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IMFSurvey Magazine: In the News

Where's the New Aid Money?

Paul McCartney at July 2005 `Live 8' concert staged to petition G8 summit to scale up aid, expand debt cancellation (photo: Peter Payne/eyevine)

Scaling up aid

Where's the New Aid Money?

By Jeremy Clift
IMF Survey online

July 20, 2007

  • Official aid to Africa was static in 2006
  • Substantial increases needed to meet MDGs
  • Other donors are stepping up assistance

At the 2005 Gleneagles summit, the Group of Eight (G8) leaders promised to double aid to sub-Saharan Africa by 2010.

Two years later, there is little sign that the promise is translating into increases in overall aid to most sub-Saharan countries.

Excluding debt relief, aid to sub-Saharan Africa from the world's major donors—grouped in the OECD's Development Assistance Committee (DAC)—was static in 2006, leaving a challenge to meet the Gleneagles commitment to double aid to Africa by 2010.

Aid to all countries (including middle-income recipients) declined, in constant 2005 dollars, to $103.9 billion in net aid in 2006, down by 5.1 percent from 2005 (see chart). This figure includes $19.2 billion of debt relief, notably exceptional relief to Iraq and Nigeria. Excluding debt relief grants—which were at a record high in 2005 as a result of the first phases of several large Paris Club debt relief operations—net aid fell by 1.8 percent in 2006, according to preliminary data published by the OECD (the Paris-based Organization for Economic Cooperation and Development).

On balance, according to the World Bank's Global Monitoring Report 2007, there is "scant evidence of any substantial scaling up of aid on the horizon."

Not so dire?

However, the overall picture may not be so bleak. While in real terms, the decline in official development assistance in 2006 was the first reduction since 1997, aid levels were still the highest recorded, with the exception of 2005 (see chart).

In addition, although aid recorded by DAC fell, other forms of aid are on the rise, including from private sources, health funds, and emerging market donors, such as China. China's official assistance to Africa in 2006 was estimated at $19 billion and it has said it will step up aid further. Overall aid from private sources doubled during 2001-05 to $14.7 billion, according to the World Bank. Global funds to combat HIV/AIDS are estimated to reach $9 billion in 2007, according to the United Nations Development Program.

Progress on MDGs

Nevertheless, according to several recent studies, further progress toward the Millennium Development Goals (MDGs) would require substantial net increases in official development assistance. Estimates by the World Bank and the United Nations suggest that additional official assistance in the order of $40-60 billion a year would be needed to meet the MDGs.

Based on the G8 commitment in Gleneagles in 2005 to double aid to Africa, the OECD estimates that assistance from the DAC countries would rise by $50 billion in real terms between 2004 and 2010


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