Archive for the ‘aid’ Category
Tuesday, May 11th, 2010
UNCTAD Secretary-General Supachai Panitchpakd, Secretary-General of Unctad, said in opening the organization’s symposium in Geneva yesterday that since the crisis hit in 2008, some 53 million people in the developing world have fallen below the poverty line “and more than 100 million additional people are going hungry. These numbers are not moving in the right direction.”
“Prior to the crisis, the chances of achieving the MDGs (Millennium Development Goals) were deteriorating,” he told the meeting. “Now, after the crisis, it will be near to impossible to achieve all of the MDGs.” The goals are centred around the target of halving extreme poverty by 2015.
The Secretary-General said developing countries should look to one another for support, noting that “South-South” regional trade and financial arrangements have been vital in recent years for providing investment, stable economic arrangements, and climbing trade. He also referred to developing countries as “the innocent bystanders of the most severe recession in 70 years. We cannot just go on with business as usual. We have yet to see ‘human recovery’ from the recession.”
 Developing countries are suffering the fall-out from the global credit crisis. And David Nabarro, Special Representative on Food Security and Nutrition of the United Nations High-level Task Force on the Global Food Security Crisis, said “the food crisis is still with us, and it’s alarming, with around 1 billion people hungry around the world, despite record grain harvests last year. . . There are very great challenges that aren’t going be resolved simply by government decrees.” Extensive structural reforms are needed in which the focus is on agricultural production “within communities, depending on partnerships between smallholder farmers, communities, and civil society,” he said. There should be “partnership between all nations” and not merely a focus on productions statistics alone.
Another representative of the UN said that “It is very important to put more money into agriculture,” as productivity, especially in Africa, has lagged far behind farming yields in more developed regions. When food shortages surfaced in 2008, he said, “the result was that these countries were unable to respond.”
Several speakers spoke of concern about financial speculation and called for controls on fluctuations in food prices to prevent speculation from causing price increases that don’t represent “real” demand for food. And they said governments have a role to play in the prices of staple foods, to protect the needs of smallholder farmers and to protect food security.
It is important and timely that Unctad has drawn attention to the plight of developing countries that are suffering a fall-out from the financial crisis. They have been affected indirectly by the slowdown in trade, cutbacks in overseas aid in some areas and a slowdown in foreign direct investment.
Tags: credit crisis, Development, Millennium Goals, Overseas Aid, poverty, trade
Posted in Development, International, World Trade, aid | No Comments »
Tuesday, March 16th, 2010
Aid to developing countries in 2010 will reach record levels in dollar terms after increasing by 35 per cent since 2004. But it will still be less than the world’s major aid donors promised five years ago at the Gleneagles and Millennium and five additional summits. Though a majority of countries will meet their commitments, the underperformance of several large donors means there will be a significant shortfall, according to a new OECD review.
Africa, in particular, is likely to get only about $12 billion of the $25 billion increase envisaged at Gleneagles, due in large part to the underperformance of some European donors who give large shares of official development assistance (ODA) to Africa.
 Africa is only likely to get half the aid promised at Gleneagles. In 2005, the 15 countries that are members both of the European Union and of the OECD Development Assistance Committee (DAC) committed to reach a minimum ODA country target in 2010 of 0.51% of their Gross National Income. Some will surpass that goal: Sweden, with the world’s highest ODA as a percentage of its GNI at 1.03%, is followed by Luxembourg (1%), Denmark (0.83%), the Netherlands (0.8%), Belgium (0.7%), the United Kingdom (0.56%), Finland (0.55%), Ireland (0.52%) and Spain (0.51%).
But others will fall short: France (0.46%), Germany (0.40%), Austria (0.37%), Portugal (0.34%), Greece (0.21%), and Italy (0.20%).
Other DAC countries made varying ODA commitments for 2010, and most, but not all, will fulfil them. Overall, these figures result in additional aid of $27 billion from 2004 to 2010, but a $21 billion shortfall between what donors promised in 2005 and the OECD estimates for the 2010 outcome. Of this shortfall, $17 billion is the result of lower-than-promised giving by the donors and $4 billion is the result of lower-than-expected GNI because of the economic crisis.
All these figures are estimates based on countries’ national 2010 aid budget plans where available and on early GNI estimates.
Eckhard Deutscher, Chair of the DAC, noted that: “Aid has increased strongly as 16 donors have honoured their commitments. But underperformance by the others, notably Austria, France, Germany, Greece, Italy, Japan, and Portugal, means overall aid will still fall considerably short of what was promised. These commitments were made and confirmed repeatedly by heads of governments and it is essential that they be met to the full extent.”
Commenting on the figures, OECD Secretary-General Angel Gurría said: “It is reassuring that most donors are recognising their international responsibilities. As we head into new rounds of discussions about funding climate change and food security concerns, I encourage all donors to carry through on their development promises.”
Tags: Africa, EU, Gross National Income, OECD, Overseas Aid
Posted in Africa, European Union, Gross National Income, International, OECD, aid | No Comments »
Friday, July 17th, 2009
The UN Conference on Trade and Development (Unctad) has just published its “Least Developed Countries Report 2009”, which looks at the world’s 49 poorest countries.
The report says the Least Developed Countries (LDCs) need to focus macroeconomic policy on building up both the productive capacity of their economies and infrastructure. Also, they need to ensure that their fledgling banking sectors lend towards productive activities rather than government portfolios and real estate.
Given the current crisis, LDCs will find it difficult to take corrective action of this nature and will still be dependent on Official development assistance (ODA). Although the report notes that this has often been wrongly directed in the past and has been used as a substitute for fiscal revenues. The report urges that ODA be maintained or even raised during the current crisis, with even more emphasis on debt relief, but that the aid should increasingly be used to bolster economic infrastructure whilst making it possible to raise more revenue through the domestic economy.
