June 2026 Newsletter

June 2026 ODAReform.org Newsletter

Dear Friends,

I see it is now almost two years since my last ODA Reform newsletter. I hope all of you have enjoyed good health and fulfilling lives in the meantime. For myself, I have been extremely busy heading a major NGO, Medical Aid for Palestinians, and have had little time to devote to ODA Reform.

However, neither you nor I have missed much on this front, since there has been no meaningful ODA reform over this period. The OECD’s Development Assistance Committee (DAC) has merely been formalising its new “grant equivalent” methods though updates to its reporting directives that have added reams of complicated new instructions.

The DAC’s “grant equivalent system” for measuring ODA is now complete….and it is a complete mess. Every one of its new methodologies features logical, mathematical and procedural errors that render the resulting figures meaningless.

The errors include double-counting, fictitious adjustments, reporting figures against incorrect years, adding and subtracting incommensurable quantities, and discounting past receipts to take account of “risk” that no longer exists.

For those of you who recall my first paper on this website, you will know that I have never been against the basic idea of scoring ODA on a grant equivalent basis. Indeed, I campaigned strongly for precisely this change more than 20 years ago when Head of Office of the OECD Deputy Secretary-General in charge of the organisation’s “Development Cluster”.

But grant equivalents are a delicate instrument for use by skilled technicians. They should not be abused as we have seen the DAC do - creating a plasticine ruler to be moulded and distorted to exaggerate donors’ generosity or reward them for favoured actions.

When I first discovered what the DAC was doing with grant equivalents back in 2021, I could hardly believe my eyes. Instead of discounting returns on loans in line with donors’ real costs, as I had suggested so many years before, the DAC had shrunk returns with sky-high “risk-adjusted” discount rates, creating bloated grant equivalents. They had then compounded their error by scoring additional ODA for loans that eventually required relief, thereby double-counting risk.

The DAC was also scoring ODA for relieving commercial loans where risk had been built into the loan interest rates and had therefore already been funded by the borrowers themselves – so that the DAC was counting “donor effort” when there was none.

I spent months carefully documenting these errors and met several times with both top management and working-level OECD officials, pointing out the gross distortions in the resulting ODA scoring. I quickly concluded that these were the inevitable result of the DAC “marking its own homework”, and that the only solution was fundamental institutional reform that would transfer the DAC’s role in ODA rule-making to professionally independent statisticians.

Yet not only was there no reform, but the DAC actually went on to cook up more fake “grant equivalent” methods to score ODA from equity investments, guarantees and other instruments on which its members make profits. This flew in the face of the central idea of ODA, which was to measure concessional development finance; and it also flew in the face of the DAC’s claimed rationale for moving to grant equivalents, which was to measure “donor effort”.

The DAC has shown itself incapable of learning from its mistakes or even facing up to them. Instead, it consistently pretends that any changes it has made are positive adaptations to new realities (“ODA modernisation”), while scratching around for supposed unmet needs to justify further “statistical development”.

The latest example is an internal “DAC Review”, which is not a review at all, but just an effort to develop a rationale for the DAC’s continued existence. The DAC recently invited inputs to this review but tried to direct these solely to what new things the DAC should do, not to what it needed to fix. It specifically ruled out in advance any attempt to hand its role in setting ODA rules to a professionally competent body.

Despite the DAC’s attempts to block any real reform, I decided to send a short submission to this DAC Non-Review, and my two main collaborators on this site, Hedwig Riegler and Simon Scott, have done likewise. I attach below all of our submissions for your information.

Meanwhile, an earlier DAC make-work exercise, TOSSD, has assumed an independent existence and now wants to become the “pre-eminent” measure of development finance. Ironically it primarily aims to provide recipients with a comprehensive account of their inflows – which the DAC’s Review document now hints that it, the DAC, wishes to supply.

However, TOSSD is not a statistical system at all, but just an activity notification mechanism that piggy-backs onto the OECD’s Creditor Reporting System. As Simon and Hedwig demonstrated last year, it is missing over 90% of the non-CRS expenditures it intends to record and has no hope of ever filling the gaps.

All this leaves statistics on developmental flows in a parlous state. The DAC has created a sprawling bureaucratic behemoth that is costing taxpayers millions of dollars a year but is producing unreliable and misleading information. The fundamental reason is that it does not understand that statistics are supposed to be clear, simple, objective facts, not craftily designed tools to sway public perceptions or alter donor behaviour.

The current system is untenable and must eventually collapse. However, the longer it goes on, the more money will be wasted, the more the aid picture will be distorted, and the more public trust will be undermined.

I encourage all of you, whenever the opportunity arises, to urge decision-makers to sweep away the DAC’s “train wreck” of aid and resource flow measurement and set up a new, professionally competent body to start again from scratch. This is the only way to restore integrity, simplicity, clarity and a modicum of user-friendliness to these statistics.

With best wishes and regards,

29 June 2026

Please click twice on the file link below to download the document

Submissions to DAC ODA Review.pdf

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