Iceland
Committed to fighting poverty, Iceland invests in marginalised and rural communities in low-income and fragile contexts through district-level approaches and multilateral and civil society partners. Iceland places a strong emphasis on gender equality and the environment. Iceland’s total official development assistance (ODA) (USD 93 million, preliminary data) increased in 2022 due in part to support to Ukraine, as well as an increase in in-donor refugee costs. It represented 0.34% of gross national income (GNI).
Find the methodological notes behind the profile here.
Iceland’s development co-operation is guided by a commitment to human rights, gender equality and sustainable development. The Policy for International Development Co-operation 2019-2023 sets out two goals aligned with Iceland’s expertise: 1) enhancing social infrastructures and peace efforts; and 2) protecting the earth, with a focus on the sustainable use of natural resources. Its three priority partner countries for bilateral co-operation are Malawi, Sierra Leone and Uganda, where Iceland is valued as a partner for its unique district-level approach to development co-operation. Iceland is currently drafting its new development co-operation policy for 2024-28.
Iceland supports its priority areas of gender equality and women’s empowerment, the blue economy, the environment and energy, human rights, and the humanitarian-development-peace nexus through its core and earmarked contributions to multilateral organisations. Increasing synergies between bilateral and multilateral development co-operation and humanitarian assistance is a priority for Iceland. In 2022, Iceland updated its strategies on multilateral co-operation, bilateral co-operation, humanitarian assistance, gender equality in development co-operation, CSO co-operation, and communication and knowledge management.
Findings from OECD-DAC reviews
The 2023 OECD-DAC peer review found that Iceland optimises its development co-operation by focusing on a few key bilateral partner countries (Malawi, Sierra Leone and Uganda) to improve livelihoods and socio-economic living conditions in rural communities. Iceland leverages its expertise on gender, geothermal energy, fisheries and land restoration, including through its training programmes and multilateral support. It works closely with a small number of multilateral organisations to advance gender equality, human rights, climate and the environment, and humanitarian assistance and to complement its bilateral portfolio. Iceland is working to scale up its ODA programme, with an interim target of 0.35% ODA/GNI subscribed in the government’s 2023-27 fiscal plan; there is, however, no plan or road map to reach 0.7%. Learn more about Iceland’s 2023 DAC peer review.
Iceland provided USD 93 million (preliminary data) of ODA in 2022 (USD 93.4 million in constant terms), representing 0.34% of GNI.1 This was an increase of 31.8% in real terms in volume and an increase in share of GNI from 0.28% in 2021. ODA volume has increased overall in the past ten years, in spite of a slight decrease in 2019. Iceland is currently just below its intermediary target of 0.35% GNI as ODA in 2022, as set in a parliamentary resolution, and its 0.7% ODA/GNI international commitment. Iceland provided all of its ODA as grants in 2021.2
Iceland ranks 18th among Development Assistance Committee (DAC) members for its ODA/GNI ratio. Over 80% of its screened bilateral allocable aid was committed to gender equality and women’s empowerment, as either a principal or significant objective in 2020-21. In 2021, Iceland had the highest share of bilateral allocable ODA commitments to persons with disabilities, and it committed one of the highest shares (47.9%) of its total bilateral allocable aid in support of the environment and the Rio Conventions in 2020-21. All of Iceland’s ODA to countries covered by the DAC Recommendation on Untying ODA was reported as untied in 2021.
Iceland is committed to several international targets, Development Assistance Committee standards and recommendations. Learn more about DAC recommendations.
Iceland provided a higher share of its ODA bilaterally in 2021. Gross bilateral ODA was 81.3% of total ODA. Forty-five per cent of gross bilateral ODA was channelled through multilateral organisations (earmarked contributions). Iceland allocated 18.7% of total ODA as core contributions to multilateral organisations.
In 2022, Iceland provided USD 9.9 million of gross bilateral ODA to Ukraine to respond to the impacts of Russia’s war of aggression, all of which was humanitarian assistance (preliminary data). In 2021, it provided USD 0.1 million.
In 2022, Iceland provided USD 2.6 million in ODA for the COVID-19 response. Iceland did not consider donations of vaccines from their domestic supply in their ODA in 2022. In 2020 and 2021, Iceland’s total bilateral support for COVID-19 response was USD 6.4 million and USD 9.5 million, respectively.
In 2021, Iceland provided USD 39 million of gross ODA to the multilateral system, an increase of 33.1% in real terms from 2020. Of this, USD 13.3 million was core multilateral ODA, while non-core contributions were earmarked for a specific country, region, theme or purpose. Project-type funding earmarked for a specific theme and/or country accounted for 19.6% of Iceland’s non-core contributions, and 80.4% was programmatic funding (to pooled funds and specific-purpose programmes and funds).
Seventy-nine per cent of Iceland’s total contributions to multilateral organisations in 2021 was allocated to the UN system and the World Bank (in descending order).
The UN system received 58.1% of Iceland’s multilateral contributions, mainly in the form of earmarked contributions. Out of a total volume of USD 22.7 million to the UN system, the top three UN recipients of Iceland’s support (core and earmarked contributions) were UNICEF (USD 4.7 million), UNFPA (USD 3.8 million) and WFP (USD 2.8 million).