Unctad takes a swipe at the World Bank and IMF, who it maintains have, for the last three decades, encouraged LDCs to concentrate on using monetary policy to contain inflation, whilst ensuring fiscal policy keeps budget deficits at a moderate level. At the same time little emphasis has been placed on public investment as a vehicle to promote economic development.
The report argues that LDCs should now refocus their economic objectives to develop their productive capacities to produce more varied and sophisticated products. This will mean adopting expansionary fiscal policies and accommodating monetary policies, together with the maintenance of exchange rates and capital flows. Greater investment into agriculture and infrastructure as well as health and education will help draw in private investment and raise labour productivity, as well as combating poverty, generating employment, reducing inequality and diversifying economic structure.
How can states raise public investment to the necessary levels? They need to improve tax revenues which in 2000-2006 only rose marginally in LDCs to 12% of GDP, despite strong economic growth, which compares to tax takes of 30-60% in richer countries. The report calls for a halt on further trade liberalisation, an increase in tax on luxury goods, an improvement in the effectiveness of taxes on high incomes and corporations and a strengthening of property taxes.
Too much attention has been placed by LDCs on using monetary policy to reduce inflation. The report concedes that inflation has fallen, but that restrictive monetary policy has delivered high real interest rates on average, which has made much investment unviable.
In conclusion, the report suggests that LDCs manage their capital accounts to deal effectively with the two major problems of capital flight and short-term capital volatility. It also calls for managed exchange rate systems – such as a managed float or loose adjustable peg system – which would allow LDCs to maintain the competitiveness of their exports.
Tags: aid, exchange rate policy, IMF, Least developed countries, macroeconomic policy, monetary policy, Unctad, World Bank
Posted in Development, Ezine, Fiscal stimulus, International Monetary Fund, Low-income countries, World Bank, aid | No Comments »
Tuesday, June 2nd, 2009
I came across this blog yesterday by Shanta Devarajan, the Chief Economist of the Africa Region at the World Bank, and thought that it would be good to copy it in full.
“In rich countries, when economic growth declines by three or four percentage points, people lose their jobs and possibly their houses, but they regain them when the economy rebounds. In poor African countries, children get pulled out of school—and miss out on becoming productive adults. In some cases, children die before they have a chance to go to school. If the current growth collapse is typical of the ones Africa has experienced in the past, an additional 700,000 African children may die before their first birthday.
In short, the effects of the global recession on Africa will be permanent. So the idea that aid may be threatened because of the recession in rich countries seems to have the logic backwards. Precisely because the effects in rich countries are temporary, resources should go to places where they may be permanent. Of course, there are political pressures to spend domestically. But do politicians in rich countries really think that a few more votes are worth more than the lives of the infants who will die as a result of the recession?
Furthermore, the relatively modest sum spent on aid to Africa in the past decade was at least partly responsible for the continent’s rapid growth. From 1998-2008, aid to Africa was increasing and economic growth was accelerating (to over 6 percent in 2007); poverty was declining and human development, especially primary school completion rates and the spread of HIV/AIDS, was improving. African countries had strengthened their macroeconomic policies—inflation had dropped to half its level in the mid-1990s—so that aid was more productive. Private capital was flowing in at a faster rate than in any other continent. All of these developments have come to a grinding halt because of the global economic crisis—a crisis that was not remotely the fault of Africans. By increasing aid to Africa, the international community has a chance to reverse this trend and prevent a temporary shock from having permanent consequences.”
You can follow his blogs at: https://africacan.worldbank.org/users/shanta
Tags: Africa, aid, recession
Posted in Africa, Low-income countries, aid, recession | No Comments »
Tuesday, March 31st, 2009
Figures published by the OECD yesterday show that total net official development assistance (ODA) from members of the OECD’s Development Assistance Committee (DAC) rose by 10.2% in real terms in 2008 to reach $119.8bn. This is the highest dollar figure ever recorded. In total, it represents 0.30% of member countries combined gross national income (GNI).
This is great news for the developing world at the present time of economic crisis. A 10% real increase is very welcome at a time when: world trade is experiencing its largest decline since 1929 and commodity prices are falling; foreign direct investment is declining; and, the budget position of many developing countries has been hit hard by the increases in food and oil prices over the past couple of years. Altogether, this means that many developing countries are not in a strong fiscal position to deal with the current crisis.
In terms of giving, the US continues to be the largest gross donor, donating $26bn in 2008, which was a real increase of 16.8%. Even so, with a ratio of ODA to GNI of 0.18%, the US is still well below the UN target for developed countries to give 0.7% of their Gross National Income. Other major givers are Germany, UK, France and Japan. In terms of GNI ratios, the leading countries are Sweden, Luxembourg, Norway, Denmark and Netherlands, all of whom exceed the UN target. The overall picture can be seen in the graphic below.
In 2005 major donors at the Gleneagles G8 and other summits pledged to lift aid from $80bn in 2004 to $130bn in 2010, at constant 2004 prices. But, the OECD notes that the prospects of economic contraction this year will reduce the level of dollar commitments. They believe that current commitments imply an aid level of $121bn in 2010, which will be below target.
The OECD points out that whilst the full effects and duration of the financial crisis are still to be seen, it is important for aid to play a countercyclical role to help balance the sharp reversal in overall flows to developing countries. The organisation said: “Only a special crisis-related effort can ensure that the 2010 targets for aid are met, which is even more important now that the economic crisis is reducing developing countries’ growth prospects and their ability to make progress towards the Millennium Development Goals.”
Tags: developing countries, development aid, fiscal crisis, Millennium Goals, OECD
Posted in Development, International, Low-income countries, aid | No Comments »
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