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Press Release
8 June 2006
UK 2005 ODA/GNI – A response to Oxfam’s overseas aid report
Related Information:
Oxfam report: The view from the summit - Gleneagles G8 one year on
The Secretary of State for International Development, Hilary Benn said:
“The Government has set a clear timetable to meet the 0.7 per cent ODA/GNI target by 2013 and is fully on track with its plans to achieve this.”
Spending Review 2004 set out the substantial year on year increases in UK development spending. DFID’s budget will increase from £3.8 billion in 2004/05 to £5.3 billion in 2007/08 representing an annual average increase of 9.2 per cent and a real terms increase of 140 per cent since 1997.
Figures published by the OECD show that UK official development assistance (ODA) is estimated to have been £5,916 million, or 0.48 per cent ODA/GNI in 2005, compared to £4,301 million, or 0.36 per cent ODA/GNI in 2004. The increase reflects both the implementation of the plans set out in Spending Review 2004 and a significant short-term increase due to the debt deal agreed with Nigeria.
The OECD have also published figures for ODA excluding debt relief which do not reflect the substantial fiscal year increased to DFID’s budget. There are three main reasons, which explain why these figures diverge:
- The OECD figures are on a calendar year basis. Because substantial payments to international institutions such as the World Bank fell due at the end of calendar year 2004 and in the first half of calendar year 2006, the increase in DFID’s budget of over £600 million between fiscal year 2004/05 and fiscal year 2005/06 translates into an increase to DFID ODA of only £350 million between calendar year 2004 and calendar year 2005. This still represents a 6.8 per cent real terms rise.
- The OECD figures include ODA spending by other Government Departments and CDC PLC (a government–owned company which invests in emerging markets). Excluding the contribution of CDC, the increase in ODA spending from calendar year 2004 to 2005 was £406 million. This represents a real terms increase of 8.6 per cent.
- CDC contributed around £210m to UK ODA in 2004, but in 2005 CDC received more from loan receipts and equity sales than it invested in equity purchases. This resulted in a negative contribution to ODA of around £200m.
The net effect of these factors means that from calendar year 2004 to 2005, the OECD figures for UK ODA excluding debt relief are flat in nominal terms or show a 2 per cent real terms decrease.
Note to editors
1. ODA is measured in calendar years in accordance with international guidelines agreed by DAC. The figures cover expenditure in developing countries from all official sources including investment by CDC Group PLC (a government–owned company which invests in emerging markets) and promissory notes deposited in respect of IDA – the soft loan arm of the World Bank – and regional development banks and funds. ODA is an internationally agreed concept, which includes debt relief. Providing debt relief means that funds are freed for poverty reduction, for example employing more teachers and putting more children into school.
2. A detailed explanation of DFID’s settlement in Spending Review 2004 can be
found at
www.hm-treasury.gov.uk . Total public spending for the Department for
International Development is set out in the
2006 Departmental Report. It shows
an increase from £3.0 billion in 2000/01 to £5.3 billion in 2007/08.
3. As set out in the Budget 2006, the debt deal agreed through the Paris Club saw Nigeria’s debt reduced by $30 billion, freeing up at least an additional $1 billion a year for Nigeria to spend on poverty reduction. The UK alone wrote down £4.5 billion of debt, and in exchange the Export Credit Guarantee Department received into its balance sheet a payment of £1.7 billion, providing debt relief to Nigeria of £2.8 billion. The debt was written off in two tranches in 2005 and 2006. Because of the way the deal is structured, instead of being spread over several years, the OECD’s Official Development Assistance (ODA) figures will score all the debt relief in 2005 and 2006. This will result in a short-term increase in the figures as reported by the OECD Development Assistance Committee (DAC) that does not reflect the underlying trend path of ODA, or the fact that the benefit to Nigeria is spread over several years. The Government is considering whether there is a more appropriate way to report Nigerian debt relief over several years to enable more accurate monitoring of trends in ODA to meet the targets committed to in 2005.
For further information, contact DFID Press Office on 020 7023 0600, e-mail pressoffice@dfid.gov.uk or call our Public Enquiries Point on 0845 300 4100.
DFID News is available on our website.