Praise for Sweden’s development aid

Sweden’s development aid policies received generally high marks in a review published on Thursday by the Organisation for Economic Cooperation and Development (OECD).

“Sweden has played a constructive, and often leading, role internationally in ensuring development co-operation quality,” the organization wrote in its evaluation.

According to the OECD, Sweden spent $4.73 billion on overseas development assistance in 2008, or 0.98 percent of its gross national income.

The figure makes Sweden the most generous donor country as a proportion of its economy.

However, the OECD wants to see Sweden do more to fight poverty and continue efforts to “overhaul, rationalize and clarify” its development aid policy framework.

“Though Sweden, more than most donors, has national policies and actions consistent with its development objectives, this has been difficult to implement in practice,” said the OECD.

The OECD praised the progress made since Sweden last underwent a peer review in 2005, including plans to reduce the number of countries receiving Swedish aid from 67 to 33 over the next three years, as well as efforts to focus on fewer development aid priorities.

But the report is critical of the government on several points, urging Sweden to “avoid producing excessive additional guidelines and guidance documents” related to overseas development assistance policy.

The OECD also recommends that Sweden find a suitable organisation to “provide independent monitoring and evaluation” and submit their findings to the Riksdag.

Sweden would also be well served to place greater emphasis on poverty reduction.

The OECD also stressed the importance of Sweden’s current role as president of the European Union for drawing attention to the importance of international development goals.

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‘We’ll be struggling well into next year’: German borrowing to soar amid pandemic

Germany on Friday passed a 2021 budget that once again smashes its "debt brake" rule, promising to shield businesses and workers from the economic hit of the pandemic as cases continue to rise.

'We'll be struggling well into next year': German borrowing to soar amid pandemic
The seating area of a restaurant closed off in Boltenhagen on the Baltic Sea coast. Photo: DPA

Chancellor Angela Merkel's government plans to borrow €300 billion ($364 billion) across 2020 and 2021 combined after the government pledged more than a trillion euros in aid, including through short-time work schemes (Kurzarbeit) and business support.

“The budget is the basis for everyone to be confident that we can provide the necessary economic and social support to get us through this crisis together,” Finance Minister Olaf Scholz told lawmakers.

The budget for 2021, which passed with 361 votes in favour to 258 against, provides for a total of €179.8 billion in new loans and nearly €500 billion in public spending.

It means for both 2020 and 2021, Germany will abandon its cherished “debt brake”, a constitutionally enshrined rule that forbids the government from borrowing more than 0.35 percent of gross domestic product (GDP), before planning to return to no new debt in 2022.

Restrictions to curb the second wave of Covid-19 – including shutting the food-and-drink, leisure and cultural sectors – continue to burden the economy, which previously pushed Berlin to amplify its aid to businesses.

Yet case rates continue to climb. On Friday, Germany reported a record nearly 30,000 new infections and almost 600 deaths in a 24-hour period.

Now, Merkel is facing calls to tighten restrictions again.

READ ALSO: Germany mulls three-week lockdown from December 20th

Aid can't be 'endless'

Despite the “ray of hope” of a vaccine rollout, Scholz said, “we know that… we're going to be struggling well into next year with the health, economic and social challenges that are going to follow from this pandemic.”

Businesses hit by the current closures are entitled to claim aid amounting to up to 75 percent of their revenues for November and December 2019, expected to cost the government some 30 billion euros.

However Economy Minister Peter Altmaier said last week that support for pandemic-hit firms implemented through November and December could not go on “endlessly”.

Nevertheless Altmaier on Friday said he aimed to increase the ceiling for aid from January in the case of a harder lockdown.

Germany's debt-to-GDP ratio will climb to 70 percent this year, Germany's central bank said in a report published Friday.

But public finances will likely improve as coronavirus measures come to an end, it said.

The government expects the economy to shrink by 5.5 percent this year, before rebounding by 4.4 percent next year.