Lessons from the Crisis in Foreign Aid Statistics

The OECD's Development Assistance Committee (DAC) has compiled foreign aid statistics since the 1960s, and it invented the concept of Official Development Assistance (ODA) in 1969. For decades, ODA data were on actual flows, the DAC having rejected suggestions commencing in 1963 to instead focus on flows' "grant equivalents". But in 2014 the DAC decided, from 2018, to switch ODA loan reporting to "grant equivalents" using unrealistic parameters that exaggerated donors' fiscal effort. In 2016 it decided to abandon the requirement that all ODA transactions be concessional. By 2018, having failed to agree grant equivalent methodology for equity investments, loans to the private sector, and debt relief, it decided to maintain reporting of these on a flow basis. ODA therefore now mixes flows and grant equivalents, which are incommensurable statistical quantities, and embodies other contradictions and anomalies. This paper examines the degradation of the ODA measure and identifies general lessons for statistical development exercises and quality control efforts.