Introduction
Since the publication of the first AidWatch report 20 years ago, Official Development Assistance (ODA) has significantly contributed to improving global health, poverty reduction, education, governance and climate resilience in partner countries and enjoys generally broad support among EU citizens.
However, while ODA has been long considered resilient in responding to crises, human-generated problems (economic, social, climate-related) and political decisions continue to weaken the global multilateral system and the global cooperation landscape. After 5 years of consecutive growth in ODA volumes, countries are increasingly prioritising national interests while cutting their ODA budgets.
The current tremendous challenges are a chance to reform ODA reporting, democratise its governance and improve its effectiveness. We are convinced that the role of ODA and particularly of EU ODA should and will remain key in the future. Read the AidWatch 2025 report and discover our 10 recommendations for EU Member States and EU Institutions to restore ODA’s purpose!
From Originally Development Aligned to off track: EU ODA’s broken promises
Grant equivalent ODA allocations by providers (2018 - 2024, EUR millions, constant)
Units: USD million, constant prices. Source: uploaded CSV. Tooltip shows Bilateral, Multilateral, their computed sum, and the ODA total row. Small differences vs. ODA total reflect rounding/methodology in source.
As a percentage of Gross National Income (GNI), the performance of EU DAC countries saw a notable drop – falling from 0.53% in 2023 to 0.47% in 2024. For the EU as a bloc (EU MS including non-DAC members and EU Institutions), ODA has now decreased for two consecutive years.
ODA trends for EU Member States plus United Kingdom (2018 - 2024,EUR Millions, constant prices)
All EU Member States have collectively committed to reaching the 0.7% goal.
However, in 2024 only three EU Member States – Luxembourg, Denmark, and Sweden – met this commitment.
Over the past 7 years, the number of EU Member States that reached the 0.7% goal fluctuated between three and four, meaning that only 11%-15% of EU MS have reached the target in recent years.
Breakdown of non-inflated and inflated ODA from 27 EU Member States (2024, EUR MIllions, constant)
100% of the ring length represents the total 2024 ODA from 27 EU Member States (80,391 EUR Millions)
In 2024, approximately one in five euro of EU ODA did not meet ODA criteria. As in previous years, most of the EU’s inflated spending in 2024 was attributable to in-donor refugee costs, followed by imputed student costs. It is likely that allowing private sector instruments to be reported as ODA will lead to these shares increasing even further in the coming years. Besides the volumes, the counting of private sector instruments as ODA dilutes its core definition further.
EU Member States' ODA 0.7% performance (2018-2024)
Numbers shown inside each square. Spacing added between countries. Values are % of GNI.
Inflated vs Non-inflated share of total ODA — 2024
Bars are scaled to 100% per country (inflated share + non-inflated share). Countries with missing data are omitted.
Private Sector Instruments (PSIs)
PSIs allow ODA to fund private sector actors in partner countries and they are reported as ODA despite their non-concessional nature. By definition ODA should be concessional so this justify its full exclusion from ODA.
In 2024, 10 EU Member States (Austria, Belgium, Czechia, Denmark, Finland, France, Germany, Netherlands, Spain, Sweden) reported PSIs, representing between 0.3%–4.7% of national ODA. Germany, France, and Sweden were the largest contributors in absolute terms.
In-donor refugee costs
In-donor refugee costs refer to ODA resources used to support refugees within EU Member States. These costs do not directly benefit partner countries.
Almost one sixth of all EU Member States’ ODA is used to cover domestic costs for refugees and asylum seekers in EU countries.
Imputed student costs
Imputed student costs are the expenses for students from low- and middle-income countries studying in donor countries.
Imputed student costs are reported only by some EU Member States, and not all reporting countries use the same calculation procedure. AidWatch reports have criticised for years that these costs do not respect the main objective of ODA and should be excluded.
Debt relief
Although debt relief can support development by creating fiscal space for highly indebted countries, it should not be counted as ODA. Debt relief has the potential to push the total ODA/GNI ratio up without allocating new concessional finance.
Example: If the Sudan debt relief agreement is approved, Austria will be able to report around EUR 4 billion in ODA from the cancellation of old export credits. However, this will not involve any actual spending from Austria’s public budget, because the losses from Sudan’s default are already covered by insurance premiums previously paid by exporters.
In 2024, debt relief represented only 0.2% of total ODA (0.1% in 2023), with France, Denmark, and Italy reporting the largest amounts.
ODA Loans
ODA loans are overcounted by methodological choices, resulting from arbitrary, exaggerated discount rates used in the calculation of the grant equivalent. The discount rates fixed in 2014 do not reflect reality because they are generally too high and take no account of market rates or variations over time, the duration of loans, or differences between currencies.
Inflated ODA reported from loans of all EU MS in 2023 and 2024 would reach 1.5% of their combined annual ODA.
The way forward: a chance to restore ODA’s purpose and impact
If EU MS and EU Institutions are concerned about our shared future and the efficiency of EU’s international development cooperation, they must invest in people and in rebuilding trust in ODA. This means restoring its credibility and purpose and allocating it where it can have greater impact.
Want to be more efficient? Start by untying ODA
Tied aid reduces the value for money and raises the cost of goods, services and works procured by 15% to 30% on average and ultimately has a negative impact on ODA effectiveness.
The EU and its Member States could release approximately 3.6% to 7.2% of its current ODA and redirect it to development purposes by fully untying it.
Reform the development finance landscape, including ODA governance
While partner countries receive financial inflows, they also experience significant outflows to the Global North, including debt service payments, capital flight, illicit financial flows, and profit repatriation by multinational companies. For many countries, debt repayments far exceed incoming ODA, resulting in a net negative transfer of resources.
To maintain its unique role in the development finance landscape, the ODA governance and reporting system should be reformed.
Increase core budgets for ODA predictability
Partner governments rely on stable bilateral commitments to plan multi-year strategies to support human development (health systems, education reform, governance strengthening).
Cuts to bilateral programmes not only reduce the concessional resources available for partner countries, they also reduce the predictability of resources.
Be coherent: ensure Policy Coherence for Sustainable Development (PCSD)
ODA inflation, misreporting and misuse by EU Member States violate PCSD by creating incoherences between declared commitments and real contributions to sustainable development, reducing effectiveness and credibility of international cooperation.
This incoherence also weakens the EU’s global influence and credibility as a global actor.
Looking to the future, will EU Institutions and EU Member States lead by example or setback?
As the world’s largest donor, the EU and its Member States have not only potential, but a responsibility and legal obligation to ensure development cooperation is credible, transparent, and centred on people’s rights.
The OECD projects a decline in global ODA of between 9% and 17% in 2025, with no clarity beyond. For the first time in nearly 30 years, the four largest donors – Germany, France, the UK and the US – have all announced major cuts.
In total, 11 DAC countries – including 7 EU Member States (Austria, Belgium, Finland, Germany, France, Netherlands, Sweden) – have announced or implemented reductions. Together, these countries account for approximately 75% of global ODA.
Recommendations
Considering the persistent gap between official commitments and actual delivery, as well as mounting evidence that large volumes of ODA are failing to deliver on development objectives, a shift in both mindset and practice is urgently needed. Development cooperation cannot be a secondary priority or a flexible budget heading used to cover domestic political needs. It must be re-anchored in its original purpose: fighting poverty, tackling inequalities, and enabling human development – especially in countries and communities most at risk.


