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.

Undersecretary supports Parliament proposal to raise additional funds for development cooperation

Undersecretary for Foreign Affairs, Vincenzo Scotti, hinted to the possibility that the drastic reduction to development cooperation appropriations could be partially avoided by using the early debt reimbursement by Argentina and increase State excises on alcohol and tobacco, as proposed by the parliamentary amendments.

The bipartisan amendment is to raise 250 million euro to increase the ODA appropriation in the Ministry of Foreign Affairs with an increase in alcohol and tobacco excise by 0,015 euros.

Additional 200 million euro could derive from the early reimbursement of the Argentina debt. The amount stemming from concessional loans is not clear yet - 200 or 250 million euros. However its reimbursement will negatively affect the Italian ODA - as it is counted as a negative flow. Hence its immediate disbursement is not an actual increase but a one-off measure to get a zero-sum result. It is also important to highlight that the financial resources from Argentina reimbursement - not available yet - are already ODA resources, namely concessional loans that are turned into grants to ease its disbursement. However, if this proposal turns into reality, this means that National Accounting Office changed its advice, as in the past it was always opposed to this kind of actions.

However, the current ODA cut under the Ministry of Foreign Affairs amounts at -411 million euros, and the two proposals could avoid the cut in 2009, while a 200 million cut will affect future years. For the time being the are proposals awaiting to be approved.

Financial Bill 2009: ODA levels between 0.09-0.14%

At the beginning of the Parliamentary budget session, it is difficult to draw a comprehensive quantitative picture of the ODA level for the next financial year. Neither all ODA is included in the budget nor it is completely appropriated during the budget session. For instance debt relief operations – accounting fro 22% of the Italian ODA between 2000-2007 – is out of the budget together with concessional loans disbursements. Moreover over the financial year, one-off ODA allocations can be approved. Eventually, ODA is actually related to disbursements while the budget session discusses appropriations. In fact, even 2008 ODA disbursements are not clear, with preliminary ODA data at 0.22%. As for the budget bill, ODA contributing budget lines are scattered among four main ministries – Min of Foreign Affairs, Min. of Finance, Min. of Environment and Min. of Interior - with no official table attempting any synthetic evaluation.

ODA under the Ministry of Foreign Affairs (MFA) was cut by 56% ( 312 million euros in total) ; down 411 million euro and to its minimum level since 2000, halving 2001 appropriations in real terms. Last year MFA ODA had peaked at 732 million euros. A June Law – cutting budget expenditures – had disproportionately reduced the MFA appropriations in comparison with other Ministries appropriations. Following this Law, the MFA re-allocated the bulk of the cut to the ODA heading, while other MFA programmes witness some financial increase – multilateral affairs programme with a 170 million increase. The MFA ODA is not enough to carry out any meaningful development interventions during 2009, as 168 million are allocated to fund already approved multi-year interventions. Multilateral aid budget envelope accounts for more than 60% of this ODA financial reduction. The Under Secretary of State. Hon Scotti, officially reported to the Parliament that this low appropriation endangers the 2009 Italian contribution to the Global Fund. For the first time since its creation, the fund for de-mining intervention has no appropriation. The 321 million euro ODA proposed appropriation is less than the amount NGO annually raise from private sources.

In the budget of the Ministry of Finance, the main ODA budge-lines include appropriations for the European Development Fund and direct transfers to the EC budget that total 1,100 million euro. Financial appropriations to meet the Italian pledges to regional development banks are part of a broad special envelope, including different expenditures. As for 2009 budget, this special envelope has no financial appropriation, excluding any contribution to multilateral banks by Italy during 2009, despite 2007 replenishment pledges and arrears. Less than 100 million euros are appropriated to enable Italian participation to the IFF-im, AMC and the MDRI.

Eventually, no more than 50 million euro are included within the Min. of Environment and Min. of Interior budget. Min. of Environment appropriations to fund sustainable development interventions in developing countries are undergoing a 20% reduction, while those for refugees expenditures are constant.

