McLeod Group blog by Stephen Brown, April 20, 2026
The latest numbers on foreign aid are out, and 2025 proved to be a record-breaking year – but not for the right reasons. It was a historic retreat, with a devastating impact. And there is no sign that aid will recover.
A series of records
According to the OECD’s preliminary figures for 2025, official development assistance (ODA) from the members of its Development Assistance Committee (DAC), which are essentially Western donors, including Japan and Korea, decreased by 23% in a single year. There have been aid cuts in the past, but this is the largest annual drop in the history of ODA. In just one year, it set aid levels back to where they were a decade ago.
What was different this time is the depth and breadth of the cuts. Out of the DAC’s 34 members, 26 countries reduced their aid budgets. The US wielded the largest machete, slicing 57% off its aid spending – the largest annual aid reduction ever recorded.
As a result, Germany became the world’s largest donor for the first time, even if it too reduced its aid. Cuts by France, Germany, Japan and the UK all fell in the 6–17% range. It was the first time the top five donors ever cut back simultaneously.
The few DAC countries that did increase aid spending were all relatively small ones, such as Denmark, Iceland, Luxembourg, Norway and Spain, which bumped up their budgets by 3–11%. Much higher increases were registered by two “emerging” non-DAC donors: Qatar (23%) and the United Arab Emirates (56%).
Lots of losers, not many winners
Who is bearing the brunt of these dramatic cuts? The UN has been thrown into crisis, having lost 27% of its core funding, the largest annual decrease ever. The 80th anniversary of the UN became an emergency cost-cutting exercise. Proposals on the table include shutting down UNAIDS and merging UN Women with UNFPA. WHO has been hit particularly hard.
Alarmingly, the humanitarian sector has suffered disproportionately. About 36% of its funding – more than US$15 billion – simply evaporated. In the past, humanitarian assistance usually was spared when aid budgets dropped, given the large number of lives directly at stake. The UN estimates that over 100 million people around the world will not get the urgent assistance they need as a result of last year’s cuts. One sector spared the carnage was assistance to the private sector, which increased by 13%.
The most affected region was Sub-Saharan Africa, which saw a 26% decrease in its bilateral aid receipts. Ukraine lost 38% of its bilateral aid, but still received more ODA than all of Sub-Saharan Africa combined.
The view from Canada
Canada’s 2.3% reduction in ODA last year may seem quite unremarkable amid the turmoil in the aid sector. But it is a step in the wrong direction, and the Canadian government plans to deepen the cuts over the next few years.
Moreover, some basic characteristics of Canadian aid show how misleading the aggregate figures can be. Last year, almost 36% of Canada’s ODA budget consisted of bilateral aid to a single country, Ukraine. By way of comparison, the DAC average is 6%. Ukraine is a worthy recipient, but such a high level of concentration of resources means that Canada’s modest aid program is spread far more thinly elsewhere.
In addition, according to the latest figures, almost one quarter of Canada’s ODA – 24% – was spent at home to help refugees settle in Canada (compared to the DAC average of 13%). That is also a worthy cause, but should not be counted as foreign aid. When 60% of ODA goes to Ukraine and refugee settlement in Canada, only 40% remains for the rest of the world, where needs are also enormous, often urgent and vastly underfunded.
The cliff’s edge
Global solidarity broke down in 2025, accelerated by the rise of geopolitical concerns and national self-interest. There is no reason to believe that last year’s record-breaking cuts are temporary. Rather, they are part of a longer-term trend. Last year’s 23% decrease in aid spending followed a 7% drop in 2024. The OECD expects aid to fall by a further 7% by 2028 – and that is a conservative estimate. Canada will be cutting its ODA by more than that.
The funding shock has thrown the development sector into a crisis. Over the very long term, aid should in fact be reduced and eventually eliminated, as sustainable development decreases the need for external financing. Some countries could also do more to mobilize domestic resources, but many don’t have anything near the required funds.
For this vision to succeed, however, we also need to restructure the international system in ways that level the playing field for countries in the Global South. That mean rewriting trading rules, ending illicit financial flows and undertaking a wide range of other structural reforms, none of which currently receives much political attention. Until such changes occur, the abrupt slashing of foreign aid will only multiply human misery and push many countries closer to the precipice.
Stephen Brown is Professor of Political Science at the University of Ottawa. Image by Robert Owen-Wahl from Pixabay.