TWN Info Service on Finance and Development (Jun26/03)
26 June 2026
Third World Network

Finance: ODA set to further fall, hitting lowest level since 2014, says OECD
Published in SUNS #10470 dated 26 June 2026

Penang, 25 Jun (Kanaga Raja) -- Net official development assistance (ODA) is projected to fall again by 6.9% in 2026, marking a third consecutive year of decline and bringing ODA to its lowest level since 2014, according to the Organization for Economic Cooperation and Development (OECD).

In a Policy Brief updating its ODA projections for 2026 and the near-term, the Paris-based OECD said that the poorest countries are hit hardest.

Bilateral ODA to sub-Saharan Africa and the least developed countries is projected to fall again in 2026, by 11.6% and 10.9% respectively, marking a third straight year of decline that leaves both at their lowest levels since the early 2000s, it added.

It said that the need for ODA is growing, sharpening the trade-offs providers face. The crisis in the Middle East is disrupting energy markets, global value chains, and growth in developing countries, while the Ebola outbreaks in the Democratic Republic of the Congo (DRC) and Uganda in recent weeks are straining already-fragile health systems.

The OECD said the result is a landscape in which a smaller volume of ODA must stretch to meet rising needs from more frequent, overlapping crises.

ODA FALLS AGAIN

According to the report, OECD Development Assistance Committee (DAC) countries' net ODA is projected to fall by 6.9% in 2026, amounting to USD 152 billion - its lowest level since 2014 and, after the 23.3% drop in 2025 and 8.5% drop in 2024, a third consecutive annual decline.

The projected amount in 2026 is equivalent to 0.23% of projected gross national income (GNI) in net terms, down from 0.25% in 2025, it said.

The cut in 2026 is broad-based: sixteen DAC members are projected to cut their ODA by a combined USD 12 billion, against USD 0.7 billion of increases projected by seventeen others, fourteen of which are EU members, while the G7 accounts for USD 9.3 billion of the reduction.

The fall is expected to continue beyond 2026: by 2028, net ODA is projected to be 9.9% lower than it was in 2025, with the ratio slipping further to 0.21% of GNI, said the report.

These cuts reflect policy choices: if DAC members were to hold their 2025 ODA/GNI ratios, total ODA would rise by 1.4% in 2026 rather than falling and would have stood 4.4% above its 2025 level by 2028 - instead of a projected 9.9% below, it suggested.

These projections reflect current inflation forecasts that could worsen in the case of a prolonged crisis in the Middle East, resulting in an upward revision to inflation that would further erode the real value of fixed aid budgets, said the OECD.

SSA & LDCs MOST IMPACTED

The report said sub-Saharan Africa (SSA) and the least developed countries (LDCs) face the steepest cuts. DAC countries' bilateral net ODA to sub-Saharan Africa is projected to fall by 11.6% in 2026, after a 26.3% decline in 2025; bilateral net ODA to LDCs, down by 25.8% in 2025, is projected to fall a further 10.9%.

"For both groups, this would be a third straight year of decline, leaving ODA at its lowest level since the early 2000s, at the start of the Millennium Development Goal era."

It also said multilateral channels are not filling the gap. Imputed multilateral aid to these groups is projected to fall by 6.6% each in 2026. Counting bilateral and multilateral aid together, total support to sub-Saharan Africa and LDCs would drop by 9.8% and 9.4%, respectively.

The report said that some providers have framed lower bilateral aid to these regions as a shift toward multilateral channels of delivery: in 2021-24, bilateral ODA to sub-Saharan Africa and the LDCs declined by 7.2% and 12% respectively, while concessional outflows from multilateral organisations to these groups increased by 23.4% and 11.3% in the same period.

However, it said data on projections suggest that absent a re-allocation toward multilateral organisations serving the poorest countries, multilateral ODA is not likely to offset the bilateral decline - especially as DAC members' multilateral ODA is projected to decline for the third straight year.

Region-wise, the report said from 2024 to 2026, Europe shows the largest two-year projected decline (40.3%), of which 88.7% reflects lower aid to Ukraine, extending a fall from the 2022 peak.

Excluding Ukraine, ODA to the rest of Europe is projected to fall by 29.1%, less than every region except South and Central Asia (-27.6%), it added.

It said sub-Saharan Africa and Latin America and the Caribbean (LAC) show similar percentage cuts (37.2% and 35.0%, respectively), but the volumes diverge sharply: USD 11.8 billion is projected to leave sub-Saharan Africa by 2026, against USD 3.0 billion for LAC.

The OECD pointed out that the difference in volume matters because 32 of 49 (65%) of sub-Saharan African countries are also LDCs, against just 1 of 27 in LAC.

"Cuts within sub-Saharan Africa are projected to be widespread, particularly to countries experiencing fragility. Aid to contexts in high or extreme fragility in the sub-continent is projected to fall by 37.9% from 2024 to 2026, and aid to the Sahel by 35.6%."

