The official system for how official development assistance (ODA) is monitored, measured and reported is being modernised. As part of this process, rules on how loans are accounted for in ODA are changing.
Currently the full value of concessional loans from donors is counted as ODA and capital repayments on old ODA loans are then subtracted from the net ODA measure. It is this net ODA figure that is commonly used to assess donors’ performance against ODA targets, such as the commitment to give 0.7% of GNI as ODA.
After 2018 only a proportion of concessional loans will be counted as ODA, and repayments will no longer be deducted from the ‘headline’ measure. The proportion of each loan that will be counted as ODA will depend on how concessional the terms of that loan are – the more concessional, the higher the proportion of the loan will be counted. These new rules will result in significant changes to the level of ODA reported by some donors.
This briefing explains the changes in detail and, using real life examples, investigates how these they will affect the net ODA figure that is used to assess donors’ performance against ODA targets.