Iceland

Iceland is a principled and active member of the international community that uses its diplomatic influence in a strategic and effective way to address global development issues. Its development policy framework is an integral part of its foreign policy. Iceland focuses its aid allocations on contexts most in need and on sectors that play to its strengths, strategically using multilateral organisations to expand its reach. The Ministry of Foreign Affairs is responsible for managing the development co-operation policy and programme.

Iceland’s first OECD-DAC peer review in 2017 found it to be an active, flexible and transparent partner whose development efforts benefit from good aid management and a prioritisation of resources. The review encouraged Iceland to ensure tangible development results despite the limited resources. An OECD-DAC mid-term review of Iceland is planned in 2020. Learn more about the 2017 OECD-DAC peer review of Iceland.

Human rights, gender equality and sustainable development guide Iceland’s development co-operation. The Policy for International Development Co-operation 2019-2023 sets out two goals aligned with Iceland’s expert knowledge: 1) enhancing social infrastructures and peace efforts; and 2) protecting the earth with a focus on the sustainable use of natural resources. Increasing synergies between bilateral and multilateral development co-operation and humanitarian assistance is a priority to Iceland. Being committed to fighting poverty, Iceland concentrates its efforts in low-income and fragile countries.

Iceland provided less official development assistance (ODA) in 2019 than in the previous year. Total ODA on a grant-equivalent basis stood at USD 67 million (preliminary data), representing 0.27% of Iceland’s gross national income (GNI) in 2019.1 The fall of 1.6% in real terms from 2018 was due to a slight drop in its overall aid programme. Despite the relatively small size of its aid budget, Iceland ranked 15th among DAC member countries in relation to its ODA/GNI ratio in 2019. The government has committed to achieve the target of allocating 0.7% of GNI to ODA and aims to reach a 0.35% ODA/GNI ratio by 2022. Total ODA on a grant-equivalent basis has the same value as net ODA under the cash-flow methodology used in the past, as Iceland provides only grants.2

Iceland is valued as a partner by its priority multilateral organisations, who appreciate its willingness to champion innovative initiatives. With a focus on Africa, its bilateral ODA supports sectors where it has forged a comparative advantage (e.g. social infrastructures, fishing and geothermal energy). Iceland champions the promotion of gender equality. See the methodological notes for details on the definitions and statistical methodologies applied.

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In 2018, Iceland provided the largest proportion of its ODA bilaterally. Gross bilateral ODA was 82% of total ODA, of which 43% was channelled through multilateral organisations (earmarked contributions). Iceland allocated 18% of total ODA as core contributions to multilateral organisations.

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In 2018, Iceland increased its total support (core and earmarked contributions) to multilateral organisations. It provided USD 39 million of gross ODA to the multilateral system, an increase of 37.9% in real terms from 2017. Of this, USD 13 million was core multilateral ODA and the rest was earmarked for a specific country, region, theme or purpose. Project aid earmarked for a specific project or purpose (tight earmarking) accounted for 35% of Iceland’s non-core contributions, while the remaining 65% was softly earmarked (to pooled funds and specific-purpose programmes and funds).

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In 2018, Iceland’s total contribution to multilateral organisations was mainly allocated to the United Nations (UN) and the World Bank Group. These contributions together accounted for more than 89% of Iceland’s total support to the multilateral system. The UN system received 65%, mainly through earmarked contributions. Out of a total gross volume of USD 26 million to the UN system, the top three UN recipients of Iceland’s support (core and earmarked contributions) were: the United Nations Children’s Fund (USD 8 million), the United Nations University (USD 7 million) and UN Women (USD 3 million). These three, together with the United Nations Population Fund (USD 2 million), are Iceland’s four priority UN partners.

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Note: See the list of UN acronyms.

See the section on “Geographic and thematic focus of ODA” for the geographical and thematic breakdown of bilateral allocations earmarked through the multilateral development system. Learn more about multilateral development finance.

In 2018, Iceland increased its bilateral spending compared to the previous year. It provided USD 61 million of gross bilateral ODA (including earmarked contributions to multilateral organisations), which represented an increase of 12.0% in real terms from 2017.

In 2018, country programmable aid was 43% of Iceland’s gross bilateral ODA, compared to a DAC country average of 49%. In-donor refugee costs were USD 11 million in 2018, a decrease of 49.9% in real terms over 2017, and represented 15% of Iceland’s total net ODA.

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Note: NGO: non-governmental organisation.

In 2018, Iceland channelled its bilateral ODA mainly through the public sector and multilateral organisations, as earmarked funding.

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Note: NGO: non-governmental organisation.

In 2018, civil society organisations (CSOs) received USD 6 million of gross bilateral ODA. Three per cent of gross bilateral ODA was allocated to CSOs as core contributions and 6% was channelled through CSOs to implement projects initiated by Iceland (earmarked funding). Between 2017 and 2018, core and earmarked contributions to CSOs increased as a share of bilateral ODA, from 6% to 9%. Learn more about ODA allocations to and through CSOs and civil society engagement in development co-operation.

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In 2018, Iceland’s bilateral ODA was primarily focused on Africa, which received USD 25 million (40% of gross bilateral ODA). USD 6 million was allocated to Asia (10% of gross bilateral ODA). Africa was also the main regional recipient of Iceland’s earmarked contributions to multilateral organisations, in line with its policy priorities. Forty-eight per cent of gross bilateral ODA was unspecified by region in 2018.

