Poorer nations set for plunge in aid

AID to the world’s poorer nations reached its highest level ever in 2008, but charity levels are likely to be doubly hit by the growing economic crisis, the Organisation for Economic Co-operation and Development (OECD) and aid agencies have warned.

Several countries, including Ireland, have already announced they will reduce the amount of money they can give to developing nations this year, with Ireland lowering aid by about 17% in total.

But poorer nations are likely to be hit at least as hard, if not harder, than more wealthy countries by the global economic downturn, according to an OECD report.

Demand for products from low-income countries is being particularly badly hit, foreign direct investment is declining and money from immigrants is also expected to drop significantly this year.

At the same time, the budgets of many developing countries were hit hard by the rises in food and oil prices over the past year, and as a result many are not in a strong fiscal position to deal with the crisis, the report warns.

Experience shows that aid plays a vital role in keeping these developing countries afloat during financial crises, while cuts in aid would mean much progress made to date could be lost, it says.

Ireland was one of 14 EU countries that increased its aid in real terms last year.