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Aid and Debt: The Challenge at Gleneagles

This article discusses the challenges and importance of aid and debt relief in achieving the Millennium Development Goals (MDGs) and reducing poverty. It highlights the impact of aid, the need for better coordination, and the role of corruption in hindering progress. It also calls for increased aid funding, binding timetables, and a focus on trade.

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Aid and Debt: The Challenge at Gleneagles

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  1. Aid and Debt: The Challenge at Gleneagles Glasgow University Pre-G8 Conference Duncan Green, Head of Research, Oxfam GB

  2. Compared to achieving the MDGs, on current trends… • 45 million more children under five will die between 2005 and 2015 • 247 million more people in sub-Saharan Africa living on less than $1 a day in 2015 • 97 million more children still out of school in 2015 • 53 million more people without proper sanitation facilities

  3. The case for aid • Econometric studies • Case study evidence at national level • Evidence for productive use of aid at grassroots level in many low-income countries • To meet the MDGs, we need immediate extra $50 billion now and binding timetables to meet 0.7% by 2010

  4. Aid levels up, but generosity downNet ODA, $ million and as a percentage of GNI, 1960-2004, OECD countries, 2003 prices

  5. Progress on meeting the 0.7% targetNet ODA as % of GNI, OECD donors, 2004 preliminary data

  6. Making aid work better for poverty reduction • Too many donors • Poor coordination eg on allocation • Conditionality: undercutting ownership • Too slow!

  7. ‘Effective’ aid volumesNet ODA by purpose, 2002

  8. Expect delays in aid deliveryResponses to the question `Generally speaking, how late do the donor’s aid disbursements arrive?’

  9. Governance and Corruption • Corruption is both a symptom and a cause of poverty • Countries become less corrupt as their economies grow • Aid is part of the solution to corruption • In Africa, political governance improving, economic is lagging • ‘Operation Rathole’ • Congressman (later Senator) Everett McKinley Dirksen (R-Ill.)

  10. Corruption is not an excuse for inaction on aid…….. • When? 1947 • About? The Marshall Plan

  11. Plus Side Permanent cancellation Includes IMF debts Additional Aid will be given to make up the debt relief $1.5bn a year saved on debt service $ 55bn written off debt stock Concerns Additional aid may not go to write-off countries, leaving them no better off Only 18 countries included, with nine to follow, out of 60+ low income countries that need debt relief (10x amount agreed) Doesn’t cover IDB What we got on debt from G8 Finance Ministers

  12. Conclusions and recommendations: • Build on debt deal to ensure genuine additionality and widen group of countries • More and better aid is needed: • More: • Immediate $50 billion aid hike • binding timetables to meet 0.7 by 2010 • Better: • harmonise donors • restrict use of conditions • Corruption is not an excuse for inaction • And above all, don’t forget trade

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