Development Co-operation Directorate (DCD-DAC)

Extracts from the 2006 Progress Report on Untying Aid

 

Implementation of the coverage provisions

Previous progress reports noted that Members' implementation of the coverage provisions of the Recommendation had, in general, been rapid and comprehensive. In addition, both prior to and since its entry into force, most Members have untied their aid beyond the requirements of the Recommendation.

 

Ex ante notifications of untied aid offers

  • ODA flows to the LDCs:  In 2004 the volume of bilateral ODA to the LDCS doubled from the 1999-2001 baseline average.
  • Impact:  The volatility of debt forgiveness from year to year can hide the effect of new commitments of ODA to least developed countries. Categories covered by the Recommendation, excluding debt forgiveness, show a steady upward trend in volume in 2004 from last year.
  • Effort-sharing:  Promoting a reasonable balance among DAC Member governments in their efforts to untied aid is an integral part of the Recommendation. The initial positions of Members and their evolution over time with respect to agreed reference points are captured in the Reference Indicator Matrix shown in Annex 1 of the 2006 Progress Report.
  • Transparency: A major issue of the Recommendation is transparency of Members' untied aid programmes. Provisions for transparency are covered through the OECD Bulletin Board which publishes freely procurement opportunities in developing countries issued by DAC Member governments' aid agencies.
  • Ex-ante notifications:  Over 300 Untied Aid Offers were posted to the Bulletin Board in 2005 amounting to a total of USD 9.5 billion in contracts for the attention of the international business community.
  • Contract awards: Of the contracts awarded in 2004 almost 61% were won by companies located outside the donor territory fo which 42% went to companies located in developing countries.

 

Untying: next steps

In response to calls from major international conferences to increase the share of aid that is untied the DAC has discussed approaches to extend the benefits of untied aid, specifically in terms of improved aid effectiveness and greater value for money.

 

Members agreed in early 2006 to the elimination of the thresholds criteria from the Recommendation, previously set at SDR 700 000 or roughly to US$ 1 million. The abolition of thresholds increases the number of aid activities covered by the Recommendation and should increase the volume of aid that is untied to the LDCs and also enhance effort sharing among Members. Efforts in other areas are also being considered.

 

 

Related Documents

 

Untying aid: The right to choose