How is Aid Changing in the Covid-19 Pandemic?

The Covid-19 pandemic presents the biggest global challenge we have faced since World War 2. The poorest people and places have been hit hardest by the economic and social effects of the crisis caused by the Covid-19 pandemic, and are also the least resilient to its effects. Measures put in place by governments to suppress the virus have also had the greatest impact on those living in poverty.

This is leading to rising needs, while resources are falling. Poverty is set to increase – with our projections suggesting extreme poverty will grow by 3% in 2020 alone. At the same time, domestic revenues in developing countries are projected to drop by US$1 trillion in 2020 from pre-Covid levels, and recovery is likely to take time. Many of these countries are heavily reliant on other critical forms of international finance – such as foreign direct investment, tourism receipts and remittances – which have also fallen steeply this year.

Financing that targets the poorest and most vulnerable people and places, including international assistance in the form of aid, is vital to address the immediate consequences of the pandemic and the longer-term setbacks to progress towards meeting the Sustainable Development Goals (SDGs). At the same time, donors are heading into recession, leading to significant cuts to aid budgets already being announced by key donors, such as the UK.

Aid is changing in the face of the pandemic, with short-term, and possibly long-term, effects. In order to guide and assess effective rapid and longer-term responses, and maximise the impact of aid, we need new types of real-time information about how aid is changing now in light of Covid-19.

To meet the need for more timely information, this paper uses near real-time data on aid, published by donors and implementing agencies to the International Aid Transparency Initiative (IATI).

While this analysis is by necessity limited to the data that is published to a sufficient standard and in a timely enough fashion, and is not therefore a comprehensive picture of all donors, IATI data has nevertheless reached a sufficient level of quality and coverage to enable critical analysis of near real-time trends, and provide a vital early warning system on current aid spending. As we seek to better respond to the new challenges Covid-19 is causing, this is a vital tool to enable action while there is still time to respond.