Germany's 2024 budget: Development funding, challenges, and future

In 2023, Germany marked both 50 years as a UN member and the halfway point of the UN's Agenda 2030. In the past decades, Germany and the international community cooperated to contribute significantly to development progress, and Germany has been a leader in both international cooperation and international development.

Nonetheless, the anticipated midterm financial outlook for the German budget demonstrates a worrisome decline in ODA. This trend raises concerns by development experts around Germany's ability to uphold its own commitments, maintain its position as a dependable partner in international development cooperation, and set global commitments and trends for the development community.

SEEK Development, in collaboration with seven CSOs, has released a commentary on the German budget negotiations and the potential risk of failing to meet the 0.7% ODA/GNI target.

This Donor Tracker Insight summarizes the full commentary, which can be found here (in German).

What are Germany's ODA commitments?

The German government has committed to collaborate with other countries. Germany, along with the other DAC donor countries, pledged to spend 0.7% of its GNI on ODA. It has also set goals in several key areas of international cooperation, including: investing EUR6 billion (US$6.5 billion) in climate financing by 2025; strengthening the rights, representation, and resources of girls, women, and marginalized groups through feminist foreign and development policies; and expanding social safety nets to enhance the long-term resilience of communities. In 2015, along with other OECD countries, Germany pledged to contribute to the 2030 Agenda, otherwise known as the 17 UN SDGs.

In its 2021 coalition agreement, the German government also committed to increased funding for humanitarian assistance, which is particularly paramount in the face of global crises and conflict. As the second-largest humanitarian donor and international leader, Germany plays a crucial role in many development fora.

Germany's ODA budget has continually increased in past years, driven by the war in Ukraine as well as crises in Afghanistan and the Horn of Africa. Much of this growth, however, has been due to increased domestic refugee-related costs, also known as in-donor refugee costs. In-donor refugee costs continue to rise due to the war in Ukraine, accounting for 13% of Germany's total ODA in 2022. Excluding in-donor refugee costs, ODA financing decreased in twelve OECD donor countries in 2022.

What are the projections for the future of German ODA?

Although German development financing has increased overall, there is still room for improvement in Germany's goals of climate, gender equality, humanitarian assistance, and social security. Germany's ODA/GNI, when excluding in-donor refugee costs, is at risk of falling below the 0.7% target in 2024.

Looking at the midterm financial planning of the BMF and official estimates of in-donor refugee costs drawn from the ODA budget, it is projected that the proportion of Germany's ODA for long-term projects will decrease in 2024. The government plans to spend more than EUR1 billion (US$1 billion) less in 2024 on humanitarian assistance through the AA. In perspective, this is an amount greater than the total humanitarian assistance provided to the Middle East and North Africa in 2021. Similarly, the 2024 cabinet budget draft for the BMZ contains a 5.3% funding reduction. In perspective, the planned cuts from the BMZ are higher than Germany's total contribution to the UNHCR in 2022. Cuts of this magnitude in both humanitarian assistance and ODA represent a major setback in the international ODA system, prevent vital emergency relief systems from reaching people in crisis, and jeopardize funding for long-term projects improving community resilience and quality of life.

If Germany, as the second-largest contributor to ODA, enacts these budget cuts, a significant portion of international development financing would be lost. The planned budget cuts in the BMZ and the AA budgets jeopardize the viability of Germany's goals and send a signal of disengagement to international partners. This could threaten the leading role in international cooperation that Germany has cultivated over the past decades, potentially triggering a negative effect in the international community. In a troubling trend, the UK and Sweden have already announced similar ODA financing cuts. There will undoubtedly be severe consequences for the international community and the achievement of the SDGs if other countries were to follow suit in reducing ODA.

What is the outlook for the 2030 Agenda?

Despite progress in some areas, Germany and the international community are far from achieving the SDGs at the halfway point of Agenda 2030. The past years have been marked by multiple crises, including martial conflicts, the COVID-19 pandemic, and the climate crisis. After decades of a consistent decline in poverty rates, rates increased for the first time during the COVID-19 pandemic. Multiple global events led to food prices reaching their highest levels in the last 30 years, which has significantly increased the number of undernourished people between 2019 and 2022. Additionally, extreme weather incidents related to climate change have increased dramatically, rising from fewer than 50 annually worldwide in 1950 to 300-500 annually since 2000.

Given these challenges, the 2023 UN Global Sustainability Report at the halfway point of Agenda 2030 speaks clearly: At the current pace, it is unlikely that we will achieve the SDGs by 2030 or even by 2050. Accelerating progress requires active mobilization and increased ambition from political leaders and the involvement of societal actors.