Korea has temporarily earmarked 1.2 trillion won ($1.16 billion) in overseas grant aid for next year, down from 1.56 trillion won in 2014. The grant plan unveiled by the Foreign Ministry on Monday will be presented to the Cabinet for approval after two weeks of fine-tuning.
The decrease runs counter to a request made by the OECD’s Development Assistance Committee last year that Seoul increase grants and other untied aid for less developed and heavily indebted nations. In the first peer review of Korea since it became a DAC member in 2010, the group also called on the country to formulate a unified strategy for official development assistance and set up a coherent system to implement it.
Korea’s ODA budget for this year, including grants, is set at 2.27 trillion won, which accounts for 0.16 percent of the country’s gross national income.
Certainly, Korea should expand its ODA to be commensurate with its status as the world’s 15th-largest economy and seventh-biggest exporter. It may deserve some credit for having increased its development aid at the fastest rate of the DAC members over five years from 2008. Still, it is regrettable that the government is giving up its original goal of increasing Korea’s overseas assistance to 0.25 percent of its GNI by 2015, which is still lower than the DAC average of 0.35 percent and the U.N.-recommended level of 0.7 percent.
It would be ideal for most ODA to be provided in untied grants. But tied aid may not be necessarily undesirable. For a country like Korea with heavy reliance on trade, it can be somewhat inevitable to connect foreign aid to economic cooperation.
As the only nation that has been transformed from an aid recipient to a donor since the end of World War II, Korea is in a position to work out and implement its own methods to help less developed countries get out of poverty and achieve modernization. What is important to consider is how to maximize the effect of development aid through diverse mixtures of programs tailored to meet the specific needs of recipients.
To this end, it may be necessary to pay heed to the DAC advice that Seoul should try to secure appropriate staff for effective aid management and enhance the transparency and accountability of assistance policies.