Tied aid

Tied aid is a kind of foreign aid. It must be spent on products & services provided by companies that are from the country providing the aid (the donor country) or in a group of selected countries.

A developed country will provide a bilateral loan or grant to a developing country, but mandate that the money be spent on goods or services produced in the selected country. From this, it follows that untied aid has no geographical limitations.

In 2006, the Organisation for Economic Co-operation and Development (OECD) estimated that 41.7 percent of Official Development Assistance is untied.