Pacific at risk as global aid falls to lowest level in a decade - report

Small island nations in the Pacific could face deep economic and health pressure as global aid spending falls to its lowest level since 2014, a new report from the Organisation for Economic Co-operation and Development (OECD) warns.

The report says Small Island Developing States (SIDS) in Asia and the Pacific are “among the hardest hit individually” with projected losses of 33.4 per cent in Overseas Development Assistance (ODA) between 2024 and 2026.

Pacific leaders have previously warned that shrinking global aid risks increasing pressure on already stretched public services across the region, particularly in health, climate resilience and disaster response.

Regional institutions such as the Pacific Islands Forum have consistently called for more predictable and coordinated development funding to avoid sudden shocks to national budgets.

It comes as the Trump Administration lobbies United Nations members to back a “Trade Over Aid” approach.

The move would push donors to prioritise market reforms and economic restructuring over traditional humanitarian and health grants.

Health funding is expected to be hit particularly hard with global support for public health and disease control falling back to pre-pandemic levels.

According to the OECD, funding for malaria programmes is set to drop by 59.6 per cent, tuberculosis by 57.2 per cent, and other infectious disease control by 40.4 per cent.

Humanitarian aid is projected to fall by 40.3 per cent while support for multilateral institutions will drop by 31 per cent.

Small Island Developing States across the Pacific are warning that sharp global aid declines could put pressure on health systems and disaster response capacity. Photo/OECD

The report also highlights how dependent many Pacific countries are on a small number of donors.

“A single provider accounts for most ODA in several LDCs and small island developing states (SIDS), such as the United States in Marshall Islands and Micronesia, or Australia and New Zealand in Tonga and Tuvalu,” the OECD said.

It warned this dependence means “a shift in aid could therefore spill over quickly into broader macroeconomic and societal stress".

In the Pacific, Australia and New Zealand have kept their aid budgets largely steady in recent updates.

Both offer some short-term stability compared to wider global cuts. New Zealand has also brought forward NZ$160 million in unspent aid funding to be used this year.

But development experts say the global trend still points to growing pressure on already stretched systems.

ChildFund New Zealand chief executive Josie Pagani says fragmented aid projects are failing to meet basic needs across the Pacific, calling for a more coordinated approach.

Josie Pagani, chief executive of ChildFund New Zealand, says the cuts are already reshaping how aid works on the ground.

“That is gonna have a very direct impact on the ability for countries to respond, or charities like ChildFund to respond directly to a crisis,” she told RNZ Pacific.

She also warned that long-running, small-scale projects are not solving deeper infrastructure gaps across the region.

“Across the Pacific, there are sort of dinosaur aid projects scattered around... water tanks with logos on them... (but) there are five million people in the Pacific who still don't have access to running clean drinking water.

“You can't solve that by a tank here and a tank there, you've got to look at it systemically,” Pagani said.

The OECD says the biggest cuts are coming from major donor countries in Europe and the United States, pushing global aid to its lowest level in more than a decade.

Listen to Canterbury University PhD student Ashalya Noa's earlier interview on her research into foreign aid and soft power in the Pacific below.

Washington’s push for a “Trade Over Aid” model is raising concern among some development and Pacific observers, who warn it could shift funding away from health, crisis response and governance support.

While Australia and New Zealand have kept aid levels largely flat, this may soften the immediate blow for the Pacific and the OECD warns the wider system is becoming more fragile and uneven with heavy reliance on a small number of partners leaving many countries exposed to sudden shocks.

For Pacific leaders and aid agencies, the concern is not just the size of the cuts, but what they signal: a long-term shift away from predictable grants toward a more conditional, trade-focused model of development support.