Luxembourg
Luxembourg’s development co-operation focuses on access to basic social services, humanitarian assistance and inclusive finance, and it has the highest share of official development assistance (ODA) allocated to least developed countries (LDCs). In 2022, Luxembourg was the most generous Development Assistance Committee (DAC) member relative to gross national income (GNI). Luxembourg’s total ODA (USD 530 million, preliminary data) increased in absolute terms in 2022 due to an increase in bilateral grants, mostly for humanitarian aid. ODA continued to represent 1% of GNI.
Find the methodological notes behind the profile here.
Luxembourg’s development co-operation strategy, The Road to 2030, prioritises four themes: 1) access to quality basic social services; 2) socio-economic integration of women and youth; 3) inclusive and sustainable growth; and 4) inclusive governance. The development co-operation programme is focused on six partner countries, five of which are in sub-Saharan Africa. Indicative country programmes are jointly signed with partner countries at the political level.
The Road to 2030 affirms Luxembourg’s strong support for multilateral institutions. The United Nations (UN) system and the European Union (EU) are key partners, and Luxembourg also aims to strengthen its engagement with multilateral development banks. Luxembourg actively uses its major international financial centre role to promote sustainable financing. Luxembourg has introduced a sustainability check for all new regulations to improve policy coherence for sustainable development. In August 2022, Luxembourg adopted a new humanitarian action strategy to better respond to multidimensional crises in a global context characterised by increasing conflicts and instability, as well as by climate change and health crises. The strategy commits Luxembourg to allocate 15% of its overall annual ODA to humanitarian actions.
Findings of OECD-DAC reviews
The 2020 OECD-DAC mid-term review praised Luxembourg’s progress. Key actions included whole-of-government country strategies, dialogue and mechanisms for greater policy coherence, and investing in information management. As Luxembourg is a leader in sustainable and inclusive finance, the mid-term review encouraged Luxembourg to better integrate developing countries into sustainable finance efforts. Investments in its cross-cutting priority – environment – and reflecting on the approach to fragility and risk management were identified as opportunities for further progress. Learn more about Luxembourg’s 2020 mid-term review.
Luxembourg provided USD 530 million (preliminary data) of ODA in 2022 (USD 562.3 million in constant terms), representing 1% of GNI.1 This was an increase of 4.4% in real terms in volume and an increase in share of GNI from 0.99% in 2021. Consistently providing 1% of GNI as ODA, Luxembourg has exceeded the 0.7% UN target since 2000. Luxembourg is in line with its domestic (1%) and EU commitments to collectively achieve a 0.7% ODA/GNI ratio by 2030. Luxembourg provides all of its ODA as grants.2
In 2022, Luxembourg was the most generous DAC member relative to the size of its economy. With 0.48% ODA/GNI committed to the LDCs in 2020, Luxembourg also surpasses the 0.2% UN target and is the leading DAC donor in this regard. Moreover, its efforts for international climate finance are supplementary to its ODA budget. Luxembourg was the DAC member that allocated the highest share of bilateral ODA to LDCs in 2021 (52.8%) as well as one of the highest shares of bilateral ODA to Africa (50.3% in 2021) and to fragile contexts (48.6%). It channels a significant share of ODA through civil society organisations (CSOs) (28.9%) and reported 100% of ODA to countries covered by the DAC Recommendation on Untying ODA as untied in 2021.
Luxembourg is committed to several international targets, Development Assistance Committee standards and recommendations. Learn more about DAC recommendations.
Luxembourg provided a higher share of its ODA bilaterally in 2021. Gross bilateral ODA was 67.6% of total ODA. Twenty-four per cent of gross bilateral ODA was channelled through multilateral organisations (earmarked contributions). Luxembourg allocated 32.4% of total ODA as core contributions to multilateral organisations.
In 2022, Luxembourg provided USD 7.3 million of gross bilateral ODA to Ukraine to respond to the impacts of Russia’s war of aggression, of which USD 7.2 million was humanitarian assistance (preliminary data). In 2021, it provided USD 1.2 million.
In 2022, Luxembourg provided USD 3 million in ODA for the COVID-19 response. Luxembourg did not report donations of vaccines from their domestic supply in their ODA in 2022. In 2020 and 2021, Luxembourg’s total bilateral support for COVID-19 response was USD 0.8 million and USD 9.5 million, respectively.
