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close this bookCERES No. 058 (FAO Ceres, 1977, 50 p.)
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Development aid: UNCTAD is trying to sort it out

Official development aid (ODA) by the industrialized countries to the poorer countries was $13.6 thousand million in 1975, or 0.36 percent of their GNP. Their financial contributions were valued at $39.9 thousand million (1.05 percent of GNP). Being official figures scrupulously prepared by the Development Assistance Committee (DAC) of OECD, they seem to be above suspicion. But do they really reflect the truth ? Not altogether. Not that there is any trickery. But our viewpoint is selective, with a tendency to narrow the field of analysis. Our statistics relate to net official development aid or net financial contributions, i.e., gross payments less the amortization corresponding to reimbursement of principal. However, reimbursement of interest has been completely ignored. Even if it is modest for official aid granted on liberal conditions, such repayment could be considerable for all private aid: commercial credits, banking credits, investments and loans on the financial or Eurodollar markets. Payments by way of interest to the private sector can be estimated at $5 or $6 thousand million in 1976, for a debt valued at $60 thousand million, which would have carried a 10 percent interest-a rate chosen arbitrarily, but not too far from reality. Our statistics haughtily disdain these reimbursements which are, however, far from negligible.

A group of experts met recently, at the instigation of the United Nations Conference on Trade and Development (UNCTAD), in an attempt to approach reality.

An adjustment seems to be necessary, the more so since the developing countries have turned increasingly to banking credits and financial markets in recent years, and their share of indebtedness in this connection has risen to about 55 percent. No easy problem since, according to DAC, the charge (principal and interest) of a commercial debt represents about $23 thousand million per annum as against a charge of $2.6 thousand million by way of ODA.

Such a readjustment would highlight the cost of private aid. Has anyone enough political courage? Enough to come closer to the truth? No. It would also be interesting to know the transfers of assets from the poorer countries to the industrialized countries and, for example, the flight of capital toward the coffers of the Swiss banks; and what the poorer countries borrow on the Eurodollar market, where operations are often covered by a thick fog. The oil-producing countries should make their intentions clearer, and also their operations, which represent about 15 percent of financial aid to developing countries.

The group of experts also considered to what extent the aid programmes of industrialized countries' governments are in conformity with the objectives fixed for the Second Development Decade (1971-80).

Without questioning the quantitative objectives (1 percent of GNP of the donor country for financial transfers, of which 0.7 percent should be in the form of ODA), new orientations for aid policy are being outlined. Until now, it has usually been the means for a minority to improve its standard of living. Henceforth, aid should aim to satisfy the basic needs of the largest number in the field of education, food and health; it should also set up small, labour-intensive industries providing jobs on the spot and products to meet local demand.