Public spending cuts have become a recurring theme throughout 2024 as governments tighten their budgets under mounting domestic economic and political pressures. Official Development Assistance (ODA), or foreign aid, has consequentially become a prime target on the budgeting chopping block. 

Even Europe’s usually reliable heavyweight donors are scaling back, signaling a looming funding crisis for global development at a time when need and the very crises ODA aims to address only grow more urgent.

It’s critical for all of us to understand both the terminology and the trends behind this life-giving aid, so that we can hold governments accountable and know exactly what these cuts mean for millions in need. Let’s get into it. 

First — Let’s Define ‘ODA’

ODA stands for Official Development Assistance, or aid provided by wealthier nations to lower-income countries. It’s the top source of foreign aid around the world. To qualify as ODA, funds must support social and economic development, which can include building up healthcare, education, infrastructure, or climate resilience (commercial ventures and military aid don’t count). 

This aid can either be bilateral (given directly between countries) or go to multilateral funds (which distribute resources around the world), including global development banks like the World Bank, or more regionally focused ones such as the Asian Infrastructure Investment Bank. It could also include multilateral institutions such as Gavi, the Vaccine Alliance, which is currently on a mission to raise a cool $9 billion to vaccinate 500 million children over the next five years. 

Secondly, unlike standard loans, ODA must come with few strings attached, including below-market interest rates and generous repayment plans. ODA must also include a minimum “grant element”, or a certain amount that doesn’t need to be repaid at all. This helps ensure ODA remains effective as a tool to tackle global poverty.  

Unpacking the Data

Now let’s dive into the numbers. The Organization for Economic Co-operation and Development (OECD), which tracks ODA, has recommended since the 1970s that donors allocate at least 0.7% of their Gross National Income (GNI) to aid. However, this target remains mostly aspirational. Only six countries — Norway, Luxembourg, Sweden, Germany, Denmark, and the Netherlands — have ever met it, and only five will likely have done so in 2023. 

Despite this, if you just look at the stats, total ODA looks to be on the rise: Countries reported a record $223.7 billion in 2023. While this figure appears impressive at first, it conceals some complicated underlying truths. A substantial portion came from funding to just one country, Ukraine, which received nearly 1/10 of total ODA flows following Russia’s 2022 invasion. Much can also be attributed to countries spending more on so-called in-donor refugee costs (IDRC), or money spent on housing and caring for refugees who arrive within a country’s borders, which is now counted as foreign aid under OECD rules. While refugee support is undeniably vital, reallocating ODA in this way creates a loophole that undermines its primary purpose of boosting development abroad.

To understand why countries are getting more stingy when it comes to aid, let’s look at three historically strong donors — the UK, France, and Germany — and unpack the dynamics shrinking their usual generosity. 

The UK: Penny Wise, Pound Foolish

Once a leader in global development, the UK has sharply cut its aid in the wake of a struggling, post-Brexit economy. This downward trend took an even sharper turn in 2020 when it cut ODA spending to 0.5% of GNI, citing the economic fallout from COVID-19.

Labour’s return to power this summer sparked hopes for a policy reversal. Prime Minister Keir Starmer championed an election manifesto promising to restore the 0.7% target “as soon as fiscal circumstances allow.” Yet Labour’s first proposed budget dashed these dreams, cementing the 0.5% target until 2030 and cutting nearly £700 million from ODA without a plan to reach any of its pre-election goals.

What’s worse, in 2023, IDRC consumed 28% of the UK’s total ODA budget — a higher cost and proportion than any other G7 nation. Excluding this, its aid will drop to just 0.36% of GNI, a dismal 17-year low. 

Despite these broader aid cuts, the UK announced a sizable £1.98 billion contribution over three years to the World Bank’s International Development Association (IDA), which provides essential financing to the world’s 78 lowest-income countries. It’s an extremely welcome move, indicating the government does recognize the importance of global aid — even if it doesn’t let them off the hook for shirking their responsibilities to overall ODA. 

France: Vive la Solidarité?

France’s relationship with aid has been a rollercoaster. President Emmanuel Macron initially championed an ambitious aid agenda, even proposing cementing the 0.7% GNI target into French law by 2025. However, under the weight of a ballooning €3.2 trillion public deficit, those dreams have been quietly abandoned.

To ease this debt, French Prime Minister Michel Barnier put forward an austere budget with a proposed €1 billion public spending cut, including aid, by 2025. It’s the third time in just two years that France has sought cutting ODA. The budget sparked an outcry across the political spectrum and shocked aid advocates. Oxfam France criticized the move as “savings at the expense of the needs of the world's poorest.”

These cuts would disproportionately affect Africa, a historic focus of French development efforts and the region that most benefits from ODA. This budget was put in jeopardy however after a sudden no-confidence vote collapsed the French government, forcing Barnier to resign. It remains to be seen if Macron, a highly unpopular president, will be able to appoint a new prime minister to quickly pass the budget and avert an economic crisis. Stay tuned. 

Germany: Retreating Inward

Germany is usually a juggernaut when it comes to aid as the world’s second-largest donor after the U.S. But even Europe’s economic powerhouse isn’t immune to the austerity wave. 

This year, the government unveiled plans to slash €4.8 billion from its development and humanitarian spending. The Federal Ministry for Economic Cooperation and Development (BMZ) would lose nearly €1 billion in 2025, while humanitarian aid is set to be more than halved. Germany also underwhelmed by committing €1.6 billion to IDA this year — a flatline pledge compared to its last contribution in 2021 that, by failing to take inflation and exchange rate fluctuations into account, amounts to a de-facto cut. 

Why the abrupt shift? Germany is grappling with the rise of the far-right Alternative for Germany (AfD) party, which fiercely opposes foreign aid and champions nationalism (failing to acknowledge that global crises like climate change don’t exactly respect borders). For now, the German Parliament must still sign off on the budget, but recent political chaos means the timeline for a final decision remains unclear.

Is There Hope for Change?

There’s no denying it: budgets across Europe are shrinking. The European Commission proposed cutting €2 billion from its development spending. Likewise, the Netherlands’ new right-wing coalition government is aiming to trim its aid budget and cut funding for international civil society organizations by about two-thirds.

Fortunately, not all nations are following this trend. Norway remains a global leader, allocating an impressive 1% of GNI to ODA. Meanwhile, Denmark announced a 40% increase in its contribution to this year’s IDA replenishment. Countries such as Spain, Croatia, Latvia, and Poland have followed suit by increasing their pledges as well.

Other, typically smaller players are also stepping up. Southern European countries like Greece, Spain, and Portugal are steadily growing their impact. Collectively, countries in this region disbursed $12 billion in development aid in 2022 — a notable 22% increase from the year before.

Who Really Pays the Price for Aid Cuts?

Reversing aid’s decline requires renewed political will to recognize ODA’s essential role in tackling global challenges. After all, aid isn’t a handout — it’s an investment in a healthier, safer, more prosperous world for all. 

As crises multiply — from the climate emergency to spiraling conflicts in Ukraine, the Middle East, and Sudan — the need for robust ODA has never been greater. Cutting foreign aid today ignores the long-term benefits of ODA. Its cost can’t be measured in euros or pounds, but in the number of lives impacted — and that’s a price no one should be willing to sacrifice.