Beyond budget allocations, debt relief operations, loans disbursements and one-off allocation could contribute to increase the 2009 ODA level. On average, debt relief operations accounted for 22% of ODA between 2000 and 2007. Yet, they are difficult to be correctly estimated as they depend on multilateral negotiations that can slow down or speed up over the year. If all debt relief foreseen agreements are signed off, additional 700 million euros could contribute to the 2009 Italian ODA. As for loans, despite the agreement of a 100 million credit to Iraq, loans’ contributions to Italian aid could equal 100 million contribution at most, with loan reimbursements by Argentina negatively affecting ODA level. Eventually, ODA additional resources could be approved during the financial year, as it was the case in 2007 with the 1 billion euros extra allocation for ODA. On balance, between 2000 and 2007, the MFA development aid reported a 100 million increase and additional ODA resources are generally appropriated with the approval of the Bill on International Military Missions. Yet, a recent Decree aimed at shielding the Italian banks from the current crisis, allows to also cut ODA appropriations to find resources to fund Banks in troubles.

Despite budget fragmentation and in-year extra budget disbursements, estimate for 2009 ODA levels can be based on 3 scenarios. The minimum scenario just takes into account financial resources that are already included in the budget bill. Following this assumption, 2009 ODA is estimated at 0.09% GNI, its minimal level since ever. The intermediate scenario – 0.14% GNI - assumes that all on-going debt relief negotiations are concluded. Adding up required pledges to multilateral contributions to be disbursed, ODA could at most reach 0.18% GNI. In comparison with 2008 current estimates, 2009 ODA will face a between a 20-60% reduction. Last year, the same scenario exercise ranged 2008 ODA level between 0.15-0.28% GNI.

Financial Bill 2009: further cut for ODA

On October 2nd, the Italian Parliament officially started the 2009 Budget session, where ODA is facing a further cut, beyond the one approved last June. Although the total ODA is neither fully included into the budget – i.e. debt relief or concessional loans - nor in the budget bill – extra budgetary allocations, it is difficult to assess the ODA quantity in the budget bill.
Aid resources are scattered among different and sometime generic budget headings. Ministry of Finance and Ministry of Foreign Affairs (MFA) are by far the main ODA shareholders, in terms of genuine aid – excluding debt cancellations. In the proposed 2009 Budget, the MFA ODA appropriation is at just 321 million euro, the minimum level since 2000, half of the budget available in 2001, in real terms. It represents a 56% reduction from last year appropriation. The proposed amount is much less than what Italian NGOs are annually raising as private contributions – 400 million euro. The main culprits for this reduction are the last June budget expenditures bill and the MFA itself that had decided to allocate its whole budget cut (421 million euro) to the disadvantage of its own ODA budget. The result is paradoxical and clearly unfair for ODA: MFA aid appropriation are just 0,01% to the total budget expenditure but represents 4,7% of the whole State budget cut. In order to estimate 2009 Italian aid levels, Ministry of Finance ODA appropriation and planned debt relief are not clear, yet. ActionAid is forecasting the range of 2009 aid levels. The results will be posted on October the 8th.

A Government amendment to allow EU delegated-cooperation

A Government amendment allowing the Italian cooperation offices on the field to receive financial transfers from the European Commission and EU member States was tabled for discussion in the lower house of Parliament. If approved, the Italian cooperation would be able to fully take part into various EU pilot experiences on delegated cooperation, otherwise forbidden by law. this amendment, Italy could propose itself as EU leading donor in different countries and sectors, as part of the full implementation of the EU Division of Labour proposal. The government-sponsored amendment is a clear evidence that after Accra the implementation of the EU aid effectiveness agenda is fully supported by the Government.

Commission of Inquiry into NGOs conduct proposed

A significant number of ruling coalition Senators presented a Bill to set up a Commission of enquiry into NGOs conduct. According to the text, the main objectives of the Commission will be to monitor the management, allocation and strategic planning of Italian NGOs. As stated within the bill introduction, the Senators are concerned by the excessive level of administrative expenditures, actually diverting relevant financial resources from Developing Countries.

MPs agree on setting up a bi-partisan Committee on MDGs

On September 17th, during a UN sponsored event, attending Members of Parliaments – less than 10 - agreed to set up a bi-partisan Committee to specifically deal with MDG and development issues. Membership to the Committee is open to any MPs , even if they are not sitting in the Foreign Affairs Committee. The main purpose of this new official body is to measure political interest in development related issues among MPs and to highlight development as a standing alone issue beyond foreign affairs. A similar Committee was set up following the signing of the Millennium Declaration in 2001, but had no real influence in the Parliamentary debate of the time.

