03 April 2006

British ministers and their European counterparts are today urged to change how they report on aid amid claims that some European countries are masking their failure to deliver additional money to the world’s poorest people by double counting debt relief as aid money. 

In 2005 the UK and the EU promised billions of euros in additional aid to poor countries. But non-governmental organisations say they must make sure that it does result in new money to cut poverty. Britain's latest figures, announced on Friday (31 March), suggest that aid may actually have fallen between 2004 and 2005 if debt relief for Iraq and Nigeria is excluded. This debt relief, at £1.8bn, accounted for almost one third of headline UK aid last year, despite delivering little in terms of new resources for development.

Campaigners argue that while cancelling debts is crucial for developing countries, the UK must report their aid in a transparent way and lead the way for Europe to do the same.

New research from NGOs including ActionAid, Oxfam and the network BOND, in a coalition representing hundreds of groups across Europe, shows that last year €12.5 billion of the EU's aid, roughly a third of total assistance, brought negligible sums of new money to reduce poverty.

Most of this money went instead on cancellation of debts which were not being serviced, housing refugees in EU countries and educating foreign students in European universities.

In a briefing launched before EU foreign ministers' vital talks next week on whether the EU will meet its aid targets, the coalition criticised key member states, including Britain, France and Germany, for inflating their aid figures.

It called on their governments to live up to their promises and demanded new rules to ensure that debt cancellation does not come at the expense of new aid for developing countries.

Last year, European governments made an historic commitment to substantially increase their aid for the poorest countries and agreed to reach the UN target of allocating 0.7% of their national income to fight extreme poverty by 2015.

The briefing praises a few countries, such as Sweden and Luxembourg, for their high aid levels.

The charge comes on the eve of a special meeting of the development assistance committee of the Organisation for Economic Cooperation and Development in Paris, where official aid figures for 2005 will be discussed.

Dragan Nastic, from BOND, said: "Some European countries, including the UK, are artificially inflating their aid figures, including items that provide little in terms of new funding for schools and hospitals. We are challenging these governments to clean up their aid reporting and meet their targets with genuine new money."

Romilly Greenhill, of ActionAid, said: "What developing countries need is more aid money to save lives and not for donors to save face."

Key findings include:

• The UK, France, Germany and Italy together counted a staggering €8.47 billion for debt relief for  Iraq and Nigeria as part of their official development assistance.
• Austria, which currently chairs the EU presidency, is likely to have inflated its aid figures by as much as 50% in 2005.
• Italy is set to miss its aid target, and the country’s official ODA level is close to new member states like Malta, Slovenia and the Czech Republic.

Phil Bloomer, from Oxfam, said: "The credibility of the EU as a world leader in giving aid to poor countries is at stake. Non-governmental organisations are watching closely in all countries to hold their governments to their pledges."

The coalition says that while technically permitted under OECD rules, EU governments’ insistence on accounting for this debt cancellation in their ODA figures contravenes the United Nations 2002 agreement in Monterrey. The agreement calls for debt cancellation to be funded additionally to official development assistance.