The report further said that every income group is affected by the cuts, particularly the lower-income countries.

For instance, it said that the largest two-year decline is projected for lower-middle-income countries (-35.1%), driven by the fall in aid to Ukraine, followed by LDCs (-34.5%); aid to upper-middle-income countries (UMICs) is projected to fall by 31.0%.

The decline in volume amounts to USD 10.5 billion in LDCs and USD 4.8 billion in UMICs, it added.

Significantly, Small Island Developing States (SIDS) are among the hardest hit individually: five of the fifteen recipient countries with the largest cuts are SIDS, with declines between 2024 and 2026 reaching up to 60%.

As a group, ODA to SIDS is projected to fall 33.3% from 2024 to 2026 - more steeply for Caribbean SIDS (-36.6%) and those in Asia and Oceania (-33.4%), while African small island states are less affected (-8.9%).

Aid to landlocked developing countries and aid to fragile states are each projected to decline by 34% over this period, said the OECD.

HEALTH FACES STEEPEST CUTS

The report said that health faces the steepest cuts of all sectors. Net ODA for health and population services is projected to be up to one-third lower in 2026 than in 2019 and 63% below the 2022 peak, representing a decline of 29-46% from 2024 to 2026, or USD 5-8 billion.

This would pull health ODA well below pre-pandemic levels, back toward where it stood in 2008, it added.

Moreover, the OECD said the cuts will fall unevenly, concentrated where external financing for health matters most.

For example, Malawi and South Sudan each fund about 60% of current health expenditure from external sources; their bilateral health ODA is projected to fall by 50.8% and 42.4% from 2024 to 2026.

Mozambique, Lesotho, and Uganda are similarly exposed, combining heavy reliance on external health finance - with particular dependence on G7 providers, the group responsible for the largest cuts - in countries with little space to raise domestic revenue, the report stressed.

It said within the health sector, population and reproductive health - including HIV/AIDS and other sexually transmitted disease (STD) control - faces the largest cut, with ODA projected to fall by up to 54.1% in 2026 against 2024, while funding for the control of communicable diseases is also under acute pressure.

Elaborating further, the report said from 2024 to 2026: ODA for malaria control is projected to fall by up to 59.6%; ODA for tuberculosis control is projected to fall by up to 57.2%; and ODA for other infectious-disease control is projected to fall by up to 40.4%.

The cuts reach beyond response to preparedness. Funding for pandemic preparedness, prevention, and response (PPR) is essential not only for responding to disease outbreaks but also minimising disruptions to essential health services during outbreaks, it pointed out.

However, such funding is affected across sectors. For example, ODA for water supply and sanitation, which supports PPR, is projected to fall by 22.3% from 2024 to 2026.

The OECD said that the risk is most acute where outbreaks occur. In the Democratic Republic of the Congo and Uganda, which are facing an active Ebola outbreak at the time of writing, health aid is projected to fall by 46.6% (to USD 208.9 million) and 53.5% (to USD 234.8 million) respectively.

Ranked by the rate of decline, health leads (29-46% decline from 2024), followed by general budget support (43.0% decline, though this is volatile and driven by Ukraine) and humanitarian assistance (40.3%, a USD 9.3 billion fall). Preliminary 2025 data already show humanitarian ODA down 35.8% in 2025, it added.

ODA for government and civil society is projected to fall by 39.8% (USD 8.9 billion), largely because Ukraine, which received 37.8% of this sector's ODA in 2024, is projected to see sharp reductions.

The report said other sectors impacted by ODA cuts from 2024 to 2026 include: ODA for education, projected to fall by 22.2%; food aid, projected to fall by 44.5% (USD 2.6 billion), with the United States - accounting for two-thirds of DAC food aid in 2024 - being the dominant provider; ODA for energy, projected to fall by 22.6%.

FALL IN MULTILATERAL ODA

According to the report, multilateral ODA has broken from a long-standing trend of steady growth. Preliminary data show a 12.7% decline in net multilateral ODA from 2024 to 2025, leaving levels 28.4% below the 2023 peak.

It said volumes are projected to fall again by 3.4% in 2026, marking three years of consecutive decline, making this the second-longest downward streak in the history of multilateral ODA, after a decline of 20% from 1992 to 1997.

Notably, it said the contraction in 2025 was uneven across institutions. Core funding to UN entities fell by 27%, the largest annual drop on record, while core support to the World Bank rose by 6.4% and to regional banks by 11.9%, reflecting disbursements from previous multi-year replenishment cycles.

All institutions are projected to see cuts in 2026: the UN by a further 4.8%, the World Bank by 6.3%, and other regional development banks by 5%, the report suggested.

Compared to 2016, the year after the 2030 Agenda for Sustainable Development was adopted, UN funding is projected to be around 18% lower by 2028, it concluded. +