Concessional lending to developing countries has risen in recent years. DAC multilateral institutions have disbursed twice as many concessional loans to developing countries in 2011 ($42 billion) than in 1995 ($19 billion). Similarly, concessional loans from DAC bilateral donors have doubled over the past decade, from $8 billion in 2001 to $16 billion in 2011. ‘Concessionality requirements’ are currently being discussed within the DAC, to see whether they are relevant and how they can be improved. While concessionality addresses key issues for the future of aid quantity and quality, the debate has so far been taking place among government officials with no broad involvement of civil society and has been framed in rather technical terms. This paper discusses the main developments in this debate over the past ten years and presents recommendations on how to optimise the developmental benefits of this reform.
FC Publication Date:
21 March 2014