Aid and Debt: The Challenge at Gleneagles

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Aid and Debt The Challenge at Gleneagles

• Glasgow University Pre-G8 Conference
• Duncan Green, Head of Research, Oxfam GB

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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

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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

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Aid levels up, but generosity downNet ODA,
million and as a percentage of GNI, 1960-2004,
OECD countries, 2003 prices
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Progress on meeting the 0.7 targetNet ODA as
of GNI, OECD donors, 2004 preliminary data
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Making aid work better for poverty reduction

• Too many donors
• Poor coordination eg on allocation
• Conditionality undercutting ownership
• Too slow!

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Effective aid volumesNet ODA by purpose, 2002
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Expect delays in aid deliveryResponses to the
question Generally speaking, how late do the
donors aid disbursements arrive?
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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.)

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Corruption is not an excuse for inaction on
aid..

• When? 1947
• About? The Marshall Plan

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What we got on debt from G8 Finance Ministers

• 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)
• Doesnt cover IDB

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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, dont forget trade