ODA DECLINES SHARPLY IN REAL TERMS

12:04 PM Jun 17, 1996

ODA DECLINES SHARPLY IN REAL TERMS
Geneva 17 June (TWN) -- Official Development Assistance (ODA) from the OECD countries fell sharply in 1995, with 16 of the 21 Development Assistance Committee (DAC), including all the G-7 registering a fall of ODA as a proportion of their GNP, the OECD DAC Committee said Monday.

Based on preliminary reporting of DAC members, a press release announced that DAC members had provided a total of $59 billion in ODA in 1995 compared to $59.2 billion in 1994.

With the low valuation of the dollar in 1995, this small decline masked a fall of 9.3% in real terms from the 1994 figure, DAC said.

It amounted to just 0.27% of the combined GNP of DAC members -- the lowest ratio recorded since the UN's adoption of 0.7% target in 1970.

The preliminary report, DAC said, did not include information on official aid provided to the countries in the former socialist bloc (Belarus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Moldova, Poland, Romania, Russia, Slovak Republic and Ukraine).

The ODA effort showed changes in the overall ranking of aid donors, with the US moving from second to the fourth position, behind Japan, in terms of the absolute amounts of aid flows.

Japan, now ranking first in terms of aid provided $14.48 billion, but as a percentage of GNP was just 0.28% compared to the average of 0.27% for all DAC countries. The US aid, at $7.30 billion was just 0.10% of the GNP, at the bottom of the league.

However, net receipts of private capital - led by bank leading and FDI -- rose in 1995 to $170 billion or twothirds of total net reported resource flows. While breakdown of its geographical distribution won't be available for some time, the DAC communique says in terms of past patterns there is an overwhelming concentration of this flow in some 20 large or middle-income developing countries.

The private flows accounted for 67% of all capital inflows to the developing world in 1995. Net FDI continued the increase observed over the last three years and rose to some $60 billion in the year.

Industrial development, increasingly skilled workforce and attraction of joint venture schemes are drawing capital to Asia and Latin America, DAC says.

International bank lending also continued to rise. The data for 1994 now seem to show larger flows than earlier reported -- $42.6 billion. This continued in 1995, with a flow of $75 billion.

But the major part of these have been in short-term lending to Thailand and Korea, and in part due to general rise in economic activity in Asia. But after the Mexican crisis in early 1995, flows to Latin America were cut back in the first half, but recovered and continued their rise compared to 1994.