The Center for Global Development (CGD), an international development think tank with a hub in London, has published a new blog exploring when the government should return to spending 0.7% of its gross national income (GNI) on official development assistance (ODA).
The government temporarily suspended its commitment in 2020 in the face of the economic impact of the COVID-19 pandemic on public finances, and it has stated that it will only return to the 0.7% commitment "when the fiscal situation allows". The government has failed to outline how it will decide this, despite repeated questioning. In the absence of a straight answer, the Center for Global Development has proposed three different potential scenarios for measuring "when the fiscal situation allows" that the government could use:
- Scenario 1 – Under this scenario, the government deficit would be used as the measurement. The CGD notes that historically, the UK has met the 0.7% commitment with a government deficit of 1.6% of gross domestic product (GDP), on average. By this measure, the UK could return to 0.7% in 2023 when the deficit is projected to be around 0.8% of GDP.
- Scenario 2 – Under this scenario, the measurement for when the UK could return to providing 0.7% of its GNI as ODA would be when the budget deficit is eliminated. The UK Chancellor of Exchequer, Rishi Sunak, has stated that this scenario is his intention. However, according to a projection by the UK Office of Budget Responsibility (OBR), an official independent body on UK public finances, this is unlikely to be reached until 2025-2026. Even then it is not a given, as historically, very few governments have achieved this goal.
- Scenario 3 – Under this final scenario, the government returns to 0.7% when the UK economy recovers to its pre-pandemic size, which is expected in 2022. While this option might pose value for money problems as the budget was dramatically cut and then has to rise quickly again, it also allows for programs to be paused rather than canceled, with payments delayed for a year only. It would also enable the UK to announce (as it hosts the G7 and the UN Climate Change Conference in 2021) that it will quickly resume its spending, maintaining global development leadership.
The CGD notes that its preference would be for the government to opt for Scenario 3, given the shortness of the cut, as well as the ability to press pause and to retain UK global development leadership. However, the CGD stresses that whichever scenario is chosen by the government, it is important for the government to set out a clear schedule for returning to the 0.7% target to enable those in the development community to plan effectively.