Italian aid effectiveness: 2008 results

According to the 2008 Paris Declaration progress report survey, Italian development cooperation is performing below the EU average on every Paris declaration indicator, despite significant improvements since 2005 . Yet, on proliferation of parallel structures, use of country systems and percentage of programme based aid Italian records are poorer than three years ago. In Europe, Italy ranks last as for aid predictability, second last on joint analytical work, and third last for relevant number of parallel implementing structures. However it is second best EU country on coordinated technical cooperation. Within this generally poor performance scenario - the tied aid data was not reported - the predictability and joint work targets are the furthest to reach. Unlikely others EU donors, Italian poor results are partly due to the fact that Italy has not approved any "aid effectiveness" national plan.

Updates on Italian ODA

In August, the 2008 ActionAid report on Italian ODA was updated by a 10 pages briefing taking stocks of the main developments the political arena, including the perspective, results and commitments, and new ODA figures available. It can be downloaded at:
http://www.actionaid.it/fileViewAction.do?xclass=Multimediafile&field=file&width=0&height=0&mime=application/pdf&id=23857

Here below, you find some abstracts:

Financial Perspective update
Unlike last year, the new financial perspective 2009-2013 does not include any reference to ODA targets and, more worryingly, at the end of July a Government decree reduces ODA allocation under Ministry for Foreign Affairs by 25% ( -170 million euro) from 2009-2011.

G8 updates
At the G8 Summit in Toyako, Mr. Berlusconi pledged 500 million dollar over the next five year to fund the global response against pandemics. In 2007, at Heiligendamm, Mr. Prodi committed 400 million dollar a year over ten years to fund the same global response.The Italian Sherpa office is already shaping the 2009 G8 thematic agenda, with an expected focus on education in conflict, health, agriculture and water and sanitation.

ODA facts updates
Due to limited and fragmented bilateral country allocations, in 2005-2006, Italy is the first donors only in Argentina and Montenegro, while ranks as second in Suriname and Rep. of Congo and then shifts at the fifth place in Albania, Eritrea, Iraq, Lebanon, Iraq, Nigeria and Tunisia. Italy ranks among the first 10 donors only in 22 partners countries.

Italy has 3.1 billions euro out standing debt, 1.6 billion covered by the HIPC initiative, while 1.5 billions with other counties, including China, Morocco and Argentina.

In 2007, 95% in NGO budget appropriation – 100 million- was committed, showing a significant scale up in administrative absorption capacity. In fact, in 2004, only 72% was committed out of a 73 million allocation. 60% of the arrears due to NGOs was paid off in 2007. NGO proposed initiatives mainly focuses on agriculture (38%) and health (19%). According to the DAC tied-aid definition, 100% of Italian NGOs committed-funds, are tied, due to administrative procedure for aid allocations.

Annual Report on Italian ODA: now available in English

Italy and the fight against world poverty - launched in May 2008 - is the third ActionAid report on Italian development cooperation. It assesses the progress made by Italy in maintaining the commitments undertaken since 2000 in the fight against global poverty. A few months before 2009 Italian G8 Presidency, the report attempts to answer the question whether Italy is ready to lead the G8. Contrary to last year’s report, our findings this year indicate that there are more obvious trends towards improvement, despite the fact that the overall results are still inadequate. T current results are still inadequate and it is very important that more efforts should be made in this direction. The most obvious example is the failure to meet the financial commitments the amount of aid: delays in allocating funds have meant that Italy has deprived the international aid community of 5.2 billion Euros since 2003.

This report assesses the trends and performance of Italian cooperation with respect to shared European objectives and strategies- summarized in the table below.

