08/12/2017 - Finland has a good track record of providing aid to the world’s neediest countries and supporting international development efforts, yet 2016 saw sharp cuts to Finnish aid flows. Setting a clear timeline to restore its foreign aid budget will be key for Finland to continue making an impact with its aid programme, according to a new OECD Review.
The latest DAC Peer Review of Finland says that a 38% annual cut to the country’s aid budget over 2016-20, with additional reductions planned for 2018-20, have pushed Finland further behind an international target to provide 0.7% of gross national income (GNI) as official development assistance (ODA). Finland’s net ODA dropped in 2016 to USD 1.06 billion, or 0.44% of GNI, from 0.59% in 2014 and 0.55% in 2015, the lowest level since 2007.
On the other hand, the Review notes that Finland’s support for the funding of private sector instruments has increased, making up in part for the drop in ODA with funding that will not affect public expenditure and reflecting Finland’s commitment to the 2030 global aid agenda.
“We are glad to see Finland actively leveraging private finance for development, however it is important to uphold public obligations,” said OECD Development Assistance Committee (DAC) Chair Charlotte Petri Gornitzka, presenting the Review in Helsinki. “We are ready to provide any support Finland needs to get its aid flows back on track as its economy recovers.”
To make the most of more limited development resources, the Review recommends that Finland put together a comprehensive picture of all of its investments – grants, blended finance and equity – in long-term partner countries and use that for planning.
The top five recipients of Finnish aid in 2015 were Kenya, Tanzania, Afghanistan, Ethiopia and Nepal, home to some of the world’s poorest people along with Finland’s other long-term partner countries, Mozambique, Somalia, Zambia and Myanmar. Until last year’s budget cuts, Finland stood alongside Denmark, Luxembourg, Norway, Sweden and the UK as the only DAC members meeting an international goal to provide 0.2% of GNI as aid to least-developed countries. Finland also has a strong track record on providing humanitarian aid.
The Review says Finland fully implemented four and partially implemented six out of 13 recommendations in a 2012 Peer Review. Among changes, Finland made adjustments to speed up the disbursement of emergency humanitarian funds. The new Review also noted the importance of adhering to internationally agreed principles of aid effectiveness and to remove conditions that tie aid to donor country companies.
Each DAC member is reviewed every five years in order to monitor its performance, hold it accountable for past commitments and recommend improvements. Reviews use input from officials in the Review country and partner countries – Kenya for this Review – as well as civil society and the private sector. Read more on DAC Peer Reviews.
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