Ireland Becomes First Major European Donor to Cut Aid

As my colleague David Roodman pointed out, the financial crisis does not bode well for foreign aid to poor countries. In the early 1990s, aid from the four donor countries experiencing financial crises dropped between 10 and 62 percent in the aftermath.This week, history may have begun to repeat itself. The Irish government became the first major European donor country to announce it would cut its overseas aid budget due to shrinking resources. (Hat tip to Duncan Green and Owen Barder for alerting us).The official statement states that:

The Government has taken the difficult decision to reduce the total budget provided for Ireland's Overseas Development Assistance in 2009 from €891million to €796 million. […] We should not overlook the fact that our aid programme remains at a historically high level - €796 million in 2009 compared to €255 million in 2000. Ireland remains the sixth most generous donor internationally in per capita terms.

As the statement points out, Ireland has been a strong donor, scoring 5th of 22 rich countries on the aid component of the Commitment to Development Index. But if Ireland's GNP holds constant, the ODA cut will be from 0.56 percent to 0.53 percent as a share of GNP, raising doubts about whether Ireland will fulfill its commitment to give 0.7 percent of GNP by 2012. Is this the start of a new trend?