Sector	Trend	Judgement for 2009
Quantity of aid	Stable – improving in 2008	Inadequate
Phantom aid	Improving	Inadequate
Predictability	Improving	Adequate
Debt	Stable	Adequate
Aid to Africa	Improving	Adequate as regards the bilateral quota Inadequate as regards financial resources
Aid to least developed countries	Worsening	Inadequate
Emergencies	Improving as regards forecasts	Inadequate
Aid to basic social services	Worsening	Inadequate
Trade aid	Stable	Adequate
Coherence	Stable	Inadequate
Tied aid	Worsening	Inadequate
Volatility	Worsening	Inadequate
Fragmentation	Improving	Inadequate

Eventually, ActionAid recommends quick priority actions that could realign Italian cooperation to the European average within a year. Its English version is now available at:
http://www.actionaid.it/fileViewAction.do?xclass=Multimediafile&field=file&width=0&height=0&mime=application/pdf&id=23855

Aid cuts confirmed

Rome, Aug 5th.

The House of Deputies passed a vote of confidence on the omnibus legislation which makes provision also for a reduction in the grant budget of the Ministry of Foreign Affairs. The bill has yet to be published, but, according to the minutes available from the House, AID budget will be shirking by € 170ml in 2009, which accounts for 23% of the resources that were secured at the end of budget cycle last year; the same will happen in 2010.

Long term implications will have to be properly assessed; some experts are implying that the grant budget within the MFA will decline form €732 ml in 2008 to €383ml in 2011. The areas at risk include the GFTAM and voluntary contributions to international organizations (FAO for instance); also, NGOs are very likely to suffer.

Within the space of a few weeks, resources for development cooperation have been subject to legislation tabled by the government and reduced substantially. These measures are in contrast to role that Italy is expected to play as the champion of the fight against poverty in the run up the G8 Summit in 2009.

The budget cycle will be finalised between October and December, when the proper financial and budget bills will be discussed by the Houses. There is still space to right what has been done wrong, by, for instance, commit enough resources to increase the current aid level from a modest 0,19%. Berlusconi has to show whether or not has the profile of an international leader and has the capacity to push the G8 and associates to react consistently to the development crises

2007 GAO report on Italian ODA

This week, the General Accounting Office released the 2007 report for Italian ODA, the first official qualitative and quantitative assessment of Ministry of Foreign Affairs managed cooperation for last year. In 2007, the MFA cooperation budget disbursed 1.3 million euros, thanks to extra-budget allocation, to fund its 13 sectoral priorities. Bilateral debt cancellations amounted to 510 million while debt conversions peaked at 140 million euros, including Perù (38 million Euro), Egypt (100 million), and Macedonia (1,8 million). The MFA allocated 53 million euros to humanitarian interventions and channelled 365 million to multilateral organizations - doubling the highest level (165 million) reached in 2003. As for geographical allocations, sub-Saharan, Africa received 39% of total allocations from 25% in 2006 - 135 million from 106 million in 2006. The GAO report concludes by listing two concerning trends: un-committed resources to 291 million euros from 234 million in 2006, with a 11% loss in administrative staff for monitoring. Ironically speaking with the GAO report wished an ODA budget increase to enable Italian to meet its EU ODA targets, the Government cut development cooperation 2009 budget, with accepting to assess Parliamentary the recommendation for an ODA increase from September 2008.

Government confirms cut to ODA, despite NGO protests

The government asked a confidence vote on a text confirming the 170 million cut to ODA in MFA budget starting from 2009 , despite different calls from national and international CSOs.

http://www.repubblica.it/2008/07/sezioni/economia/conti-pubblici-76/bono-accusa/bono-accusa.html

Next Fall, the Government could still avoid the 2009 cut by presenting the Budget bill and different motions are already table in the Parliament asking the Government to commit for this ODA increase. Next week Government will whether to accept or reject those motions.

ODA cut: Parliamentary amendments to prevent reductions in ODA allocations

At the beginning of the Parliamentary debate on Decree 112, providing for a three year ODA reduction by 170 million euros (-25% of Ministry of Foreign Affairs ODA envelope), in the Committee for Foreign Affairs, the bill speaker from the ruling coalition expressed his concerns to the Government. Undersecretary Scotti, on behalf of the Government, replied that the government is still working to clearly detail which development cooperation expenditures to cut. Despite some concerns within the ruling coalition, at the moment only member of the opposition presented 3 amendments to avoid the ODA, with no support by any member of the ruling coalition. The in the Foreign Affairs Committee could still provide some space to foster bipartisan agreement to prevent the cut.