See the section on Geographic and sectoral focus of ODA for the breakdown of bilateral allocations, including ODA earmarked through the multilateral development system. Learn more about multilateral development finance.
In 2021, Iceland’s bilateral spending increased compared to the previous year. It provided USD 57.6 million of gross bilateral ODA (which includes earmarked contributions to multilateral organisations). This represented an increase of 10.4% in real terms from 2020. In 2021, Iceland focused most of its bilateral ODA on health and well-being, no poverty and gender equality goals of the UN 2030 Agenda.
In 2021, country programmable aid was 35.3% of Iceland’s gross bilateral ODA, compared to a DAC country average of 45.2%. In-donor refugee costs were USD 4.3 million in 2021, a decrease of 32.7% in real terms over 2020, and represented 7.5% of Iceland’s gross bilateral ODA.
In 2021, Iceland channelled bilateral ODA mainly through multilateral organisation and the public sector as earmarked funding. Technical co-operation made up 14.3% of gross ODA in 2021.
Civil society organisations
In 2021, civil society organisations (CSOs) received USD 5.5 million of gross bilateral ODA. Three per cent of gross bilateral ODA was allocated to CSOs as core contributions, and 6.9% was channelled through CSOs to implement projects initiated by the donor (earmarked funding). From 2020 to 2021, the combined core and earmarked contributions for CSOs increased as a share of bilateral ODA, from 8% to 9.5%. Learn more about ODA allocations to and through CSOs, civil society engagement in development co-operation, and the DAC Recommendation on Enabling Civil Society in Development Co-operation and Humanitarian Aid.
In 2021, Iceland’s bilateral ODA was primarily focused on Africa. USD 20.8 million was allocated to Africa and USD 3.6 million to the Middle East, accounting respectively for 36.2% and 6.3% of gross bilateral ODA. USD 2.1 million (3.7%) was allocated to Asia (excluding the Middle East). Africa was also the main regional recipient of Iceland’s earmarked contributions to multilateral organisations.
In 2021, 42.1% of gross bilateral ODA went to Iceland’s top 10 recipients. Its top 3 recipients are in Africa and correspond to its 3 priority partner countries. The share of gross bilateral ODA that was not allocated by country was 52.5%, with 14.3% of this unallocated bilateral ODA spent on refugees in the donor country.
In 2021, the least developed countries (LDCs) received 40.5% of Iceland’s gross bilateral ODA (USD 23.3 million). This is higher than the DAC average of 22.9%. Iceland allocated the highest share of gross bilateral ODA (40.5%) to least developed countries in 2021, noting that 52.5% was unallocated by income group. Iceland allocated 32.6% of gross bilateral ODA to land-locked developing countries in 2021, equal to USD 18.8 million. Iceland allocated 0.1% of gross bilateral ODA to small island developing states (SIDS) in 2021, equal to USD 0.1 million.
Fragile contexts
Support to fragile contexts reached USD 18.8 million in 2021, representing 32.7% of Iceland’s gross bilateral ODA. Thirty-one per cent of this ODA was provided in the form of humanitarian assistance, increasing from 22.2% in 2020, while 5% was allocated to peace, decreasing from 13.2% in 2020.
Learn more about support to fragile contexts on the States of Fragility platform.
Sectors
In 2021, close to half of Iceland’s bilateral ODA was allocated to social infrastructure and services. Investments in this area accounted for 48.9% of bilateral ODA commitments (USD 28.1 million), with a strong focus on support to health (USD 14.7 million), education (USD 6.4 million) and government and civil society (USD 5 million). ODA for economic infrastructure and services totalled 7.5% of bilateral ODA commitments (USD 4.3 million), focusing on energy (USD 3.9 million), communications (USD 0.2 million) and business (USD 0.2 million). Bilateral humanitarian assistance amounted to USD 7.9 million (13.8% of bilateral ODA). In 2021, earmarked contributions to multilateral organisations focused on health, emergency response and government and civil society.
Gender equality
In 2020-21, Iceland committed 81% of its screened bilateral allocable aid to gender equality and women’s empowerment, as either a principal or significant objective (down from 88.3% in 2018-19, compared with the 2020-21 DAC average of 44.4%). This is equal to USD 35.3 million of bilateral ODA in support of gender equality. The share of screened bilateral allocable aid committed to gender equality and women’s empowerment as a principal objective was 17.1% in 2020-21, compared with the DAC average of 4.5%. Iceland includes gender equality objectives in 92% of its ODA for humanitarian aid, compared with the 2020-21 DAC average of 17.5%. Iceland screens all activities against the DAC gender equality policy marker (100% in 2020-21). Learn more about ODA focused on gender equality, the DAC Network on Gender Equality and the DAC Recommendation on Ending Sexual Exploitation in Development Co-operation.
Environment
In 2020-21, Iceland committed 47.9% of its total bilateral allocable aid (USD 20.9 million) in support of the environment and the Rio Conventions (DAC average of 34.3%), down from 48.6% in 2018-19. Unpacking the environmental data further:
Eleven per cent of screened bilateral allocable aid focused on environmental issues as a principal objective, compared with the DAC average of 11.3%.
