Facts on Poverty Reduction

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Facts on International Aid

At the Monterrey Financing for Development Conference in 2002, world leaders pledged “to make concrete efforts towards the target of 0.7%” of their national income in international aid. In today’s dollars, that would amount to almost $200 billion each year.

In 2005, total aid from the 22 richest countries to the world’s developing countries was just $106 billion—a shortfall of $119 billion dollars from the 0.7% promise. On average, the world’s richest countries provided just 0.33% of their GNP in official development assistance (ODA). The United States provided just 0.22%.

The cost of supporting countries to meet the Goals would require donors to increase ODA to 0.44% of GNP by 2006 (or $135 billion) and to plan for a scale-up to 0.54% by 2015 (or $195 billion) – well within the bounds of the 0.7% promised in Monterrey. This means that of the combined rich world GNP of approximately $30 trillion dollars, on average just $150 billion a year would be enough to get the world on track to ending extreme poverty throughout the world.  

Five countries have already met or surpassed the 0.7% target: Denmark, Luxembourg, Netherlands, Norway and Sweden. Five other countries have committed themselves to a timeline to reach this target before 2015: Belgium, Finland, France, Ireland and the United Kingdom.  In May of 2005, all members of the European Union (except for those 'new' members who joined after 2002) agreed to meet the target by 2015.  This brought the number of rich countries who have already met, or have committed to meet, the 0.7% target by 2015 to seventeen. In 2003, donor aid flows varied considerably:  

Donor Countries and 0.7% Commitment

Countries already at 0.7%

 

ODA in 2005 as
% of GNI (gross national income)

Denmark

0.81%

Luxembourg

0.87%

Netherlands

0.82%

Norway

0.93%

Sweden

0.92%

Recent Commitment to Reach 0.7%

Belgium

Reach 0.7% by 2010

Finland

Reach 0.44% by 2007 and 0.7% by 2010

France

Reach 0.5% by 2007 and 0.7% by 2012

Ireland

Reach 0.7% by 2007

United Kingdom

0.47% by 2007-2008 and 0.7% by 2013

All members of the EU 15

0.56% by 2010 and 0.7% by 2015

 

 


Source: OECD/DAC Database (2006)

 

Better aid is needed, not just more aid. Both the quantity and the quality of development assistance need to increase. Currently, aid is unpredictable, driven by donor objectives, and tied to contractors from donor countries. In low-income countries, only about 24% of bilateral aid actually finances investments on the ground.

Public perceptions reflect support for higher levels of aid. When asked what percentage of the federal budget they think goes to foreign aid, Americans' median estimate is 25% of the budget, more than 25 times the actual level. Only 2% of Americans give a correct estimate of 1% of the budget or less. When asked how much of the budget should go to foreign aid, the median response is 10%. Only 13% of Americans believe that the percentage should be 1% or less. Over 60% of Americans believe that contributing 0.7% of national income to meet the Millennium Development Goals is the right thing to do.