Wednesday, February 25, 2009

The downturn in aid from a British perspective

The world economic downturn has really hurt international aid, but for the UK the drop in value of the British Pound has also had a bad impact. The drop in value of the pound has decreased the effectiveness of aid, and how much the pounds can buy or help.

From this story in Reuters, writer Megan Rowling examines the effects of currency value and the credit crunch on aid. The article contains a ton of information that I could not fit into our snippet, so I would really encourage clicking on the above link.

British-based charities are suffering additionally from the pound's decline, making their money worth less abroad.

The squeeze has come as the needs of many crisis-hit communities, such as those in Zimbabwe, Sri Lanka and Sudan's war-torn Darfur region, are rising.

"The problems in Darfur haven't changed one iota because of Western bank failures. If anything, it's just gone off the agenda," said John Low, chief executive of the Charities Aid Foundation (CAF), which helps charities manage money.

A CAF survey in January of 322 British charities -- including groups working on overseas aid -- found half expected their income to fall in the next year and 41 percent had seen their income drop in the previous three months.

British charities working overseas say the most harmful effect of the crisis so far has been the weakness of the pound. The CAFOD agency estimates the dollar value of British government aid may fall by as much as $41 billion between 2008 and 2014.

Groups funded by CAFOD in developing countries have already seen the dollar value of their sterling grants drop 25 to 30 percent compared with the middle of last year. "We're basically passing on the pain to our partners with profound apologies," said policy adviser George Gelber.

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