Bookmark this page: www.oecd.org/dac/glossary
Aid activities include projects and programmes, cash transfers, deliveries of goods, training courses, research projects, debt relief operations and contributions to non-governmental organisations.
Repayments of principal on a loan. Does not include interest payments.
The combination of Official Development Assistance, whether grants or loans, with any other funding to form finance packages. Associated Financing packages are subject to the same criteria of concessionality, developmental relevance and recipient country eligibility as tied aid credits.
See Total Receipts.
The entitlement of a creditor to repayment of a loan; by extension, the loan itself or the outstanding amount thereof.
A firm obligation, expressed in writing and backed by the necessary funds, undertaken by an official donor to provide specified assistance to a recipient country or a multilateral organisation. Bilateral commitments are recorded in the full amount of expected transfer, irrespective of the time required for the completion of disbursements. Commitments to multilateral organisations are reported as the sum of (i) any disbursements in the year reported on which have not previously been notified as commitments and (ii) expected disbursements in the following year.
A measure of the "softness" of a credit reflecting the benefit to the borrower compared to a loan at market rate. (cf. Grant Element). Technically, it is calculated as the difference between the nominal value of a tied aid credit and the present value of the debt service as of the date of disbursement, calculated at a discount rate applicable to the currency of the transaction and expressed as a percentage of the nominal value.
In DAC publications, flow data are expressed in US dollars (USD). To give a truer idea of the volume of flows over time, data can be presented in constant prices and exchange rates, with a reference year specified. This means that adjustment has been made to cover both inflation in the donor’s currency between the year in question and the reference year, and changes in the exchange rate between that currency and the United States dollar over the same period. A table of combined conversion factors (cf. Deflators) is provided here. Further information on DAC deflators may be found here.
COUNTRY PROGRAMMABLE AID (CPA)
Country Programmable Aid (CPA) reflects the amount of aid that can be programmed by the donor at partner country level.
CPA is defined through exclusions, by subtracting from gross ODA aid that is unpredictable by nature (humanitarian aid and debt forgiveness and reorganisation), entails no cross-border flows (development research in donor country, promotion of development awareness, imputed student costs, refugees in donor country and administrative costs), does not form part of co-operation agreements between governments (food aid and aid extended by local governments in donor countries), is not country programmable by the donor (core funding to national NGOs and International NGOs), or is not susceptible for programming at country level (e.g. contributions to Public Private Partnerships, for some donors aid extended by other agencies than the main aid agency).
CREDITOR REPORTING SYSTEM (CRS)
The DAC database on individual aid activities.
DEVELOPMENT ASSISTANCE COMMITTEE (DAC)
The committee of the OECD which deals with development co-operation matters. Currently there are 26 members of the DAC: Australia, Austria, Belgium, Canada, the Czech Republic, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Japan, Korea, Luxembourg, the Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, the United Kingdom, the United States and the European Commission.
DAC LIST OF ODA RECIPIENTS
The DAC list of ODA Recipients shows developing countries and territories eligible for receiving Official Development Assistance (ODA). The list is designed for statistical purposes, not as guidance for aid or other preferential treatment. In particular, geographical aid allocations are national policy decisions and responsibilities. The list is revised by the DAC every 3 years. For further information please click here .
(also Restructuring) Any action officially agreed between creditor and debtor that alters the terms previously established for repayment. This may include forgiveness (extinction of the loan), or rescheduling which can be implemented either by revising the repayment schedule or extending a new refinancing loan.
The DAC has developed deflators for resource flows that convert data in current dollars (i.e. using the exchange rates prevailing in the year of the flow) to data in constant dollars (i.e. to dollars with the purchasing power they had in a recent reference year). The methodology is explained here and the deflators are available here.
The release of funds to or the purchase of goods or services for a recipient; by extension, the amount thus spent. Disbursements record the actual international transfer of financial resources, or of goods or services valued at the cost to the donor. In the case of activities carried out in donor countries, such as training, administration or public awareness programmes, disbursement is taken to have occurred when the funds have been transferred to the service provider or the recipient. They may be recorded gross (the total amount disbursed over a given accounting period) or net (the gross amount less any repayments of loan principal or recoveries on grants received during the same period). It can take several years to disburse a commitment.
The systematic and objective assessment of an on-going or completed project, programme or policy, its design, implementation and results. The aim is to determine the relevance and fulfillment of objectives, development efficiency, effectiveness, impact and sustainability. An evaluation should provide information that is credible and useful, enabling the incorporation of lessons learned into the decision–making process of both recipients and donors.
