s treatment for half the children in the world infected by AIDS”.

(Translated by Rachel Eadie)

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