 Apart from any possible effects on New Zealand’s aid programme, DAC graduation has very
limited implications for the Cook Islands. In terms of financial assistance, over half of the
economy’s ODA now comes from non-DAC sources, and this will increase with the rising
donor profile of China and international climate change agencies such as GEF.
 Of the DAC funding from donors other than New Zealand, the large capital sums currently
flowing from the EU will drop steeply in any case as the infrastructure projects they support
are completed, and the EU’s longer-run role seems likely to be a minor one. The same is
true of Japan.
 Possibly access to some training programmes and technical assistance provided by
international agencies may be reduced, but this remains to be tested in practice.
 A base tier of aid, comprising small aid grants to front-line government agencies from a wide
range of donors which are unconcerned with the issue of DAC graduation, provides between
$10 million and $20 million per year, and is expected to continue post-graduation.
 A second tier is budget support, which provides a further $10 million per year. This is not
explicitly guaranteed to continue beyond 2018, but neither is it explicitly guaranteed to be
discontinued. A reasonable response to this uncertainty would be for the Cook Islands
Government to establish a buffer-fund arrangement of some sort. New Zealand accounts
for $8 million of this tier and the EU for $2 million.
 Large capital grants to fund key infrastructure investments make up the top tier of aid.
Funding for the key projects identified in the 2015 Infrastructure Plan will have been
committed prior to graduation, though the actual spending will continue beyond it. Capital
needs beyond 2021 will be smaller and less “lumpy”, and could be within the fiscal capacity
of the Cook Islands Government if (i) the fiscal responsibility limit on tax revenues can be
relaxed somewhat and (ii) funding from non-DAC donors continues to increase.