Minister of Foreign Affairs wishes a bipartisan ODA reform

On July the 2nd, during his first hearing at the Parliament, the Minister of Foreign Affairs supported a wide approval of a new ODA bill, beyond political parties lines. In his statement, the new ODA law is to make international cooperation, especially the bilateral one, a suitable tool for foreign policy. Eventually, he confirmed Sub-saharan Africa as a key priority of the Italian cooperation.

Italian ODA cut by 510 million euro between 2009-2011

The Government decree n° 112 from June 25th is cutting ODA resources managed by the Ministry of Foreign Affairs (MFA) by 170 million euro a year till 2011. After two years of ODA consecutive increases, currently the MFA budget amounts at 738 million euro with the view to be reduced at just 393 millions in 2011 - the same level of the MFA ODA budget after last Berlusconi's 2005 financial bill. In September, the government will still be able to avoid this financial cut when presenting the multiyear State budget.

Italian aid effectiveness strategy: first ever official statements

On June 26th, at a UN sponsored Parliamentary event, the deputy general director for the Italian development cooperation partially unveiled the Italian priorities for EU Accra agenda. Italy is supporting a greater role for civil society within the Paris Declaration. As for the EC sponsored division of labour, Italy is willing to increase its engagement in fragile States, while volunteering to play a role in health, education, rural development, with keep focus on other cross-country sectors (women empowerment and environment). The official data on sector of engagement will be published at the end of July. Unfortunately there was no reference to further aid untying. The EC division of labour is pushing the Italia development cooperation to understand whether its added value is. While discussion on aid quality is slowly moving on, the government is cutting the 738 million worth development cooperation budget within the Ministry of Foreign Affairs by 510 million euro over the next 3 years.

Waiting for the Economic Financial Perspective, Italian ODA/GDP at 0,22% in 2008

On June 18th the Government approved the Financial and Economic Perspective for 2009-2011. According to official declarations on the eve of the meeting, the Perspective is expected to be a short document (20p). Yet, this document is neither publicly available nor clear whether any ODA increase is mentioned. Previous 2002 and 2007 Financial Perspectives had included annual timetables for aid increase to allow Italy to meet the EU aid targets. Those commitments were not actually met. Over the last months, civil society has called on the new government to include a updated version of the aid timetable, in order to show its commitment to achieve the EU ODA target on the even of the Italian G8 Presidency

The June EU Head of States Council reaffirmed their commitment to reach 0.51% ODA/GDP in 2010, meaning that Italy will have to more than double its current aid level. Recent estimates from the Ministry of Finance forecast 2008 Italian aid at 0.22% - up from 0.19% and equal to 3,5 billion euros, including 600 million from debt relief.

New director for development cooperation appointed

Elisabetta Belloni was appointed as the new Director General for development cooperation, taking over from Alain Economides appointed as Head of Cabinet. Director Belloni was managing the Emergency Unit of the Minister of foreign affairs.

ActionAid 2008 report on Italian development cooperation: Ready for the G8?

ActionAid Italy launched the third Italian edition of the shadow report on the Italian development cooperation - “Italy and the fight against poverty: Are we ready for the G8?”. The report attempts to assess the Italian legitimacy to lead the G8 in 2009 on the development and Africa related issues. The Italian performance on development cooperation is benchmarked against internationally or EU agreed targets on aid quantity, quality and allocations. The main call is that Italy will be able to meaningfully steer the G8 African agenda only if the Italian development cooperation is in line with the EU average. The report acknowledges that some improvements occurred over the last two years, with a significant increase in genuine aid, a new focus on Africa, and an increase in aid predictability. Conversely, other aid features such as tied aid, aid allocations to LDCs and BBS further deteriorated. The report argues that the G8 is a crucial opportunity to quickly speed up the alignment of the Italian development cooperation. Although the Italian development cooperation crisis worsened over the last 15 years, many quality and allocations issues can be quickly fixed by 15 points action-plan with no addition cost for the Italian State budget. In the following debate discussants and speakers agreed that the 2009 G8 Presidency provided the very opportunity to embed development cooperation at the core of the Italian foreign policy.

