ODA Grant Equivalent.
Since 2018, the OECD DAC requires donors to report the "grant equivalent" of concessional loans rather than the cash-flow face value. This tool models the strict DAC arithmetic used to determine if a loan qualifies as Official Development Assistance.
Methodology & Assumptions
This calculator uses the updated 2018 OECD DAC methodology for calculating the grant equivalent of concessional loans.
- Discount Rates: Differentiated by recipient income group: 9% for LDCs and other LICs, 7% for LMICs, and 6% for UMICs.
- Repayment Profile: Assumes a standard linear repayment profile (equal principal payments after the grace period).
- Thresholds: A loan must reach a minimum grant element threshold to be reportable at all (45% LDC, 15% LMIC, 10% UMIC).
Why it matters
Under the old cash-flow system, donors were incentivized to give loans rather than grants, as the full face value was reported as ODA immediately. The grant equivalent system severely penalizes hard loans, forcing donors to provide highly concessional terms if they want the political credit of ODA.