Publication of preliminary figures on 2018 Official Development Assistance*
What do the figures show?
Preliminary OECD figures show that Official Development Assistance (ODA) provided by the European Union and its Member States has reached €74.4 billion in 2018 on a grant equivalent basis, representing 0.47% of EU Gross National Income (GNI). This is significantly above the 0.21% average of non-EU countries that are members of the Development Assistance Committee (DAC).
On a flow basis, this constitutes a 1% decrease compared to 2017 levels.
On a flow basis, ODA as a share of GNI has gone down by 0.2 percentage points between 2017 and 2018. (Please read below explanation on methodological change.)
The EU is collectively committed to providing 0.7% of Gross National Income (GNI) as ODA within the timeframe of the 2030 Agenda.
Why did EU collective ODA decrease in 2018 compared to 2017?
The figures show a 1% decrease of aid compared to the previous year, corresponding to €731 million, on a flow basis. This is due to a significant decrease in in-donor refugee spending which aims at assisting refugees and asylum-seekers during the first year of their stay, covering food, shelter or training. Compared to previous years, the number of people arriving in Europe has gone down. In consequence, in-donor refugee spending has decreased as well, by €3.3 billion - a 32% decrease compared to 2017.
This is partially compensated by increases in bilateral and multilateral ODA by some Member States. Indeed, efforts by the EU and its Member States have stepped up their efforts directed at developing countries by 4% with €68.8 billion in 2018 compared to €66.2 billion in 2017.
Why has there been a methodological change and why is EU collective ODA lower if calculated through the grant equivalent methodology?
The OECD DAC has decided on a new methodology to calculate the ODA value of concessional loans. It is applied for the first time this year to 2018 data for official loans and loans to multilateral institutions [1]. The new method, "grant equivalent method", is a method to report the grant equivalent of loans calculated on the basis of the donor effort. The methodology assigns a percentage to each concessional loan on the basis of several parameters (risk of default measured ex-ante depending on the beneficiary country income group, duration of the loan, interest rate, grace period). This percentage (the so-called “grant element”), is applied to the amount of the loan to calculate the “grant equivalent”, i.e. the “gift portion” of the loans, which is now recorded in OECD DAC statistics and which explains why the amount recorded through grant equivalent is usually lower than the amount recorded with the previous methodology.
In the past (“flow basis”), the actual flows of cash between a donor and a recipient country were recorded and a loan was recorded at “face value” as ODA but subsequent repayments by countries were then subtracted as negative ODA, so that loans ultimately produced zero net ODA, except in the case of a default. With the new methodology reflows are not counted. The new system improves the reporting of ODA loans and allows accounting for the efforts made by donors to provide loans depending on their level of concessionality, that is, the level of benefit to the borrower compared to a loan at market rate.
Grant equivalent figures (e.g. the EU collective ODA figure or the EU collective ODA as a share of GNI) are however not comparable with previous years' data calculated on a flow basis. Comparisons over time are made possible by applying the previous methodology (on a flow basis) to 2018 operations (this is why, for comparison purposes, we use the flow basis to compare EU and Member States ODA as a share of GNI which has gone down from 0.50% in 2017 to 0.48% in 2018 on a flow basis - whilst headline figure of 0.47% is in grant equivalent).
What do the figures show regarding ODA managed by the EU institutions?
On a flow basis, ODA from EU Institutions remained stable in 2018 (-0.5%).
Commission-managed ODA went up by 3.5%.
On the other hand, a decline in EIB-managed ODA of slightly more than EUR 500 million between 2017 and 2018 is due to a reduction in ODA loans and an increase in reflows of the European Investment Bank's loans.
What is the EU performance regarding ODA to LDCs target?
Data for ODA to Least Developed Countries (LDCs) for 2018 will only be available in December 2019. In 2017, EU collective ODA to LDCs reached €18.2 billion equivalent to 0.12% of GNI (on a flow basis). The EU is committed to collectively meeting the target of providing 0.15 - 0.20% of GNI as ODA to LDCs in the short term and to reach 0.20% of GNI as ODA to LDCs within the timeframe of the 2030 Agenda. Four EU Member States exceeded the 0.15% threshold of ODA to LDCs/GNI: Luxembourg (0.42%), Sweden (0.31%), United Kingdom (0.23%) and Denmark (0.22%).
How are the numbers compiled? Who are they compiled by?
The OECD Development Assistance Committee (DAC) is the ultimate authority that decides if expenditure reported to it (by member states or other donors) qualifies as Official Development Assistance (ODA).
The DAC is currently composed of 30 members: Australia, Canada, Iceland, Japan, Korea, New Zealand, Norway, Switzerland, USA, 20 EU Member States and the EU. Two EU Member States (i.e. Estonia and Latvia) are non-DAC OECD members, while another six (Bulgaria, Croatia, Cyprus, Lithuania, Malta and Romania) are neither OECD nor DAC members.
The Commission presents individual data on all EU Member States, including on those that are not members of the DAC, provided they have reported their figures to the OECD (all 28 Member States but Cyprus). The EU uses the same current price figures as presented by DAC in the publication of preliminary figures for 2018, reconverted from USD to EUR using the DAC exchange rate.
There are two differences in analysing the changes in ODA volumes:
The Commission presents and analyses data in Euro values, while the DAC uses US Dollars. This exchange rate difference applies for both global figures and individual Member States.
The Commission uses values in nominal terms (current prices) for presenting changes. The DAC presents data both in constant prices and nominal terms, but calculates changes only in constant prices and exchange rates. Note that ODA to GNI ratios are not affected by the above differences.
In addition to the EU28 ODA presented by the DAC, the Commission also presents the EU collective ODA, which is a sum of the ODA reported by the EU Member States and the additional ODA provided by the EU institutions. Most of the EU institutions' ODA spending is, for the purposes of ODA/GNI reporting, imputed to EU Member States, i.e. Member States data include part of the institutions' spending. The ODA provided through the European Investment Bank's (EIB) own resources is not imputed to Member States and is additional to the Member States' ODA.
Why are the data preliminary?
The data presented is based on information that the OECD has received from Member States in recent weeks. Additional information on the details of funds and programmes for 2017 will be reported to and checked by the OECD-DAC over the course of 2019. Final 2018 ODA figures with a detailed breakdown should be published by OECD DAC in December 2019.
For More Information
Detailed information on individual Member States
[1] For further information see: http://www.oecd.org/dac/financing-sustainable-development/development-finance-standards/modernisation-dac-statistical-system.htm.
MEMO/19/2122