Progresses on Division of Labour but concerns on aid scale_up

Following evident delay, Italy finally decided to take part into the European Commission Division of Labour Fast Track exercise in the following countries: Bolivia, Ethiopia, Kenya, Mozambique, Senegal, Sierra Leone and Uganda. In Albania, Italy will be one of the EU MS to chair the division of labour exercise. Before Accra, and possibly on the eve of the next EU technical seminar on aid effectiveness mid-June, Italy is also going to select its sectors of engagement in each country.

It is important to note that each decision on division of labour is going to happen between Rome and Brussels not at field level. Italy requested this specific centralized communication arrangement, as the Italian cooperation field offices do not have enough power to independently decide where actually to get engaged. The current centralized structure is also preventing Italy from taking part into “delegated cooperation” experiments.

As for the binding timetables on aid increase, Italy opposed and continues opposing any binding timetable. More worryingly, in 2005 together with Germay, Italy signed the 0.51% ODA target subject to financial national economic situation. Later, the new German government accepted the 0.51% without condition, while Italy apparently never officially changed its initial condition. As for tied aid, Italy had no problem in accepting the recent DAC expansion to all HIPC, while wishing to bring on board aid new donors such as China, on this issue.

ODA bill reform as a priority bipartisan matter

During the May 28th presentation of the ActionAid annual report on Italian development cooperation, the current Undersecretary of State for Foreign Affairs, Sen. Mantica, and former Foreign Affairs Minister, Hon. D'Alema in a bipartisan move both agreed to deal with the legislative reform of the ODA bill, as a matter of priority. They also agreed to restart discussions from the text that was tabled for discussion in the Foreign Affairs Committee of the Senate during the last legislative term. Undersecretary commended Minister Frattini’s decision to directly deal with development cooperation and Sub-saharan Africa, as a first sign of political commitment by the new Government on development cooperation related issues. Meanwhile rumours warn against a sudden and significant financial reduction in the current development cooperation budget, in mid-June.

Italian aid in Afghanistan: predictable but tied

According to the Afghan NGOs coordination report, the Italian development cooperation disbursed all committed aid in 2007, becoming one of the best performers in disbursement together with Australia and UN Agencies. However, the report questions whether those funds were efficiently spent or got wasted in expensive subcontractors and poor quality work. The report quote the example of the Italian sponsored reconstruction of a Kabul hospital. According to Kabul Press, who investigated the project, UNFPA were given $2.2m for the work, which was sub-contracted to the UN Office for Project Services (UNOPS), again sub-contracted to an Italian organisation- INTERSOS -, who in turn sub-contracted to an Afghan construction company. On the basis of a government investigation and sources involved with the project, Kabul Press report that less than half of the total budget was spent on the project, and the quality of the work was so poor that it required further reconstruction.

http://www.kabulpress.org/my/spip.php?article830

NGO resources contributing to Italian tied aid

According to the latest OECD data, the percentage of tied aid in italian ODA - discounting debt - is highest in Europe - above 70%. Tied concessional loans account for up to 73% of tied aid, thanks to an article in the ODA law, compelling to issue special waivers to un-tie concessional loans.

However, NGO funds allocation mightbe responsible for main share in the tied aid grants. Accurate estimates are impossible as 2006 data have not been fully reviewed, yet. However, according to the DAC tied-aid definition 100% of Italian NGOs committed-funds, following the national procedure, are tied.

The main responsibility lays within the administrative procedure for allocation: the Italian system is not based on call for proposals open to national and non-national NGOs.Actually, the only used procedure for funds allocations to NGOs consists of NGOs submitting spontaneous projects to the development cooperation to be screened following geographical or sectorial official cooperation priorities.

If the proposal fits with the main official priorities, it gest the whole budget funded by the Italian development cooperation. No-Italy based NGOs are excluded from all official funds.

Italian ODA 2007: slight decrease and big increase in REAL aid

According to figures by the DAC, Italian aid in 2007 decreased by 3.6% but its "real aid" - discounting debt releif - increased by 46.7% from 2006 to 2007 - the secondo donors biggest increase - while aid to Africa almost trippling from 2006. Prospects for 2008 are still positive thanks to late 2007 financial appropriations to be disbursed in early 2008. If this positive trend continues, Italy could get its cooperation on track in time for its G8 presidency.

