2009 Financial Bill finally approved: ODA cuts are confirmed

Last Friday, the Lower House of Parliament approved the 2009 Financial Bill, actually confirming the heavy and initial cuts to development cooperation. Despite proposal by minority groups and pressure from Civil society, no change was introduced within the Bill as for development cooperation section. According to unconfirmed sources, in the view of the Italian G8 Presidency, the Ministry for Foreign Affairs has asked 500 million dollar to be allocated to development cooperation over 2009. Extra-budget cycle financial allocations to development cooperation via a special decree is not new in recent years, both with centre-right ( the 2005 Tsunami Decree) and centre-left governments (the 2006 revenue-windfall decrees).

New evalutaion Unit members appointed: first evaluations planned after 7 years?

The last Steering Committee for development cooperation has appointed the new 5 experts for the Evaluation Unit. According to the current legislation, the Evaluation Unit is tasked with:1) ex-ante initiatives approval before they are submitted to the Steering Committe and 2) commissioning ex-post independent impact evaluations. Due to zero financial resources allocated to the last evaluation unit activities, the Italian development cooperation did not actually carry out any independent evaluation over the last 7 years. The 2009 workplan of the newly appointed Evaluation Unit provides for 500,000 euro worth evaluations. Unfortunately, an approved plan of activity is no guarantee that these are going to be adequately resourced. In 2006, the last evaluation unit approved a 3 year plan, but no financial resources have ever be allocated to implement that.

Multi-year development guidelines approved

Foreign Minister Franco Frattini, presided the December 9th meeting of the Steering Committee for Development Cooperation. The Minister reported almost the full use of the fiancial resources of the cooperation for 2008 - ( 811 million euros as grants and 270 million euros as soft loans) .

The December 9th, Steering Committee has also approved multi-years guidelines for development cooperation for the years 2009-2011.

New DAC data on development cooperation

The 27th November released DAC data on development cooperation in 2007 feature a mixed picture of the Italian development cooperation, highlighting some improvements in aid quality and allocation from the 2006 ones, tough still insufficient to attain the EU average. 2007 data show that last year the Italian aid benefited from a strategic reorientation. Yet, limited financial allocations remain the main obstacle for any credible re-alignment to the EU average.

Positive elements are:

- “Genuine aid” increased by 48% ;
- “Genuine aid” to Sub-Saharan Africa increased by 40%;
- “Genuine aid” to Least developed countries increased by 10%;
- Tied aid net debt decreased by 10%;
- Administrative costs were reduced by 25%;
- Bilateral aid to basic and social services doubled.

Unfortunately there are negative features, mainly related to quality:
- Italian aid stands at 0.19% GNI while the EU average is at 0.39%;
- Italian aid is decreasing by 2.6% from 2006;
- Share of aid to Sub-Saharan Africa is at 19% from 52% to the advantage of north Africa;
- Italia tied aid share is the third highest among OECD donors, after Greece and Portugal;
- Share of Italian bilateral aid to basic and social services is 1% while EU average stands at around 11%.

Financial Bill 2009: Lower House approves ODA budget cuts

Yesterday, the Lower House of Parliament approved the financial bill for 2009 that is now to be reviewed by the upper house - Senate. During the debate, the Parliament majority rejected three amendments aiming to partially restore the ODA cut for the Ministry of Foreign Affairs. No amendment was proposed to restore development funding to allow the Ministry of Finance to disburse its annual instalments to development banks. For the time being the ODA forecast for 2009 ranges between 0.09-0.14% GDP.

6.3 billion euros debts cancelled by Italy since 2002: 61% to sub-Saharan Africa

According to the 2008 Report on debt relief activities by the Ministry of Finance, since 2001 Italy has cancelled 6.3 billion euros in international debts - 61% benefiting Sub-Saharan Africa. 86% stems from export credit cancellations. In 2005 Italy cancelled 57% of its debt relief, thanks to the Iraqi cancellation - 31% of total debts operations. After 2005, the annual share for aid cancellations quickly decreased: 7% in 2006 and below 1% of the total in 2007. It is clear that the Italian credits are almost over with a relevant impact on the overal ODA - as debt relief accounted for about 22% on average.

2009 ODA cut: Budget Committee rejects amendments to avoid it

Over the last three weeks, ruling coalition members of Parliament and Undersecretary of State Scotti have bee ensuring that ODA cut in 2009 budget appropriation could have been avoided, thanks to some amendments proposing to raise excise on tobacco and alcohol to collect resources for ODA. Unfortunately, last Tuesday, the parliamentary Budget Committee rejected all amendments on excises increase, as additional financial resources they could raise were difficult to forecast. While discussions on the financial bill continue in the Budget Committee, there currently is only one amendment left that is attempting to limit the ODA reduction. However, this is a minority amendment and it is not clear yet whether, MPs from ruling coalition, proposing an ODA increase, will actually support this survived amendment.