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Bilateral ODA by recipient country

In 2018, 46% of gross bilateral ODA went to Iceland’s top 10 recipients. Malawi and Uganda are two bilateral partner countries where Iceland has an embassy and supports specific district authorities. Mozambique, the West Bank and Gaza Strip, and Afghanistan are focus countries that Iceland supports through earmarked contributions to multilateral organisations.3 These countries were all among the top recipients of its ODA in 2018. The share of gross bilateral ODA that was not allocated by country was 48%, of which 38% was expenditure for in-donor refugees.

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In 2018, least developed countries (LDCs) received 42.6% of Iceland’s gross bilateral ODA (USD 26 million). This is above the DAC country average of 23.8%. The LDCs received the highest share of gross bilateral ODA in 2018, noting that 48% was unallocated by income group.

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Note: LDC: least developed country; LIC: low-income country; LMIC: lower middle-income country; UMIC: upper middle-income country.

Support to fragile contexts reached USD 29 million of gross bilateral ODA in 2018 (47.7% of gross bilateral ODA). Extremely fragile contexts received 15.1% of this amount. Learn more about support to fragile contexts on the States of Fragility platform.

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Note: The chart represents only gross bilateral ODA that is allocated by country.

In 2018, most of Iceland’s bilateral ODA was allocated to social infrastructure and services. Investments in this area accounted for 30% of bilateral ODA commitments (USD 12.5 million), with a focus on support to water supply and sanitation (USD 3.8 million) and government and civil society (mainly women's equality organisations and institutions, USD 2.8 million). ODA commitments focused also on fishing and forestry (USD 3.8 million) and energy (USD 2.6 million). Bilateral humanitarian aid amounted to USD 3.2 million (8% of bilateral ODA). Earmarked contributions to multilateral organisations focused primarily on social infrastructure and services and production sectors in 2018.

In 2018, Iceland committed USD 6.5 million (24.1% of bilateral allocable aid) to promote aid for trade and improve developing countries’ trade performance and integration into the world economy in 2018.

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In 2018, Iceland committed 92% of its bilateral allocable aid to gender equality and women’s empowerment as either a principal or significant objective (up from 79% in 2017),4 compared with the DAC country average of 42%. This is equal to USD 25 million of bilateral ODA commitments in support of gender equality. Out of this, the share of bilateral allocable aid committed to gender equality and women’s empowerment as a principal objective was 12%, compared with the DAC country average of 4%. Iceland has a strong focus on gender in all sectors. Iceland screens all activities against the gender marker (100% in 2018). Learn more about ODA focused on gender equality and the DAC Network on Gender Equality.

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In 2018, Iceland committed 52% of its bilateral allocable aid (USD 14 million) in support of the environment as either a principal or significant objective, down from 72% in 2017 (the DAC country average was 33%). Six per cent focused on environmental issues as a principal objective, compared with the DAC country average of 11%. Thirty-four per cent (USD 9 million) focused on climate change as either a principal or significant objective, down from 37% in 2017 (the DAC country average was 26%). Iceland has a similar focus on adaptation (23% in 2018) and on mitigation (21%). Learn more about climate-related development finance.

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Data analysis for the OECD initiative Sustainable Oceans for All shows that Iceland committed USD 2.5 million in support of the conservation and sustainable use of the ocean in 2018, amounting to 9.4% of bilateral allocable aid. This is above the DAC country average of 1.1% and in line with Iceland’s new policy focus on protecting the oceans and promoting their sustainable use. Learn more about ODA focused on the ocean economy.

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In 2016, Iceland integrated its bilateral development agency, ICEIDA, within the Ministry for Foreign Affairs to strengthen its institutional framework and operational capacity for development co-operation. The Ministry for Foreign Affairs manages 90% of Iceland’s ODA, and within the ministry, the Directorate of International Development Cooperation is responsible for Iceland’s development co-operation policy formulation, planning, administration, evaluation and co-ordination.

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The Ministry for Foreign Affairs has a dedicated unit for evaluating the portfolio of development initiatives and funding under Icelandic ODA. The Director of Evaluations is responsible for ensuring that the DAC guidelines and procedures for evaluations, as well as other applicable standards, are applied. Iceland’s Policy for International Development Co-operation 2019-2023 states that external evaluations will assess project performance and impact. Read more about Iceland’s evaluation system.

Visit the DAC Evaluation Resource Centre website for evaluations of Icelandic development co-operation.

Explore the Monitoring Dashboard of the Global Partnership for Effective Development Co-operation.

Ministry for Foreign Affairs: https://www.government.is/topics/foreign-affairs/international-development-cooperation

Member of the OECD Development Assistance Committee (DAC) since 2013.

The methodological notes provide further details on the definitions and statistical methodologies applied, including the grant-equivalent methodology, core and earmarked contributions to multilateral organisations, country programmable aid, channels of delivery, bilateral ODA unspecified/unallocated, bilateral allocable aid, the gender equality policy marker, and the environment markers.

← 1. DAC members adopted the grant-equivalent methodology starting from their reporting of 2018 data as a more accurate way to count the provider’s effort in development loans. See the methodological notes for further details.

← 2. All 2019 statistics in this paragraph are expressed in current prices and, therefore, they may differ from values in the ODA volume chart, which uses constant prices.

← 3. Support to the West Bank and Gaza Strip is not limited by geographical borders, but applies also to Palestinian refugees in the neighbouring countries of Jordan, Lebanon and the Syrian Arab Republic.

← 4. The use of the recommended minimum criteria for the marker by some members in recent years can result in lower levels of aid reported as being focused on gender equality.

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https://doi.org/10.1787/2dcf1367-en

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