ONG pressures on standing PMs

With a view to the next general elections due on April, 13^th-14^th , the Italian Coordination of International Networks (CINI) - ActionAid, AMREF, Save the Children Terres des hommes, WWF, and VIS - tested the Premiership candidates and the outgoing members of the Foreign Affairs Commission commitments on international cooperation. This move is supporting a general commitment by all Italian CSOs to draw candidates attention on development cooperation.

A 10 question survey on quantity, quality of aid and management structure was sent to 70 people. Intermediate results were presented on March with the final to be published on April 7^th. At that time only 10 individuals had replied, with no response by the centre-right political parties – one replied the following day. Answers showed consensus on the following issues: increase in financial resources for ODA; pursuing policy coherence for development cooperation; recognition of the importance of civil society’s role in strategic issues; single management for all ODA resources. Building on this consensus, CINI wished the new legislature will soon tackle long terms problems of the Italian cooperation.

EU donors reflecting on GBS in international workshop in Rome

On February 26th, ActionAid organized a European Seminar on General Budget Support: Lessons fearnt and way forward.
During the one day long workshop 10 different panelists - including think tanks, donors countries and partners countries - shared experiences and pioneered new ideas for future GBS initiatives. Speakers agreed that GBS is not panacea for all aid, but it is a promising political package to foster State and administrative capacities, together with the improvement accountability relations Governments-Citizens. GBS is not immediately suitable for all states but consensus arised to work to foster a GBS-enabling environment, even in post-conflict context. GBS is not more prone to corruption than project based aid but it is the best aid modality to immediately warn against governance related weakness in partners countries. One panelist strongly pointed out that DBS support in favour of local authories is worth further consideration, as a means to support decentralization.GBS compels a behavoural-change among all aid stakeholders. As for civil society, ActionAid shared its in Tanziania and Uganda. Despite lack of evidence of any reduction in financial support , donors-CSO engament changes based not only on service delivery but on policy-contents. EU member states shared their expeiences and future plans. UK, the EC and the Netherlands acknoledged past mistakes while Italy and Spain pointed at the managment challenges posed by GBS to their aid systems.

All presentations can be found in the download section, right-below.

Italy in the Development Cooperation Report 2008

Commitment to the MDGs. Since the adoption of its official guidelines in 1999, poverty reduction has been a principal objective of Italian development co-operation. However, Italy has yet to establish a coherent approach to mainstreaming this goal. A proposal to reform the structure of development co-operation and focus commitments on the MDGs was examined by the Italian parliament but the governemnt crisis blocked the process.

Aid effectiveness agenda. Italy supports the principle of recipient ownership and attempts to align its programmes with local strategies when possible. Its ability to carry out its commitments, however, is hampered by a lack of staff, organisational support and operational flexibility. The 2004 peer review encouraged Italy to build upon its efforts to streamline administration in order to address the parallel need for a clear strategy on harmonisation. Italy aims to reinforce the quality of evaluation feedback, including improved evaluation planning and operational guidance.

Advancing gender equality and women’s empowerment. The 2007 guidelines for Italian development co-operation maintain gender equality and women’s empowerment as a priority. The Directorate General for Development Co-operation intends to increase its commitment to the MDGs on gender. Specific action in favour of gender equality in 2007 included: i) a major seminar on the empowerment of women in West Africa and a new Italian programme on this topic; ii) a workshop on implementing the UN resolution concerning the participation of women in peace building and post-conflict reconstruction in Somalia; iii) specific programmes for the empowerment of women in Afghanistan, Lebanon and Palestine.

ODA 2008 forecast: still at 0.29%

Estimates for 2008 ODA are difficult to forecast during the budget cycle, as ODA budgeted resources are scattered and hidden within many financial headings in different Ministries. Moreover important components such as debt relief and concessional loans are not highlighted in the budget. Finally, during last year, significant financial resources for development cooperation – 1.1 billions euros –were allocated extra-budget cycle, via special decrees, with a share of these funds is to be disbursed in 2008. The 2008 disbursement of 2007 out-of-budget allocations, together with expected extra-budget allocation in 2008 are the main responsible for the ODA peak to 0.28-0.29% in 2008, after its stalling in 2007 – 0.21-0.23%. The forecast peak is neither enough to meet the EU Barcelona 0.33% target with a two year delay nor it is sustainable - likely to decrease in 2009. Since the approval of the 2002 road map for aid increase, included in the 2003-2006 Financial perspective, Italy summed up 4.5 billions euros in aid arrears - the gap between commitments and actual disbursements.

