The OECD Development Assistance Committee's 1998 review of Germany's development aid policies and programmes.  It finds that the German aid programme is one of the largest in the world, and it is managed with great expertise and skill. It is strongly oriented towards the partnership principle. The three basic objectives of German aid are poverty reduction, protection of the environment and natural resources and education and training. Poverty reduction, gender and the protection of the environment are cross-cutting tasks permeating all German aid activities.

Since the last review of its development co-operation programme by the OECD's Development Assistance Committee in 1995, Germany has taken several measures to improve the quality and effectiveness of its aid. These measures include:

- the reformulation of the concept for development policy; - the establishment of guidelines for the integration of poverty reduction and gender into all project and programme design; - the conception and implementation of development-oriented emergency assistance programmes, including conflict resolution activities; - a new approach to evaluation; - decentralisation of the German technical assistance agency (GTZ); and the establishment of field offices by the financial co-operation agency (KfW); - more systematic relations with non-governmental organisations.

At the same time, there are still significant challenges in adapting a complex multi-institutional management structure to evolving needs for policy-based, co-ordinated programmes, and also in overcoming persistent pressures on the budget. The volume of German aid for developing countries has been falling significantly in recent years. As a share of GNP, ODA net disbursements fell from 0.42 per cent in 1990 to 0.28 per cent in 1997. Assistance for the reform process in Central and Eastern Europe and the former Soviet Union also declined sharply in 1996 and 1997.