Overseas aid budget will increase by 66% over three years from 1999, says Minister

Spending on overseas aid is to remain frozen this year but will increase by 66 per cent over the following three years, the Minister of State with responsibility for development co-operation, Ms Liz O'Donnell, has announced.

In a compromise in the row over aid spending, Ms O'Donnell said the Government had agreed to commit an additional £62.2 million over 1999-2001. This would bring the total amount spent on country programmes, aid agencies and emergency relief to £400 million over the period.

The agreement defuses a potentially embarrassing conflict between Fianna Fail and the Progressive Democrats. But it is unlikely to satisfy aid agencies, whose initial response to the deal last night was negative.

Ms O'Donnell said the decision would make the annual wrangle over aid spending "a thing of the past". Irish aid levels would no longer be "at the whim" of variable levels of gross national product or budgetary restrictions.

Earlier this month, she said she would not rule out resigning, when it became apparent that the Minister for Finance, Mr McCreevy, intended putting a freeze on aid spending. Yesterday she told the Seanad that the threeyear package was a "radical new departure" which would end the danger of "slippage".

The announcement followed intensive behind-the-scenes brokering involving Ms O'Donnell, Mr McCreevy and the Taoiseach, Mr Ahern. The aid agencies also lobbied hard.

Mr McCreevy allocated £138 million to overseas development assistance in the Estimates earlier this month, up £1 million over last year. But expressed as a proportion of GNP - the normal international yardstick for measuring aid levels - this represented a sharp downturn in Ireland's contribution to the Third World. Aid agencies and church groups sharply criticised the decision as miserly and unnecessary.

Ireland's aid contribution is set to fall from 0.31 per cent of GNP last year to 0.29 this year and about 0.25 per cent in 1999. Even though the package envisages substantial cash injections in the three following years, it is doubtful that these will be sufficient to arrest this downward trend. This is because the economy, and with it GNP, is growing so fast.

However, Ms O'Donnell insisted that the deal would enable the Government to "move progressively closer" to its own target of 0.45 per cent of GNP by 2002 and to the UN target of 0.7 per cent of GNP.

But Mr David Begg, chief executive of Concern, was sceptical. "We're still looking at cuts of 7 per cent in bilateral aid and 17 per cent in emergency funding this year. As for the future, it doesn't look to me as if we're back on track."