ODA in Turmoil: Why Aid Definitions and Targets Will Come Under Pressure in the Pandemic Age, and What Might be Done About It?

In the wake of the COVID-19 pandemic, official development assistance (ODA) remains an essential, though often criticised, form of external financing for developing countries. At the same time, the pandemic risks aggravating existing pressures on ODA which may erode its credibility and the volume of public concessional, cross-border resources made available for development purposes. We revisit the evolution of ODA and discuss three such pressures: ODA/GNI ratio targets threaten ODA budgets when GNI is falling in many donor countries; flawed new rules on scoring debt relief as ODA will lead to large-scale double-counting just as debt relief looks ever more likely; and the increasingly-blurred boundary between global public goods and traditional ODA may allow the former to displace the latter. We discuss ways in which the Development Assistance Committee has sought to mitigate these pressures in the past, and conclude that alternative strategies may be required. To this end, we recommend that the DAC rolls back its new debt relief rules, considers an additional target tier for “beyond ODA” spend on global public goods, and commits to greater transparency and developing country participation in its financial metric-setting processes.