OPTIONS FOR MODERNISING THE ODA MEASURE

Expert Reference Group on Development Finance, 23-24 January 2014

Julia BennManager, Statistical Policy, Analysis and Engagement UnitDevelopment Co-operation Directorate

Outline of the presentation

Option 1: Focused ODA

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Option 2: New ODA2

Option 3: Updated ODA

! List of ODA Recipients session 2!! Concessionality session 3!!! Total official support for development session 4

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N.B.

Option 1: Focused ODA

Excludes from reporting in-donor expenditures that do not result in, or relate to, flows to developing countries

Reflects budgetary expenditures incurred by the government in development co-operation

Include in the broader measure (TOSD) types of support removed from ODA, face value of non-grant instruments (and more generally outflows from DFIs)

Capture entire cash flow in data on developing countries’ resource receipts

Option 2: New ODA

Reflects budgetary effort of development co-operation

For non-grant instruments, only includes the grant equivalent (instead of the face value) of the flow • Apply risk-adjusted discount rate implications on

debt relief Tightens eligibility of in-donor costs

Coverage of the broader measure and developing countries’ resource receipts similar to option 1

Option 3: Updated ODA

Maintains ODA measurement on a cash basis, but modernising it on a number of items:

– Revises concessionality assessment to reflect the prevailing market rate conditions (grant element threshold for ODA eligibility could also be revised)

– Gross disbursements (e.g. equity acquisitions counted at face value)

Guarantees not reflected in ODA but amounts mobilised included in the broader measure (if defined as « development finance resulting from official efforts ») 

Mismatch with ODA/GNI target

Scenarios (to be further elaborated)

Scenario 1 (focused ODA) = decline of 10% Scenario 2 (new ODA) = slight increase (2%) Scenario 3 (updated ODA) = increase of 9%

Complete assessment of the impact of each option would require a simulation over a number of years and additional data

Which option(s) would be fit for purpose?

Recalling that cash flow would be captured in TOSD and receipts, which option would best: measure provider effort (and « clean up » the

most controversial ODA items)? ensure fair comparisons between providers? incentivise market-like financing where

appropriate (and ensure that ODA is directed to where it is most needed )?

Which option would be credible from the viewpoint of: Partner countries? South-south providers?