Evaluation also refers to the process of determining the worth or significance of an activity, policy or program. An assessment, as systematic and objective as possible, of a planned, on-going, or completed development intervention.
Note: Evaluation in some instances involves the definition of appropriate standards, the examination of performance against those standards, an assessment of actual and expected results and the identification of relevant lessons.
See also the Glossary of Key Terms in Evaluation and Results Based Management.
Loans for the purpose of trade and which are not represented by a negotiable instrument. They may be extended by the official or the private sector. If extended by the private sector, they may be supported by official guarantees.
See Grant Element.
Transfers made in cash, goods or services for which no repayment is required.
Reflects the financial terms of a commitment: interest rate, maturity and grace period (interval to first repayment of capital). It measures the concessionality of a loan, expressed as the percentage by which the present value of the expected stream of repayments falls short of the repayments that would have been generated at a given reference rate of interest. The reference rate is 10% in DAC statistics. This rate was selected as a proxy for the marginal efficiency of the domestic investment, i.e. as an indication of the opportunity cost to the donor of making the funds available. Thus, the grant element is nil for a loan carrying an interest rate of 10 percent; it is 100 per cent for a grant; and it lies between these two limits for a soft loan. If the face value of a loan is multiplied by its grant element, the result is referred to as the grant equivalent of that loan. (cf. Concessionality Level) [Note: the grant element concept is not applied to the market-based lending operations of the multilateral development banks. Instead, these are classified as concessional if they include a subsidy (“soft window” operations) and non-concessional if they are unsubsidised (“hard window” operations)].
See Annex 1 of the CRS Reporting Directives and the grant element calculator.
A transaction in which the donor country retains formal title to repayment but has expressed its intention in the commitment to hold the proceeds of repayment in the borrowing country for the benefit of that country.
IMPUTED MULTILATERAL FLOWS
Geographical distribution of donors' core contributions to multilateral agencies, based on the geographical breakdown of multilateral agencies' disbursements for the year of reference. Further information on the OECD’s methodology to calculate imputed multilateral flows may be found here.
LOANS (ALSO CREDITS)
Transfers for which repayment is required. Only loans with maturities of over one year are included in DAC statistics. Data on net loans include deductions for repayments of principal (but not payment of interest) on earlier loans. This means that when a loan has been fully repaid, its effect on total net ODA over the life of the loan is zero.
Used of loans with an original or extended maturity of more than one year.
The date at which the final repayment of a loan is due; by extension, a measure of the scheduled life of the loan.
In DAC statistics, those international institutions with governmental membership which conduct all or a significant part of their activities in favor of development and aid recipient countries. They include multilateral development banks (e.g. World Bank, regional development banks), United Nations agencies, and regional groupings (e.g. certain European Union and Arab agencies). A contribution by a DAC member to such an agency is deemed to be multilateral if it is pooled with other contributions and disbursed at the discretion of the agency. Unless otherwise indicated, capital subscriptions to multilateral development banks are presented on a deposit basis, i.e. in the amount and as at the date of lodgment of the relevant letter of credit or other negotiable instrument. Limited data are available on an encashment basis, i.e. at the date and in the amount of each drawing made by the agency on letters or other instruments.
Aid activities financed from multilateral development institutions' regular budgets. Projects executed by multilateral organizations on behalf of donor countries are classified as bilateral flows, since it is the donor country that effectively controls the use of the funds.
The total amount disbursed over a given accounting period, less repayments of loan principal during the same period, no account being taken of interest.
In DAC statistics, net flow minus payments of interest.
OFFICIAL DEVELOPMENT ASSISTANCE (ODA)
Grants or loans to countries and territories on the DAC List of ODA Recipients (developing countries) and to multilateral agencies which are: (a) undertaken by the official sector; (b) with promotion of economic development and welfare as the main objective; (c) at concessional financial terms (if a loan, having a grant element of at least 25 per cent). In addition to financial flows, technical co-operation is included in aid. Grants, loans and credits for military purposes are excluded. Transfer payments to private individuals (e.g. pensions, reparations or insurance payouts) are in general not counted.
OFFICIAL DEVELOPMENT FINANCE (ODF)
Used in measuring the inflow of resources to recipient countries: includes (a) bilateral ODA, (b) grants and concessional and non-concessional development lending by multilateral financial institutions, and (c) Other Official Flows for development purposes (including refinancing loans) which have too low a grant element to qualify as ODA.
OFFSHORE BANKING CENTRES
Countries or territories whose financial institutions deal primarily with non residents.
