09/20/2012 11:29 am ET Updated Nov 20, 2012

Foreign Aid Short $167 Billion Last Year Due To Economic Crisis: United Nations Report

By Michelle Nichols

UNITED NATIONS, Sept 20 (Reuters) - There was a $167 billion shortfall in development aid last year due to the global economic crisis and it could worsen in the next three years as donor country budgets struggle to recover, according to a United Nations report released on Thursday.

The report, "The Global Partnership for Development: Making Rhetoric a Reality," said the amount of official development assistance given by 23 members of the Development Assistance Committee of the Organization for Economic Cooperation and Development fell 3 percent last year to $133.5 billion.

But the U.N. target is for states to allocate 0.7 percent of gross national income to development aid and the 2011 total only made up 0.31 percent of aggregate GNI. This is $167 billion short of the U.N. target commitment, found the report.

"The protracted global economic crisis has begun to take its toll on international development cooperation," U.N. Secretary-General Ban Ki-moon wrote in a preface for the report, produced by the Millennium Development Goal Gap Task Force.

The task force was created by Ban in 2007 to improve the monitoring of the eight goals, a group of U.N. targets set in 2000 to seek to improve health and reduce poverty by 2015

"Last year official development assistance fell for the first time in many years, while trade protectionist measures increased," Ban said.

"Notwithstanding considerable fiscal constraints, a number of donor countries continue to meet the globally agreed target ... These efforts can and should be emulated," he said.

The U.N. report recommends that donor countries deliver on their aid commitments despite budgetary restraints.

Only Sweden, Norway, Luxembourg, Denmark and the Netherlands provided aid over and above the U.N. target last year, while the largest falls in aid budgets came from Greece and Spain - as a direct result of the economic crisis - followed by Austria and Belgium, who reduced their debt forgiveness grants.

Other members of the Development Assistance Committee are Britain, Finland, Ireland, France, Switzerland, Germany, Australia, Canada, Portugal, New Zealand, the United States, Italy, Japan and South Korea.

"Growth of core official development assistance is expected to stagnate between 2013 and 2015, reflecting the delayed impact of the global economic crisis on donor country budgets," the report said.

"The current economic situation has lured governments back into using protectionist trade policies," the report said. "The implementation of new trade restrictions by the Group of 20 countries has not slowed down and their increasing effect on global trade is now a cause for concern."

Among the recommendations by the report was that a deal be reached on the Doha round of world trade talks, which started in 2001 and never reached an agreement, and that any trade restrictive measures adopted since the onset of the global financial crisis be removed. (Reporting by Michelle Nichols; Editing by Jackie Frank)