Revisiting the Official Devlopment Assitance - ODA - Concept
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The document discusses the ODA (Official Development Assistance) concept and its implications for financing development. It highlights the benefits and criticisms of ODA, questioning its breadth and effectiveness in addressing key issues like refugee costs and climate aid. The document poses several discussion points aimed at refining the ODA framework for better aid efficiency and accountability.
![‘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]](https://image.slidesharecdn.com/oecddacergoct2013session3-131009073644-phpapp01/85/Revisiting-the-Official-Devlopment-Assitance-ODA-Concept-6-320.jpg)
Revisiting the Official Devlopment Assitance - ODA - Concept
- 1. 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
- 2. ODA basics 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)
- 3. 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.
- 4. 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
- 5. 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
- 6. ‘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]
- 7. 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 aid. 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?