OTHER OFFICIAL FLOWS (OOF)
Transactions by the official sector with countries on the DAC List of ODA Recipients which do not meet the conditions for eligibility as Official Development Assistance, either because they are not primarily aimed at development, or because they have a grant element of less than 25 per cent.
PARTIALLY UNTIED AID
Official Development Assistance for which the associated goods and services must be procured in the donor country or among a restricted group of other countries, which must however include substantially all aid recipient countries. Partially untied aid is subject to the same disciplines as tied aid credits and associated financing.
Consist of flows at market terms financed out of private sector resources (i.e. changes in holdings of private long-term assets held by residents of the reporting country) and private grants (i.e. grants by non-governmental organizations and other private bodies, net of subsidies received from the official sector).
In data presentations which focus on the outflow of funds from donors, private flows other than foreign direct investment are restricted to credits with a maturity of greater than one year and are usually divided into:
PURPOSE OF AID
The DAC statistics on the purpose of aid cover three dimensions: the sector of destination, the form or type of aid, and the policy objective(s) of aid. Data are collected on individual commitments in the Creditor Reporting System (CRS), and in the form of annual commitment aggregates in the DAC Questionnaire.
A 5-digit code used for recording information on the purpose (sector of destination or other purpose – cf. Sector Classification) of individual aid activities. Purpose codes identify the specific area of the recipient’s economic or social structure the transfer is intended to foster. See list of Purpose codes.
SECTOR ALLOCABLE AID
As only a portion of aid can be allocated to sectors, when measuring shares of aid to specific sectors it is recommended to limit the denominator to aid that can be apportioned. Otherwise there is an implicit assumption that none of the aid unallocable by sector benefits the specific sectors under review. Sector allocable contributions cover sectors 100 to 400 or purpose codes 11110 to 43082 of the list. Contributions not subject to allocation include general budget support, actions related to debt, humanitarian aid and internal transactions in the donor country.
The DAC uses a sector classification specifically developed to track aid flows and to permit measuring the share of each sector (e.g. health, energy, agriculture) or other purpose category "non-sector allocable aid" (e.g. general budget support, humanitarian aid) in total aid. The sector of destination is assigned by answering the question "which specific area of the recipient's economic and social structure is the transfer intended to foster". It does not refer to the type of goods or services provided. Each activity can be assigned only one purpose code. For activities cutting across several sectors, either a multi-sector code or the code corresponding to the largest component of the aid activity is used.
Used of loans with a maturity of one year or less.
Includes both (a) grants to nationals of aid recipient countries receiving education or training at home or abroad, and (b) payments to consultants, advisers and similar personnel as well as teachers and administrators serving in recipient countries (including the cost of associated equipment). Assistance of this kind provided specifically to facilitate the implementation of a capital project is included indistinguishably among bilateral project and programme expenditures, and not separately identified as technical co-operation in statistics of aggregate flows.
TERMS OF REPAYMENT
The terms of repayment of a loan may be the following:
Equal principal payments (EPP) denotes a fixed schedule of equal installments of principal adding up to the face value of the loan. Interest is charged on outstanding principal and the amount of individual service payments decreases with each payment of principal.
In the annuity method, each service payment is established as an equal amount, within which the interest component declines with time while the principal component increases.
means the loan is repaid in a single amount (principal and interest) at maturity
. If interest is paid at various earlier dates, then the repayment schedule is a particular case of equal principal payments and is reported under that category.
If the type of repayment does not correspond to any of the three above, the code "other" is used.
Official grants or loans where procurement of the goods or services involved is limited to the donor country or to a group of countries which does not include substantially all aid recipient countries. Tied aid loans, credits and associated financing packages are subject to certain disciplines concerning their concessionality levels, the countries to which they may be directed, and their developmental relevance so as to avoid using aid funds on projects that would be commercially viable with market finance, and to ensure that recipient countries receive good value.
The inflow of resources to aid recipient countries includes, in addition to ODF, official and private export credits, and long-term private transactions (see private flows). Total receipts are measured net of amortisation payments and repatriation of capital by private investors. Bilateral flows are provided directly by a donor country to an aid recipient country. Multilateral flows are channeled via an international organisation active in development (e.g. World Bank, UNDP). In tables showing total receipts of recipient countries, the outflows of multilateral agencies to those countries is shown, not the contributions which the agencies received from donors.
Describes amounts committed but not yet spent. See also commitment, disbursement.
Official Development Assistance for which the associated goods and services may be fully and freely procured in substantially all countries.
VOLUME (REAL TERMS)
See Constant Dollars.
Development Co-operation Directorate (DCD-DAC)
Methodological work - what is ODA, how is it counted and who qualifies for it?