The Development Assistance Committee (DAC) is an important forum within the OECD in which donor countries coordinate policies and seek answers to common problems on a variety of development issues.

The DAC synthesizes good development practices and prepares guidelines and toolkits on issues like poverty reduction, good governance, conflict prevention, environmental conservation, and gender equality in developing countries.

The DAC helps advance key U.S. foreign policy and foreign assistance objectives, including: coordinating US foreign assistance initiatives with other donors; increasing the total volume of aid and distributing the burden; and improving the effectiveness of aid.

The DAC seeks to improve the effectiveness and accountability of official development assistance by focusing on development results, encouraging harmonization of donor practices and building donor-recipient partnerships (as agreed in the DAC’s 21st Century Strategy report.

The United States, along with our development partners, is collaborating to achieve this goal on the shared conviction that, “Aid is a scarce resource…and it must be targeted to meet priority needs and help generate other development investments.”

The OECD is the only venue where the heads of all bilateral aid agencies meet to coordinate economic assistance policies. As such, it has been an important forum for advancing U.S. interests in areas such as aid effectiveness (Millennium Challenge Account), and post-conflict relief and reconstruction (Afghanistan and Iraq). The Development Assistance Committee also tracks all official development assistance by OECD Members, and issues annual reports on the amounts and types of assistance provided. As these reports indicate, the U.S. is the world's largest donor.

Effective aid helps people in need improve their lives and developing countries achieve peace, security, good governance and economic prosperity.

For the U.S., effective aid is measured in terms of results, for example: fewer babies dying; more children in school and finishing at least primary education; small farmers marketing higher value produce; better managed public finances; less corruption; and fewer deaths due to natural disasters.

Internationally, aid effectiveness has become a top priority recognizing that it is the key to sustaining increasing aid levels. It is seen as putting developing countries in the driver's seat, increasingly aligning donor programs to their national development plans and strategies, strengthening and progressively using country systems, better coordinating donor programs and simplifying donor procedures, and then measuring results based on common frameworks.

The Paris Declaration:

Internationally, aid effectiveness has become a top priority, recognizing that it is the key to development impact and thus to sustaining increasing aid levels.

Ministers and Donor Agency Heads from over 100 developing countries and donor institutions, including the USAID Administrator, endorsed the Paris Declaration on Aid Effectiveness on March 2, 2005.

The OECD/DAC co-sponsored the high level forum that led to the Declaration. The Paris Declaration encourages locally developed action plans and coordinating processes based on franker recipient-donor dialogue and more equal partnership.

It expects developing countries to take the lead in defining their national development plans and strategies and donors to increasingly align their programs with these plans, while strengthening and progressively using country systems, better coordinating their programs and simplifying their procedures, and then measuring results based on common frameworks and mutual accountability.

U.S. Support:

The U.S. DAC delegate played an active role in the preparations and negotiations, which included U.S. government interagency input and agreement. The U.S. Government strongly supports implementation of the Paris Declaration.

We endorsed most of the Paris targets subsequently negotiated, except for those relating to country public financial management and procurement systems. The U.S. has substantive issues with the methodology for defining and assessing quality procurements systems and financial systems being reformed before we can commit to using them. We also support the improvement of country systems. We are working with the DAC to resolve these issues. USAID and MCC programs are actively engaging with developing countries and donors to advance the Paris agenda.

Measuring Progress:

The OECD/DAC Working Party on Aid Effectiveness established a Joint Venture on Monitoring the Paris Declaration (JV-MPD) tasked with coordinating international monitoring of indicators.

The first baseline survey covering 34 developing countries was undertaken in 2006 and a comprehensive report issued in July 2007. A mid term progress survey will be done in 2008 and a final survey conducted in 2010.

A third High Level Forum on aid effectiveness is scheduled to take place September 2008 in Ghana. The surveys will be used to aggregate information on indicators across a range of countries and donors to be summed up in periodic progress reports. The country monitoring exercise is designed to encourage and build on local coordinating and reporting processes.

For further details, visit the OECD Web site at: http://www.oecd.org/dac/effectiveness/monitoring

Total official development assistance (ODA) from members of the Development Assistance Committee (DAC) totalled USD 103.9 billion in 2006, a decline of 5.1 over in 2005. This represents 0.30% of members’ combined Gross National Income. Seventeen of the DAC’s 22 members met the 2006 targets for ODA that they set at the 2002 Monterrey Conference on Financing for Development.

ODA was exceptionally high in 2005 due to large Paris Club debt relief operations, notably for Iraq and Nigeria, which had boosted ODA to its highest level ever at USD 106.8 billion. In 2006, net debt relief grants still represented an important share of net ODA, as members implemented further phases of the Paris Club agreements, providing a little over USD 3 billion for Iraq and nearly USD 11 billion for Nigeria. Excluding debt relief, ODA fell by 1.8 per cent.

On a gross basis, ODA represented about USD 116 billion, with the United States (USD 24 billion), Japan (USD 18 billion), the United Kingdom (USD 13 billion), Germany and France (USD 12 billion each), representing nearly 70% of the total.

Preliminary data show that bilateral net ODA to Sub-Saharan Africa rose by 20% in real terms, to about USD 27 billion. Most of the increase was due to debt relief grants. However, if debt relief for Nigeria, which accounts for the bulk, is excluded, then aid to Sub-Saharan Africa actually fell by 2%.

The largest donor in 2006 was again the United States, followed by the United Kingdom, Japan, France and Germany. The only countries to meet or exceed the United Nations target of 0.7% of GNI were Denmark, Luxembourg, the Netherlands, Norway and Sweden.

In 2006, net ODA by the United States was USD 22.7 billion, a fall of 20% in real terms. Its ODA/GNI ratio also fell to 0.17%. The fall was mostly due to debt relief which had been exceptionally high in 2005 as the United States forgave all its outstanding debt with Iraq in 2005 rather than spreading it over several years. Disbursements to Sub-Saharan Africa (USD 5.6 billion) reached a record high mainly due to debt relief (USD 1.4 billion, of which Nigeria was USD 0.6 billion) and increased disbursements in support of education, HIV/AIDS and malaria programmes. Net ODA flows to Iraq remained important (USD 4.8 billion), increased to Afghanistan (USD 1.6 billion due to Economic Support Funds) and aid to the least developed countries was at its highest level (USD 5.5 billion). For more details see the OECD Website.

The United States is also the largest provider of other financial flows to developing countries amounting to about $100 billion a year in private capital flows, personal remittances, and private and non-government philanthropy. U.S. Official Development Assistance represents only about 20% of total U.S. flows to the developing world.