OPTIONS FOR MODERNISING THE ODA MEASURE Expert Reference Group on Development Finance, January 2014 Julia Benn Manager, Statistical Policy, Analysis and Engagement Unit Development Co-operation Directorate

Outline of the presentation Option 1: Focused ODA 3 Option 2: New ODA 2 Option 3: Updated ODA ! List of ODA Recipients  session 2 !! Concessionality  session 3 !!! Total official support for development  session 4 1 N.B.

Option 1: Focused ODA  Excludes from reporting in-donor expenditures that do not result in, or relate to, flows to developing countries  Reflects budgetary expenditures incurred by the government in development co-operation  Include in the broader measure (TOSD) types of support removed from ODA, face value of non-grant instruments (and more generally outflows from DFIs)  Capture entire cash flow in data on developing countries’ resource receipts

Option 2: New ODA  Reflects budgetary effort of development co- operation  For non-grant instruments, only includes the grant equivalent (instead of the face value) of the flow Apply risk-adjusted discount rate  implications on debt relief  Tightens eligibility of in-donor costs  Coverage of the broader measure and developing countries’ resource receipts similar to option 1

Option 3: Updated ODA  Maintains ODA measurement on a cash basis, but modernising it on a number of items: – Revises concessionality assessment to reflect the prevailing market rate conditions (grant element threshold for ODA eligibility could also be revised) – Gross disbursements (e.g. equity acquisitions counted at face value)  Guarantees not reflected in ODA but amounts mobilised included in the broader measure (if defined as « development finance resulting from official efforts »)  Mismatch with ODA/GNI target

Scenarios (to be further elaborated)  Scenario 1 (focused ODA) = decline of 10%  Scenario 2 (new ODA) = slight increase (2%)  Scenario 3 (updated ODA) = increase of 9%  Complete assessment of the impact of each option would require a simulation over a number of years and additional data

Which option(s) would be fit for purpose?  Recalling that cash flow would be captured in TOSD and receipts, which option would best:  measure provider effort (and « clean up » the most controversial ODA items)?  ensure fair comparisons between providers?  incentivise market-like financing where appropriate (and ensure that ODA is directed to where it is most needed )?  Which option would be credible from the viewpoint of:  Partner countries?  South-south providers?