In 2021, Luxembourg provided USD 260.9 million of gross ODA to the multilateral system, an increase of 13.6% in real terms from 2020. Of this, USD 175 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 14% of Luxembourg’s non-core contributions and 86% was programmatic funding (to pooled funds and specific-purpose programmes and funds).
Seventy-four per cent of Luxembourg’s total contributions to multilateral organisations in 2021 was allocated to the UN system and EU Institutions (in descending order).
The UN system received 51.4% of Luxembourg’s multilateral contributions, mainly in the form of core contributions. Out of a total volume of USD 134 million to the UN system, the top three UN recipients of Luxembourg’s support (core and earmarked contributions) were UNDP (USD 16.3 million), UNICEF (USD 15.2 million) and WFP (USD 14 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, Luxembourg’s bilateral spending increased compared to the previous year. It provided USD 365.2 million of gross bilateral ODA (which includes earmarked contributions to multilateral organisations). This represented an increase of 5.4% in real terms from 2020.
In 2021, country programmable aid was 56.5% of Luxembourg’s gross bilateral ODA, compared to a DAC country average of 45.2%. Luxembourg does not report In-donor refugee costs as ODA.
Luxembourg disbursed USD 0.2 million for triangular co-operation in 2021. Learn more about triangular co-operation and specific projects at the OECD’s voluntary triangular co-operation project repository.
In 2021, Luxembourg channelled bilateral ODA mainly through the public sector and NGOs, as earmarked funding. Technical co-operation made up 17.6% of gross ODA in 2021.
Civil society organisations
In 2021, CSOs received USD 105.6 million of gross bilateral ODA. Four per cent of gross bilateral ODA was allocated to CSOs as core contributions and 24.9% 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 decreased as a share of bilateral ODA, from 31.3% to 28.9%. 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, Luxembourg’s bilateral ODA was primarily focused on Africa. USD 183.8 million was allocated to Africa and USD 50.5 million to Asia (excluding the Middle East), accounting respectively for 50.3% and 13.8% of gross bilateral ODA. USD 19.6 million (5.4%) was allocated to the Middle East. Africa was also the main regional recipient of Luxembourg’s earmarked contributions to multilateral organisations, in line with the policy priorities of the overall strategy.
In 2021, 52.1% of gross bilateral ODA went to Luxembourg’s top 10 recipients. Its top 10 recipients are priority partner countries in Africa and Asia. The share of gross bilateral ODA that was not allocated by country was 30.3%, mainly due to regional and multi-sector projects as well as contributions to specific-purpose programmes.
In 2021, the least developed countries (LDCs) received 52.8% of Luxembourg’s gross bilateral ODA (USD 193 million). This is greater than the DAC average of 22.9%. Luxembourg allocated the highest share of gross bilateral ODA (52.8%) to least developed countries in 2021, noting that 30.3% was unallocated by income group. Within bilateral ODA that was unallocated, Luxembourg estimates that 30.3% was directed to the LDCs. Luxembourg allocated 38.4% of gross bilateral ODA to land-locked developing countries in 2021, equal to USD 140.1 million. Luxembourg allocated 6.5% of gross bilateral ODA to small island developing states (SIDS) in 2021, equal to USD 23.7 million.
Fragile contexts
Support to fragile contexts reached USD 177.7 million in 2021, representing 48.6% of Luxembourg’s gross bilateral ODA. Twenty-three per cent of this ODA was provided in the form of humanitarian assistance, increasing from 21.7% in 2020, while 5.8% was allocated to peace, a slight decrease from 6.3% in 2020.
Learn more about support to fragile contexts on the States of Fragility platform.
Sectors
In 2021, close to half of Luxembourg’s bilateral ODA was allocated to social infrastructure and services. Investments in this area accounted for 44.3% of bilateral ODA commitments (USD 162 million), with a strong focus on support to health (USD 53.9 million), education (USD 50.2 million) and government and civil society (USD 29.6 million). ODA for economic infrastructure and services totalled 11.2% of bilateral ODA commitments (USD 41 million), focusing on banking and financial services (USD 28.7 million), communications (USD 7 million) and energy (USD 4 million). Bilateral humanitarian assistance amounted to USD 67 million (18.3% of bilateral ODA). In 2021, earmarked contributions to multilateral organisations focused on emergency response, health and government and civil society.
