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Aid in Times of Crisis

Aid in Times of Crisis Duncan Green Head of Research Oxfam GB June 2010 Current aid promises EU has pledged to reach 0.56% of GNI by 2010 2010: aid levels expected to fall €11bn short Main shortfalls in Italy, Germany and France And the pressures on aid budgets will only increase …..

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Aid in Times of Crisis

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  1. Aid in Times of Crisis Duncan Green Head of Research Oxfam GB June 2010

  2. Current aid promises • EU has pledged to reach 0.56% of GNI by 2010 • 2010: aid levels expected to fall €11bn short • Main shortfalls in Italy, Germany and France • And the pressures on aid budgets will only increase …..

  3. Aid after previous financial crises

  4. The costs of breaking those promises • Harming poor people • Damaging the implicit social contract between rich and poor countries • Undermining Europe’s moral authority • Why should emerging powers then trust Europe’s promises on anything else?

  5. The current crisis: Channels of transmission Aid budgets? Government spending…? Informal economy Remittances Trade Finance

  6. Oxfam’s research on the current crisis • 12 countries/2,500 households + lit review • So far, countries and households dealt better with the economic crisis than we expected; • Families supported each other, shared food, information, money, kept kids in school; • But $65bn fiscal hole a major concern (aid grants only cover 13% of that so far) • What are the limits of resilience – for families and nations?

  7. Lessons for governments and donors Build resilience before a shock, replenish it afterwards (before the next one) Volatility matters as much as average flows/stocks Startling gap on real-time impact monitoring and genuine dialogue with affected communities Social protection needs extension – especially into the informal economy, and automatic instruments Gender matters in terms of impact and response Countercyclical spending in good times and bad That needs support from aid system

  8. Good v Bad Aid Do: fund watchdogs, fund long-term, support state capacity, put government in the driving seat, ensure downwards accountability Measles vaccines save 7.5m lives 1999-2005 Education for All Rise in General Budget Support (but still tiny %) MDG contracts a model of good aid Don’t: overcomplicate, impose conditions, support parallel systems, poach staff or tie aid Over 2 year period, Uganda had to deal with 684 different aid instruments from 40 donors, (just for central government funding)

  9. Beyond Aid • Coherence is a double-edged sword • Effective states learn by doing (and sometimes failing), so defend policy space and pluralism • One ray of light: innovative financing, eg financial transaction taxes; bank levies • Do No Harm agenda: • Climate Change did not end in Copenhagen! • Migration is a Good Thing • Corruption needs supply and demand • Tax havens steal money from poor countries

  10. Thank you! For more information, see Oxfam’s new reports on: The Global Economic Crisis And 21st Century Aid dgreen@oxfam.org.uk

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