Foreign aid hits record $ 161.2 billion during COVID

  • 2020 was a banner year for foreign aid, which reached $ 161.2 billion.
  • This was a 3.5% increase in real terms from 2019, due to additional spending to help developing countries fight the coronavirus pandemic.
  • But OECD Secretary-General Angel Gurría said more needed to be done to support vaccine deployment and tackle economic and social fallout.

2020 was a banner year for foreign aid, which reached a record high of $ 161.2 billion, according to the Organization for Economic Co-operation and Development (OECD).

That figure marked a 3.5% increase in real terms from the previous year, due to additional spending to help developing countries tackle the COVID-19 crisis, preliminary data showed.

Short-term support during the pandemic has focused on health systems, humanitarian aid and food security, the OECD said.

In the medium term, aid providers have indicated they will focus on making diagnostics and vaccines available to countries in need and offer support to address the economic and social repercussions of COVID-19.

But OECD Secretary-General Angel Gurría has warned that more needs to be done to help developing countries and that the global COVAX vaccine distribution facility is underfunded.

a graph showing foreign aid contributions in 2020

COVID-19 spending helped push foreign aid to an all-time high in 2020.

Image: OECD

$ 12 billion spent on COVID-19 activities

Early estimates show that members of the OECD’s Development Assistance Committee (DAC) spent $ 12 billion on COVID-19-related activities.

Some of this official development assistance (ODA) spending was new, while others were redirected to existing development programs, according to a survey carried out in April and May of last year.

The majority of providers have stated that they will not discontinue programs already in place.

Trade volume in developing countries down 8.5%

The increase in foreign aid came in a year when all other major income streams for developing countries – such as trade, foreign direct investment and remittances – fell due to the pandemic. Domestic resources have also come under increasing pressure.

The OECD estimates that total external private financing to developing countries fell by 13% in 2020, while the volume of trade fell by 8.5%.

The increase in ODA in 2020 was also partly due to an increase in loans from some donors. Some 22% took the form of loans and equity investments, compared to around 17% in previous years, with the remainder in the form of grants.

Some countries increased their aid budgets during COVID-19

Sixteen DAC countries increased their aid budgets, with the largest increases recorded in Canada, Finland, France, Germany, Hungary, Iceland, Norway, the Slovak Republic, Sweden and Switzerland.

Meanwhile, 13 countries have reduced their aid contributions – including Australia, Greece, Italy, South Korea, Luxembourg, Portugal and the United Kingdom.

G7 donors accounted for 76% of total ODA and DAC-EU countries 45%. Aid from EU institutions increased by 25.4% in real terms as they raised funds for COVID-19-related activities and increased sovereign lending by 136% in 2019.

More needed to help developing countries, OECD warns

“Governments around the world have provided $ 16 trillion in COVID stimulus, but we have only mobilized 1% of that amount to help developing countries cope with an unprecedented crisis in our lives,” Gurría said.

Donor governments must help developing countries with vaccine distribution, hospital services, as well as the incomes and livelihoods of the most vulnerable, in order to build “a true global recovery,” he said.

About Wanda Dufresne

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