Gender equality
In 2020-21, Luxembourg committed 38.4% of its screened bilateral allocable aid to gender equality and women’s empowerment, as either a principal or significant objective (down from 46.4% in 2018-19, compared with the 2020-21 DAC average of 44.4%). This is equal to USD 69.6 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 9.7% in 2020-21, compared with the DAC average of 4.5%. Luxembourg includes gender equality objectives in 0.4% of its ODA for humanitarian aid, compared with the 2020-21 DAC average of 17.5%. Luxembourg screens the majority of activities against the DAC gender equality policy marker (55.3% 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, Luxembourg committed 14.7% of its total bilateral allocable aid (USD 48.3 million) in support of the environment and the Rio Conventions (DAC average of 34.3%), down from 24.3% in 2018-19. Unpacking the environmental data further:
Three per cent of screened bilateral allocable aid focused on environmental issues as a principal objective, compared with the DAC average of 11.3%.
Four per cent of total bilateral allocable aid (USD 14.6 million) focused on climate change overall (the DAC average was 29%), down from 7.1% in 2018-19. Luxembourg had a higher focus on adaptation (7.5%) than on mitigation (4.4%) in 2020-21.
Three per cent of total bilateral allocable aid (USD 6.1 million) focused on biodiversity (compared with the DAC average of 6.5%), down from 3.8% 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.
Committed USD 1.5 million of bilateral ODA to the mobilisation of domestic resources in developing countries, amounting to 0.4% of its bilateral allocable aid. Regarding the payment of local tax and custom duties for ODA-funded goods and services, Luxembourg typically seeks tax and customs duty exemptions on its ODA-funded goods and services in partner countries and territories, although exceptions exist and it makes information available on the OECD Digital Transparency Hub on the Tax Treatment of ODA.
Committed USD 68.5 million (20.4% 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 3.4 million (1% 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.
Luxembourg uses leveraging mechanisms to mobilise private finance for sustainable development. In 2021, Luxembourg’s Ministry of Foreign and European Affairs mobilised USD 14.4 million from the private sector through simple co-financing.
In 2020-21, 9.2% of mobilised private finance by Luxembourg targeted middle-income countries and 25.7% LDCs and other low-income countries (LICs), noting that 65.1% was unallocated by income. During the same period, the top beneficiary region of this financing was Africa (22.2% of the total).
Mobilised private finance by Luxembourg in 2020-21 mainly benefited activities in the business & other services (13.8%) and banking & financial services (8.6%) sectors, noting that 56.9% was unallocated/unspecified by sector.
Learn more about the amounts mobilised from the private sector for development.
Luxembourg’s development co-operation is comprised of the Ministry of Foreign and European Affairs (MFEA), the implementing agency Lux-Development (LuxDev), and the Ministry of Finance. The Directorate for Development Cooperation and Humanitarian Affairs at the MFEA is responsible for designing and implementing Luxembourg’s development co-operation policy, while the development co-operation agency, LuxDev, executes around one-third of Luxembourg’s bilateral ODA on behalf of the state and also implements programmes for DAC partners. The Ministry of Finance is responsible for multilateral initiatives with international financial institutions.
An important mechanism for exchanging with stakeholders is the Inter-Ministerial Committee for Development Co-operation, which regularly associates civil society representatives, and a regular multi-stakeholder conference, the “Assises de la Coopération”. CSOs active in development co-operation, humanitarian assistance and global citizenship education co-ordinate through the umbrella body Cercle de Coopération des ONGD.
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 Luxembourg based on the 2016 and 2018 Monitoring Rounds can be found here. Monitoring profiles for other providers are available here.
2020 OECD-DAC mid-term review of Luxembourg: https://www.oecd.org/dac/peer-reviews/Peer-reviews_DAC-mid-term-Luxembourg-2020.pdf.
2017 OECD-DAC peer review of Luxembourg: www.oecd.org/dac/oecd-development-co-operation-peer-reviews-luxembourg-2017-9789264284364-en.htm.
Government of the Grand Duchy of Luxembourg, Directorate for Development Cooperation and Humanitarian Affairs: https://cooperation.gouvernement.lu/en/cooperation-au-developpement.html.
Luxembourg Development Agency (LuxDev): https://luxdev.lu/en/home.
CSO umbrella organisation Le Cercle de Coopération des ONGD: https://cercle.lu.
Luxembourg’s practices on the Development Co-operation TIPs: Tools Insights Practices learning platform: https://www.oecd.org/development-cooperation-learning?tag-key+partner=luxembourg#search
Member of the OECD Development Assistance Committee (DAC) since 1992.
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. Non-grants include sovereign loans, multilateral loans, equity investment and loans to the private sector.