A recent report says that the world's richest nations greatly exaggerate their aid to economically poor countries and that about 60% of the money donated by G7 countries is 'phantom aid'.

Phantom aid is defined as aid diverted from economically poor nations for other purposes, including aid that is:

• not targeted for poverty reduction, estimated to be worth US$4.9 billion
• double counted as debt relief, totalling US$9.4 billion
• overpriced and ineffective - Technical Assistance, estimated at US$13.8 billion
• tied to goods and services from the donor country, estimated at US$2.7 billion
• poorly coordinated and with high transaction costs, estimated at US$9 billion
• too unpredictable to be useful to the recipient - lack of data prevents an estimate
• spent on immigration-related costs in the donor country, totalling US$1.5 billion
• spent on excess administration costs, totalling US$0.4 billion.

In total, 'real aid' in 2003 accounted for US$27 billion, or 0.1% of combined donor income.

Nearly 90% of all contributions coming from the USA and France were considered phantom aid.