Government projections that overseas aid would reach 0.34 per cent of GNP this year will not be met because of a new method of calculating GNP, the Dail was told.

The Minister of State for Foreign Affairs, Ms Liz O'Donnell, said the Department of Finance knew about the change in calculation last year.

However, she was not notified of the new form of calculation until this September and the interim plan of 0.45 per cent of GNP in overseas development aid had been "severely thrown off course" as a result.

Ms O'Donnell told Mr Gay Mitchell, Fine Gael's foreign affairs spokesman, that the £178 million in overseas aid for 1999 was projected as 0.34 per cent of GNP. She said negotiations last year with the Minister for Finance led to agreement on guaranteed cash increases over a three-year period, with an interim target of 0.45 per cent of GNP and an ultimate aim of 0.7 per cent, the UN target.

Mr Mitchell suggested development aid should be taken out of the Estimates wrangle and that the best way to meet the UN target by 2007 was to legislate.

Ms O'Donnell said she had an open mind about such legislation and would welcome a debate. "It may well be that if there is cross-party consensus on a statutory basis for reaching the UN target". Ms O'Donnell had thought she had taken the overseas aid budget out of the Estimates wrangle, by agreeing the programme, but "GNP and the new method of calculating it has overtaken that".

The problem of following a rapid GNP growth was affecting the Government's capacity to reach its international targets. She was therefore glad of cross-party agreement that the State's overseas development budget "must continue to grow in line with our international commitment".