Thirty-seven per cent of total bilateral allocable aid (USD 15.9 million) focused on climate change overall (the DAC average was 29%), up from 33.7% in 2018-19. Iceland had a greater focus on adaptation (27.5%) than on mitigation (20.1%) in 2020-21.
Nine per cent of total bilateral allocable aid (USD 3.9 million) focused on biodiversity (compared with the DAC average of 6.5%), down from 10% in 2018-19.
Learn more about climate-related development finance and the DAC Declaration on Aligning Development Co-operation with the Goals of the Paris Agreement on Climate Change.
The OECD initiative Sustainable Oceans for All shows that Iceland committed USD 1.1 million in support of the conservation and sustainable use of the ocean in 2021, down slightly from USD 1.2 million in 2020. The 2021 value is equivalent to 2.3% of Iceland’s bilateral allocable aid. Learn more about development co-operation in support of a sustainable ocean economy and the data platform on development finance for a sustainable ocean economy.
Committed USD 7.7 million (16.2% of its bilateral allocable aid) to promote aid for trade and improve developing countries’ trade performance and integration into the world economy in 2021.
Committed USD 14.7 million (31% of its bilateral allocable aid) to address the immediate or underlying determinants of malnutrition in developing countries across a variety of sectors, such as maternal health, water, sanitation and hygiene (WASH) or agriculture.
Committed USD 25 million (52.6% of its bilateral allocable aid) to development co-operation projects and programmes that promote the inclusion and empowerment of persons with disabilities.
Regarding the payment of local tax and custom duties for ODA-funded goods and services, Iceland does not typically seek exemptions on its ODA-funded goods and services in partner countries and territories. It does not make information available on the OECD Digital Transparency Hub on the Tax Treatment of ODA.
In 2016, Iceland integrated its bilateral development agency within the MFA to strengthen its institutional framework and operational capacity for development co-operation. In October 2022, the MFA underwent an institutional reorganisation, with two separate directorates in charge, respectively, of international affairs and policy and development co-operation. While the Directorate of International Affairs and Policy manages the humanitarian assistance portfolio, the Directorate for Development Co-operation oversees bilateral co-operation and CSOs, development policy, co-ordination and multilateral organisations, the environment, energy and the private sector, and ocean affairs. The MFA is working to ensure coherence and co-ordination across the two directorates, particularly to provide a joined-up response in fragile contexts. Sustainable Iceland – a new co-operation platform led by the Prime Minister’s Office – brings together all ministries and the association of municipalities to measure progress towards implementing the Sustainable Development Goals targets domestically.
The GRÓ Centre for Sustainable Development – established in 2019 as a UNESCO category two multi-disciplinary training centre – offers training programmes in Iceland to developing country professionals, focused on Icelandic expertise in gender, geothermal energy, fisheries and land restoration.
In 2022, the MFA had a total of 44 staff working in development co-operation, of which 20 are based at headquarters and 8 in Iceland’s permanent missions in Geneva, New York, Paris and Rome, and the embassies to Malawi and Uganda. In 2023, Iceland will recruit a chargé d’affaires in Sierra Leone. Iceland can also rely on the expertise of 16 locally recruited staff in its embassies in Malawi and Uganda.
The Icelandic Committee for Development Cooperation includes a range of stakeholders, from businesses to labour unions, civil society and members of parliament. Civil society and non-governmental organisations (NGOs) have five representatives that participate in the Icelandic Committee for Development Cooperation and regular consultations are held between the ministry and NGO and CSO representatives.
The Global Partnership for Effective Development Co-operation monitoring exercise tracks the implementation of the effectiveness commitments. Following a reform of the exercise during 2020-22, the 4th global monitoring round (2023-26) has resumed. More detailed results for Iceland based on the 2016 and 2018 Monitoring Rounds can be found here. Monitoring profiles for other providers are available here.
2023 OECD-DAC peer review of Iceland: https://www.oecd.org/dac/oecd-development-co-operation-peer-reviews-iceland-2023-a1552817-en.htm
2020 OECD-DAC mid-term review of Iceland: https://www.oecd.org/dac/peer-reviews/DAC-mid-term-Iceland-2020.pdf
2017 OECD-DAC peer review of Iceland: http://www.oecd.org/dac/peer-reviews/oecd-development-co-operation-peer-reviews-iceland-2017-9789264274334-en.htm
Ministry for Foreign Affairs: https://www.government.is/topics/foreign-affairs/international-development-cooperation
Iceland’s practices on the Development Co-operation TIPs: Tools Insights Practices learning platform: https://www.oecd.org/development-cooperation-learning?tag-key+partner=iceland#search
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.
Notes
← 1. DAC members adopted the grant-equivalent methodology starting from their reporting of 2019 data as a more accurate way to count the donor effort in development loans. See the methodological notes for further details.
← 2. Other providers also provide non-grants, which include sovereign loans, multilateral loans, equity investment and loans to the private sector.