Reaching the marginalized: EFA global monitoring report, 2010; 2010

THE AID COMPACT: FALLING SHORT OF COMMITMENTSAid for educationfor economic recovery and social protection.The impact of the financial crisis will inevitablydepend on the severity and duration of theeconomic slowdown. But there are growingconcerns that as aid budgets come under pressure,the pledges made to the poorest countries in 2005are even less likely to be honoured.Experience points in a worrying direction.Aid contracted sharply and recovered slowlyafter the early 1990s’ financial crisis. Over thequarter century to 2004, aid tended to declineat times of rising public debt and deterioratingfiscal indicators in rich countries (Roodman, 2008;World Bank and IMF, 2009).It is encouraging that political leaders havepublicly reaffirmed aid targets, notably at theDoha Conference on Financing for Developmentin late 2008, and the London summit of the G20and L’Aquila summit of the G8 in 2009. But actingon these reaffirmations in national budgetnegotiations will require strong political leadership,with governments and development advocatessetting out a compelling case in defence of aid.The record to date has been mixed (Box 4.1).The United Kingdom has committed to maintainingthe real financial value of its aid budget, implyinga rising share for development assistance in GNI.Public spending reviews in Ireland and Swedenhave led to announcements of aid cuts for 2009and 2010, respectively, albeit in the context ofmedium-term financing plans that, if implemented,will restore aid levels. There are strong indicationsthat Italy’s aid budget may be cut, with no clearframework thus far for recovery and future growth.Many donor countries have yet to set out clearpost-crisis aid spending plans. This has addedto the uncertainty over prospects for achievingthe 2010 targets. The European Commission hasprepared one of the most detailed projectionsso far, using information from EU members.It indicates that overall EU aid spending in 2010will represent 0.50% of GNI, against the 0.56%target level (European Commission, 2009b).The varying responses of donors to the economiccrisis are conditioned by many factors, includingfiscal pressures, the depth of the recession andprospects for recovery. It would be naïve to supposethat aid budgets can be entirely insulated fromwider economic developments, but politicalleadership can make a significant difference.Figure 4.3: Most G8 countries are falling short of their ‘fair share’ in aidG8 donor contributions needed to meet the 2010 aid targets accordingto the ‘fair share’ principle and increase in aid achieved from 2004 to 2008Constant 2004 US$ billions181614121086420UnitedStatesJapanGermanyFair share of US$50 billion increase by 2010Increase achieved from 2004 to 2008UnitedKingdomFranceNote: The fair share is based on each DAC donor country’s share of total DAC GNI.A donor’s fair share of the targeted US$50 billion increase in total net ODA from 2004 to 2010is measured as its share of the total DAC GNI multiplied by the targeted amount.By convention, the United States share of total DAC GNI is capped at 33%.Source: OECD-DAC (2009d).PortugalSwitzerlandDenmarkNew ZealandGreeceBelgiumFinlandAustraliaNorwayAustriaNetherlandsSpainLuxembourgIrelandSwedenConsider the very different positions of Italy andSpain within the European Union. Not only is Italyone of the least generous EU donors, but it has alsomoved towards shared aid targets more slowly thanalmost any other member state. Meanwhile,Spanish aid has almost doubled as a share of GNIItalyCanadaFigure 4.4: Most non-G8 donors also have a long way to go% of 2010 target DAC donors achieved by 2008 according to the ‘fair share’ principle2004Fair sharetarget achievedIncrease from2004 to 2008Decrease from2004 to 2008-250 -200 -150 -100 -50 0 50 100 150 200 250Achievement of ‘fair share’ of 2010 aid target (%)Note: The fair share is based on each DAC donor country’s share of total DAC GNI. A donor’s fair share of thetargeted US$50 billion increase in total net ODA from 2004 to 2010 is measured as its share of the total DAC GNImultiplied by the targeted amount. By convention, the United States share of total DAC GNI is capped at 33%.Source: OECD-DAC (2009d).223