Foreign aid has been cut off by several countries, leading to concerns. According to multiple sources including the BBC, the United Kingdom has cut off a large amount of foreign aid worth more than £900m for this year for the short term. Several other countries including Sweden and Norway also cut off their foreign aid earlier. But all the aid-giving countries have not cut their foreign aid. For instance, the United States and Spain increased their foreign aid. But whether there will be a further cut in foreign aid in the world and how much countries which heavily rely on foreign aid to support their education programs, healthcare systems and infrastructure development will be impacted remain further concerns.
Foreign aid is given mostly by developed countries to governments and other organizations across the world for addressing humanitarian conditions and many other development challenges. Notably, foreign aid has increased globally. But it has been declining after the increase from 2012 to 2017. In 2023 — according to multiple sources — foreign aid has decreased to as high as 39 percent. But several countries have cut off their foreign aid driven by economic troubles, budget constraints and other drivers. The United Kingdom cut off its foreign aid because of the economic downturn. The Ukraine war has led to economic constraints in many countries, along with rising living costs. Norway and Sweden cut their foreign aid and diverted funds towards Ukraine driven by several causes including economic challenges and shifting priorities.
The possibility of further cut off in foreign aid remains in the world, but a long-term cut is less likely at this moment. Over the years, various countries have made decisions to reduce their foreign aid budgets for a variety of reasons. Decisions on foreign aid budgets are often influenced by domestic economic concerns, geopolitical interests and shifting political priorities, changing global dynamics and several other causes. With a global financial crisis currently looming, though there is an improvement in recent months, and commodity prices continuing to rise, driven by the Ukraine war and other causes, it may not be surprising if several other countries cut foreign aid, which is often become an easy target for governments seeking to cut spending.
But foreign aid cuts are mostly temporary in the world. Improved economic conditions lead to an increase in foreign aid again. For instance, Sweden reduced its foreign aid budget by 20 percent in 2020 due to the economic impact of the COVID-19 pandemic. But it increased its foreign aid budget after the economic recovery. Importantly, foreign aid has positive implications for both the giver and the recipient countries. While foreign aid helps fight poverty and bring many other positive outcomes for the recipient countries, it leads to a positive image and an increased influence, along with other outcomes including an increase in exports, for the aid giving countries. Given that economic threats are reduced, there will probably be a re-increase in foreign aid.
But the effects of cuts in foreign aid are enormous, both short-term and long-term, even if they are temporary. Foreign aid cuts lead to increased poverty, instability and, sometimes, conflict in recipient countries, which can ultimately impact global security and economic stability. Additionally, a decline in foreign aid leads to humanitarian crises and affects many facets of development. Without funding, many countries which heavily rely on foreign aid struggle to provide critical services. For instance, in Malawi and Haiti, the reduction in foreign assistance resulted in a decline in essential services. Many organizations — which rely on foreign aid for education programs, poverty reduction or other services — also do not proceed or are only able to do so at a limited scale.
Foreign aid, which also plays a crucial role in promoting diplomatic relations and fostering cooperation between nations, is definitely crucial for less developed countries to fight poverty, address critical challenges and promote sustainable development. It is desired that foreign aid is not suddenly cut off completely. This is pertinent to humanitarian foreign assistance. But alternative sources of funding are crucial for organizations to run, given that a reduction in foreign aid often takes place in the world. But countries also need to increasingly focus on their own capacity to provide support to critical services. This is crucial when foreign aid in certain critical sectors is suddenly declined.
