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Reduction in Europe-wide aid budgets

in International Business

Reduction in Europe-wide aid budgets

The Eurozone debt crisis had led to cuts in government development aid to poor countries.

It is the first significant reduction for a decade led by two of the states worst affected by the crisis-Spain and Greece.

“As austerity bites across Europe, we can now see the impact it is having on life-saving aid programs,” it adds.

The report on the aid budget is published by the aid watchdog Data, as part of lobbying campaign by aid agencies amid EU leaders negotiating the next seven year European budget.

European countries account for over half of all global official development assistance.

By far the biggest three donors are Germany ($14bn – 0.39% of national income), UK ($13.5 bn – 0.55%) and France ($12 bn – 0.42%)

One of the authors of the Data report, Adrian Lovett, said the countries that would be worst affected by any prolonged aid cuts were poor African states

The concept of aid has always received criticism. The critics argue that provision of aid reduces the incentive for the beneficiaries to work. Moreover, the government would not bother to carry out public services, when organizations like Medecins sans Fronteires or Oxfam runs infrastructure projects.

The critics arguet that infrastructure investment, commodities exports or liberalization have been far more significant than aid.  India and China are two of the countries that are not getting richer because of aid.

Adrian Lovett, one of the authors of the report, uses Ghana as an example to prove that aid can be a source for economic development.

Ghana, through smart leadership at the national level and better coordination by the various donors, has been able to manage the inflow of aid properly and allocate it for the right purposes.

“So Ghana is now on the brink of ending its dependence on development cash. That’s exactly the route we see many African countries potentially taking,” says Lovett.

Adrian Lovett is the Europe executive director at One, the anti-poverty campaign group.

Tags assigned to this article:
aideuropean crisisEurozone Crisis

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