Presentation by Simon Scott to the Expert Reference Group advising the Development Cooperation Directorate of the OECD on its project to review how external financing for development is tracked and measured.
Revisiting the Official Devlopment Assitance - ODA - Concept
Revisiting the ODA Concept
Presentation by Simon Scott
Introduction to the 3rd session of the Expert Reference Group on External Financing for Development
OECD / 3-4 October 2013
O for Official means provided by official agencies
(national, state and local levels)
D for Developmental means with the
promotion of economic development and welfare of
developing countries as its main objective
A for Assistance means concessional in
character (mainly grants and concessional loans)
Benefits of the ODA concept
The 0.7% of GNI target dating from the 70s (and the
0.15% - 0.2% target for LDCs) supported aid levels
Provides a clear comparison of donor effort
Distinguishes spending on development and welfare
from other aims (strategic, commercial etc.)
Helps decide on priorities and allocations
But today, some consider the concept either too broad
or too narrow.
Is the ODA concept too broad?
Too many recipients?
• DAC List: 149 countries and territories of which 95
are middle income countries.
Contested ODA items (because domestic or non-flows):
• First-year refugee costs
• Imputed student costs
• Development awareness activities
• Debt forgiveness
Is the ODA concept too narrow?
Cross-border transfer principle acts as a disincentive
to innovative instruments (e.g. guarantees, equity).
Limited GPG coverage:
• Climate change ODA excludes purchase of Certified
Emission Reduction Units and all domestic mitigation
• Most peacekeeping costs excluded
Include tax expenditures?:
• Tax deductions for contributions to NGOs
• Tax exemptions for charitable organisations
• Duty-free access for developing country imports
‘Concessional in character’ criterion
ODA loans must bear a grant element of 25%
calculated at a 10% discount rate
But does this make them concessional in
character? Is concessionality the cost to the
donor or the benefit to the recipient?
Should the full amount of loans to recorded as
concessional or only their grant equivalents?
[grant equivalent = grant element * face value]
Questions for discussion
What is most important in a renewed ODA concept?
• Allow fair comparison of donor/provider effort;
• Provide information to recipients on aid inflows;
• Encourage the most efficient use of aid and other resources and/or;
• Provide precise and reliable delineation of what will be reportable as
Exclude refugee and student costs?
Exclude debt forgiveness, or report only actual costs?
Include more peacekeeping and climate aid?
Include tax breaks for NGO contributions?
Loans: new discount rate and/or grant equivalent?