# _Allocation of grants and ODA debtforgiveness_

Three groups of countries can be identified from the share or level of ODA debt forgiveness included in total grants. Countries in the first group-the high groupreceived more than 15 percent of total grants in the form of ODA debt forgiveness during 1989-93 (26 percent on average as a group). Countries in the second group-the middle group-received 5-15 percent of total grants in the form of ODA debt forgiveness during the same period ( I percent on average as a group). Countries in the third group-low group-received less than 5 percent of total grants in the form of ODA debt forgiveness during 1989-93 (3 percent on average as a group). In absolute terms the difference between the three groups is striking: $403 million of debt forgiveness during 1989-93 for the average country in the high group, $145 million for the average country in the middle group; and just $24 million for the average country in the low group (Table 1). 8

**Table 1. Average grants and ODA debt forgiveness for three groups of countries, 1984-88 and 1989-93**

(millions of U.S. dollars)

||**_Tota_**|**_l grants_**<br>**_ODA debt forgiveness_**|**_ODA debtforgiveness_**<br>**_Grants (percent)_**|
|---|---|---|---|
|**Countrygroup**|**_1984-88_**_average(*)_|_1989-93_**_average(*) (1)_**_1989-93_**_average (*)(2)_**|_'89-93_**_average_**_(2)1(1)_|
|**Low group (16 countries)**|489|800<br>24|3%|
|**Middle group**(9**countries)**|606|**1,268**<br>145|11%|
|**High group (7 countries)**|**606**|**1,560**<br>**403**|**26%**|
|**iTotal**|**548**|**1**<br>**1098**<br>**141**|**13%**|

**_(*)_** Five year total for each country has been taken, then tfhe simple average for each group was calculated for the five year period.

Source: OECD/DAC _(i) Poverty indicators and export earnings._ Neither absolute poverty (in terms of GNP per capita) nor lack of access to foreign exchange (through exports) seem to have been a criteria in allocating ODA debt relief and pure grants in recent years. In fact, the countries in the low group, are the poorest among all three groups, indicating that poverty did not serve as the basis for the allocation of grants or forgiveness (Table 2).9 In addition, countries in the high group are also significantly better off in terms of their capacity to generate foreign exchange through exports; that is, despite receiving more grants than the low group, relative to exports the grants received by the high group are about one-third that received by the low group. Therefore it can be argued that if one criteria to allocate grants is the size of the export industry in the recipient countrygiving more grants and forgiveness to countries where foreign exchange is more scarcethen grants seem to have been poorly allocated in recent years.

> The countries in the high group are Cameroon, Ghana, Kenya, Madagascar, Senegal, Sierra Leone and Zambia. The middle group is: Benin, Congo, Cote D'ivoire, Guinea, Mauritania, Mozambique, Nigeria, Tanzania and Togo. The low group is: Burkina Faso, Burundi, Central African Republic, Chad, Comoros, Equatorial Guinea, Ethiopia, the **Gambia,** Guinea-Bissau, Malawi, Mali, Niger, Rwanda, **Sao** Tome, Uganda and Zimbabwe. We also analyzed the allocation of grants and ODA debt forgiveness on per capita basis and found that poverty may have guided some allocation decisions. For details see Appendix 1.

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