This decrease is the result of many factors. The political commitment
to aid in donor countries is being challenged by chronic fiscal
pressures compounded in many countries by high rates of domestic
unemployment. The end of the Cold War has done away with security
and ideological justifications for aid. A perception of aid dependence
among the poorest countries and growing scepticism generally of
past effectiveness of aid in promoting development and reducing
poverty are further additions to the list of disincentives. Changes
in fundamental development theories have also played their role.
The shift in beliefs from development being equated with growth
and led by public sector planning efforts towards more complex,
multidimensional concepts of development as being people-centred,
participatory and market-driven has led to uncertainty about the
most appropriate role of aid. In short, there is a crisis in confidence
in the utility of aid.
The decline in ODA is cause for very serious concern. ODA is an
essential source of funding for many developing countries and
particularly in the area of social development cannot be replaced
by private financial flows. And it is at the core of the commitments
made by States at the several world conferences held this last
decade addressing sustainable development. While States have agreed
that funding for the implementation of Agenda 21 and other
international commitments towards sustainable development should
mainly come from countries' own public and private sources, they
have also reaffirmed time and again the need to mobilise and provide
new and additional, adequate and predictable financial resources
to meet the targets of poverty reduction, protection of the environment
and economic growth.
Beyond financial concerns, decreasing ODA has serious political
repercussions on the possibility to forge international consensus
on sustainable development in the future and, in particular, on
its environmental aspects. The Special Session of the United Nations
General Assembly in June 1997 (Rio+5) to make an overall review
and appraisal of the implementation of Agenda 21 provides
one example where lack of progress on financing of sustainable
development had a noticeable negative effect.
Hence, the urgent need to reverse the decline in ODA. This will
require pursuing strategies which aim at improving the performance
of development assistance and restoring donor support for ODA.
We propose that national Parliaments launch a debate in plenary
on the subject of declining ODA with a view to fostering a broader
public understanding and support for official development assistance
and consequent government action. Such a debate should focus on
the following parameters for the future direction of aid :
(i) The development goal of Official Development Assistance, implicit
in its very name but often obscured by a narrow view equating
development with growth, must be reasserted. We need to repeat
that the ethical case for ODA rests ultimately on aid's ability
to alleviate poverty, for this and future generations. To that
end, ODA must address sustainable development conceived as a broad
objective based on the need to achieve - in an integrated and
mutually supportive way - the triple goals of economic growth,
social progress and equity, and the protection of the environment.
By definition, these goals must prevail over short-term commercial
or partisan motivations.
(ii) At the same time, overall effectiveness of ODA must be improved.
Both donor and recipient countries need to ensure that existing
ODA funding is used in the most effective and efficient way and
that it contributes to economic growth, social development and
environmental protection in the context of sustainable development.
More effective use of ODA is essential in overcoming current donor
fatigue and in promoting political support for increase of ODA
levels by the governments and general public in donor countries.
(iii) To achieve these objectives, sustainable development and
therefore also the use of ODA must be driven by domestic priorities.
Aid projects have the best chance of succeeding when they are
the result of a broadly based participatory process in which the
political leadership, the agencies of the State and civil society
agree on desirable policy changes and translate them into parameters
of policy and administration which are generally accepted.
(iv) Similarly, development projects should be implemented in
the context of sound economic, social and environmental policies.
Recipient States need to develop a sound policy framework and
transparent, participatory and effective national institutions.
While growth is necessary for poverty reduction, it will not achieve
this result unless it occurs in an environmentally sustainable
manner and within an institutional and policy framework which
ensures that the benefits of growth are equitably shared.
(v) Governments in both donor and recipient countries, as well
as international financial institutions, need to ensure greater
transparency with regard to the objectives of aid programs and
the consistency of actual allocations and end uses with those
objectives. Greater accountability in determining the objectives
of aid and in the allocation of resources will help reduce donors'
use of tied aid, and recipients' use of aid for short-term political
and economic gains.
(vi) ODA should be better targeted to the least developed countries
and to those sectors in developing countries and countries in
transition which do not benefit from adequate funding from various
private sources, both domestic and external. Such sectors where
the primary goal is to achieve human development are usually in
the social area, particularly education, health, and poverty eradication,
as well as environmental protection in many cases.
(vii) ODA can be instrumental in covering incremental costs of
national actions and policies aimed at achieving global environmental
benefits, in particular actions aimed at the implementation of
goals and objectives of various international conventions. Bearing
in mind the overarching role played by the Global Environment
Facility (GEF), governments have the responsibility to ensure
the adequate replenishment of the Facility as well as to identify
ways and means to improve access to its resources. Furthermore
careful consideration has to be given to the scope of GEF's programme
(viii) There is a need for more systematic use of donor-recipient
dialogues and more effective coordination among the donors themselves
in order to ensure that ODA meets national priorities and, at
the same time, facilitates the achievement of specific goals agreed
at the international level. There also seems to be a need to improve
greater policy coordination and collaboration between bilateral
and multilateral donors, including international financial institutions,
and various funding and technical co-operation activities carried
out by the organizations of the United Nations system, as well
as by NGOs.
(ix) A most promising mechanism for donor-recipient coordination
is a clear, recipient-driven strategy for sustainable development.
National and sectoral sustainable development strategies can serve
as the basis for designing funding programs using both domestic
and international financial resources, including ODA.
(x) There is also a need to explore and foster new approaches
to the uses of ODA. This includes consideration of the possibility
of further shifting the ODA financing from funding specific projects
towards supporting broader goals of national policy reform aimed
at sustainable development, including the need for addressing
possible short-term social implications of such reforms. Furthermore,
there are discussions regarding the role that ODA can play as
a catalyst for leveraging private investment in support of sustainable
(xi) Within the broad context of ODA, the problem of indebtedness
of the poorest and the most indebted developing countries, must
also be addressed. In addition to traditional mechanisms such
as commercial bank debt buybacks and more innovative ones such
as debt-for-nature swaps or debt-for-social-development swaps,
particular mention should be made here of the Debt Initiative
for Heavily Indebted Poor Countries (HIPCs), a joint World Bank
and IMF initiative now being implemented.
(xii) A comprehensive policy regarding the financing of sustainable
development must also address the issue of subsidies and particularly
those that lead to unsustainable development. Existing subsidies
will need to be made more transparent, examined in parliament,
reformed, and as the case may be, removed. At the same time, support
will have to be provided to the most vulnerable affected groups.
(xiii) ODA is not a form of charity. In many cases ODA provides
an important long-term service for the tax payers in donor countries
themselves. By addressing urgent social needs, particularly the
need to eradicate poverty, ODA can play an important role in avoiding
potentially dangerous social dislocation which, in turn, can lead
to national and regional conflicts. ODA, as shown above, can play
a crucial role in ensuring that all countries join efforts aimed
at addressing global environmental problems which, otherwise,
can not be effectively dealt with by developed countries acting