Italian ODA 2006: few money, better targeted to Africa, but too much technical assistance

According to the last DAC data for 2006, the Italian ODA is at 0.20% of GNI - 3.6 billions dollars - 30% down from 2005 level, when ODA/GNI was at 0.29%. In 2006, Italy ranks at the bottom of European donors list, only Greece ranks worse. The latest release of these official data mark the Italian failure to reach the EU Barcelona target - 0.33% ODA/GNI by 2006. The Italian aid is boosted by debt relief (37.8%) and compulsory contributions to the EC budget (36.1%). For the first time since 1994, Italian bilateral share (55%) is larger then the multilateral one (45%).

In 2007, the Italian ODA is expected to increase up to 0.29%-0.31%, thanks to specially approved decrees paying for arrears to IDA and Global Funds, and allocating resources to development cooperation. According to the latest financial perspective, the Italian Government is committed to reach 0.33% in 2008, yet the target is again unlikely to be met, with ODA levels forecast to decrease from 2007.

In 2006, 77% of Italian bilateral aid is untied, yet by discounting debt relief, only 27% aid is untied - a significant increase from last year when untied aid - debt relief net - was at 62%.

As for 2006 sectoral allocations, technical assistance is still the most important sector ( 8.5% in sectoral aid), while support to education is at just 3.75. Administrative costs increased by 25 million dollars, almost doubling its share in bilateral aid (2.65%). Italian support to Basic Social Services decreased from last year, from 5.03% to 3.36%.

As for geographical allocations, Nigeria is the first recipient (754 million dollars) - 72% debt relief - followed by Iraq and Serbia, where debt relieves are on average above 90%. By discounting debt relief, Nigeria is still the first recipient followed by Lebanon and Afghanistan. Angola, Indonesia and Ghana had negative transfers.

Italian aid to Sub-Saharan Africa increased by 200 million dollar, despite overall ODA level decreased.The share of bilateral ODA to the region significantly increased reaching out 52% from 38%, while the share to Middle East decreased. The aid reorientation advantaged non-LDC countries, as the received the same amount of aid.

Government likely to drop emendament on Aid reform

Following, negative Parliamentary reactions, the Government is willing to drop the emendament on aid reform from the Financial Bill, while the Senate has promised to break the stalemate on aid reform by opening discussions up to civil society. The Government emendament faced strong criticism by the opposition while it was supported by the majority of the civil society organizations. Public hearings are scheduled to start next week.

Government tries to reform ODA Law by using the Financial Bill

After a 3 month long fruitless discussion within an ad-hoc Committee in the Senate to find wide consensus on the institutional setting for the new Italian aid architecture, the Government broke the stalemate during the debate on the Financial bill in the Lower House of Parliament.

The ad-committee was not able to find any bi-partisan agreement on the establishment of the implementing Agency for Development Cooperation and the creation of a pooled-fund for half of ODA financial resources within the budget. Both were opposed by the opposition.

The Government included both bodies and provision for further untying within an amendment to the Financial Bill. If the Governments keeps this provision, by early next year the Italian instutions for development cooperation will be completely different. It is important to note that by this amendment, the Ministry for Foreign Affairs will enhance its planning role, while the Minister of Finance will keep its share in the financial institutions. The Minister of Finance will provide contribution to, for instance, regional development banks, while agreeing its policy position with the Minister for Foreign Affairs. Moreover the pooled fund, to be exclusively managed by the Agency, will not include loans or multilateral transfers.

However the current ODA Law will be maintained to discipline over other non-management related issues, such as the aims of ODA and the actors for development cooperation. The Parliament will still be called on innovating the ODA architecture on other institutional features, such as the appointment of a Deputy minister for development cooperation, institutional arrangements for policy coherence, provisions for Parliament and civil society meaningful engagement, possibility for Southern CSOs to get access to Italian resources.