Denmark is a top aid donor but reduced budget and refugee costs pose risks | WPN World People News

Denmark has long been a generous provider of development aid, especially to the neediest countries, and is known for giving high-quality and flexible support. However, it faces significant challenges from a reduction of its aid budget and fast-rising refugee costs, according to a new OECD report.

The 2016 DAC Peer Review of Denmark notes that with an estimated 2015 aid budget of USD 2.6 billion, equating to 0.85% of its gross national income, Denmark is one of a handful of countries to regularly surpass an international donor commitment to provide at least 0.7% of GNI in official development assistance (ODA). In 2014, Denmark sent the equivalent of 0.26% of its GNI as aid to the poorest countries, well above a UN target of 0.15-0.20%.

Yet Danish ODA is programmed to fall back to 0.7% of GNI from 2016. This budget reduction, along with staff cutbacks, organisational changes and an expected tripling in spending on refugees in Denmark in 2016 to the equivalent of 30% of the country’s gross ODA, will put pressure on development programmes and aid planning.

“Denmark has shown a strong commitment to poverty reduction and humanitarian aid over the years, as well as providing guidance on human rights and gender equality for the 2030 Agenda for Sustainable Development,” said OECD Acting Director of Development Mario Pezzini. “The challenge now will be to ensure that a smaller aid budget and fast-rising refugee costs do not derail this excellent record.”

A draft for a new development strategy set to be discussed by the Danish parliament later this year strengthens coherence and integration between humanitarian and development aid. However, Denmark does not currently address where new funds for refugees might come from.

The new development strategy should also ensure funding allocations to multilateral bodies are aligned with objectives, the Review says. Denmark is a valued partner to multilateral organisations, yet the share of its core aid contributions going to them has declined from 70% of all multilateral allocations in 2010 to 45% in 2014. This trend is set to continue, as resources allocated to their general budget are shifted to fund specific thematic projects.

The Review also says Denmark could do more to balance its commercial objectives with the poverty focus of its development co-operation. In particular, the monitoring of the leveraging effect and development impact of its aid flows could be improved.

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 country concerned and a partner country – Ghana for this Review – as well as civil society and the private sector.

Source: Organisation for Economic Co-operation and Development