British Overseas Territories that suffer serious economic decline after a natural disaster could qualify for official development assistance under new international aid rules.
Governor Martyn Roper and Premier Alden McLaughlin welcomed the change last week, saying it would provide additional security for the Cayman Islands in the event of a hurricane that severely impacted the islands.
Anguilla, the British Virgin Islands and the Turks and Caicos Islands were devastated by successive hurricanes last year. However, they were unable to qualify for support from the U.K.’s $13 billion foreign development aid budget because they were deemed “too rich” under a formula set by the Organisation for Economic Co-operation and Development.
The formula defines which type of assistance qualifies as development aid and counts toward the U.K.’s commitment to spend 0.7 percent of gross national income on development aid – the United Nation’s target for all developed countries.
Ultimately, the U.K. found funding from sources other than the approved aid budget to provide a reported 57 million pounds sterling (US$74 million) in disaster relief. Since then, it has been campaigning for changes to the formula in an effort to free up more funds to support its territories in the aftermath of devastating hurricanes.
Under the new rules, agreed at a meeting of the OECD’s Development Assistance Committee in Paris last week, wealthy countries that face economic catastrophe in the aftermath of a natural disaster can re-qualify for aid. For that to happen, the per capita income must fall below the World Bank’s high-income threshold of $12,055 for one year.
The U.K. declared the rule change as a major victory and Cayman Islands Governor Martyn Roper and Premier Alden McLaughlin both welcomed the move.
“Overnight, you may have seen that the OECD has changed its rules on using the Overseas Development Aid budget to help territories going through natural disasters,” Mr. Roper said at a press conference last week.
“Last year, in serious hurricanes the U.K. wasn’t able to use its ODA budget to help territories. The U.K. has persuaded the OECD and other countries to change its rules so in future it will be able to use ODA budgets in disaster relief, including in the Cayman Islands.”
Premier McLaughlin also welcomed the change, saying in a Facebook post, “This is good news for all British Overseas Territories, especially if we continue to see an increase in severity in our region of natural disasters.”
The U.K. government presented the change as a “major victory” in a press release that was carried by the BBC and other major news organizations last week.
The new “reverse-graduation” mechanism means that British Overseas Territories and other Caribbean islands badly damaged by hurricanes could re-qualify for aid in the future if their economy is sufficiently badly affected, according to the release.
“The rule change could benefit the U.K. when it assists with the economic recovery and reconstruction of nations hit by natural disasters,” the release noted.
It adds, “The U.K. government has always been clear that in times of crisis, nothing will hold us back from helping the British territories. The ODA rules have not and will not hamper the U.K.’s response to humanitarian crises. The new mechanism could help protect a country’s hard-fought development gains and prevent it from slipping into long-term economic decline due to severe natural disasters in the future.”
The current rules for official development assistance prohibit the use of Overseas Development Aid to support countries above a certain gross national income. Though there is no penalty for violating the OECD’s rules, the U.K. is committed by its own law to spending the recommended benchmark of 0.7 percent of gross national income on such aid, as determined by the OECD’s Development Assistance Committee.
International Development Secretary Penny Mordaunt said the U.K. was pushing for further reforms to increase flexibility in how it uses its development aid budget.
“This is a major victory for the U.K., which has led the charge in securing this change. We will continue to press for further reforms to these important rules to ensure we are able to use the aid budget in the most sensible way.”