Behind the scenes at the Paris-based Development Assistance Committee a controversy has been brewing over whether billions of dollars of loans reported as France, Germany, and the European Investment Bank really meet the DAC's criteria to be "aid." As a result, the DAC has asked its staff to look into how the rules should be improved and clarified. In this long post, I make the case for a revision that is both sensible and realistic, and I describe some number crunching I've just done to simulate the consequences of the chain.
About $9 billion/year in loans recently reported as aid would be rejected. Most countries' aid totals wouldn't change, but France's would drop from 0.45% to 0.38% of GDP.