2008 Italian ODA could further increase thanks to extra budget cycle allocations, as it occurred in 2007. Last year ODA appropriations increased between January and June (from 1.1 billion to 1.5 billion euro). According to the current projections on 2008 level, the additional disbursement of 650 million euro will be enough to meet the 0.33% target.

ActionAid evaluation of the ODA reform Bill, under discussion

The ODA bill, under discussion in the Senate, sketches some positive elements, to be enhanced:

· there is a clear reference to partnership, as starting principle for development interventions, but not mention to ownership;

· aid activities are not necessarily tied;

· Deputy Minister for development cooperation, sitting in the Cabinet, is mentioned;

· multi-year strategy for development cooperation is to be approved by the Cabinet;

· the Minister for Foreign Affairs is responsible for development policy by also setting the Italian strategy towards the Financial institutions and the European development fund and by ensuring coordination;

· an implementing Agency is sketched following special financial regulation;

· there is an initial reference to policy coherence for development.

Unfortunately, the new aid architecture designed by the bill has some limitation and contradiction.

General remarks

The new bill does not reform all aspects included in the current law for development cooperation (Law 49) that is likely to be maintained to regulate issues, such as concessional loans or business partnerships in developing countries. There is no clear cut separation between planning institutions and implementing ones, entailing multiple responsibilities and lengths procedures. For instance, the Interministerial Committee for Development Cooperation (ICDC) not only deals with policy coherence but it mainly approves all development initiatives. Similarly, the Minister for foreign affairs issues very detailed and binding instructions to the implementing Agency.

ICDC – Interministerial Committee for Development Cooperation

• The ICDC’s mandate is too similar to the Minister for foreign Affairs’one, especially on planning, control and coordination. This sets potentials for duplication and conflict.

• Despite an high-level political membership, the ICDC does not fully take part into the strategic phase. It mainly focuses on micro-management, wasting its potential as ministerial forum for policy coherence. Despite its limited technical capacities, the ICDC is tasked to approve all development initiatives. While making no reference to project submission procedure, the bill sketches out a burdensome approval procedure for development activities starting from the ICDC, passing by the Minister and finally to the implementing Agency;

Development cooperation strategy

• The Minister of Finance does not submit any input during the planning phase.

• There is no mention to reduce the disbursement procedure to the development banks.

• The Cabinet does not meaningfully take part into the planning phase.

• The drafted contents of the 3-year strategic document do not mention important political issues such as, country strategies and allocations, debt cancellations, concessional loans and actions for policy coherence.

Pool Fund

• The pool fund does not include all-budget resources for development cooperation but at most 20%.

• The Fund managing authority is not clear, though the implementing agency can use those financial resources.

Development cooperation implementation

• The bill does not make clear who is responsible to implement the development cooperation strategy, as the Minister for foreign affairs is responsible for the whole development policy while the implementing agency is only tasked to carry out limited initiatives.

• The Agency is simply one among the implementing actors within the development system. Even if it is to be defined by specific Government decrees its tasks are too limited, as the Agency is not the main body responsible to implement the approved strategy.

• The bill indirectly forbids any decentralized cooperation, axed on field offices, as it explicitly excludes Agency field offices.

• There is no reference on how the Minister for foreign affairs coordinates development initiatives by the Regions that have only to inform the Agency of their initiatives.

• Responsibility to deal and sign agreement with multilateral organizations is unclear.

• Independent impact evaluation of development policies is completely missed.

Actors in development cooperation

• Civil society is only partially engaged during the planning phase.

• Civil society from partner countries is not mentioned as an actor, with access to the financial resources.

• Private sector is just referred to as partner with, apparently, no role as implementing actor.

In order to ensure the whole reform of development cooperation setting the basis for a coordinated, coherent and efficient system, the bill must deal with all the elements of the current Law; clearly divide between strategic and implementing phase with specific responsibility. Therefore, ActionAid recommends to:

• clearly state that all Italian aid is untied, tough country-local purchases can be preferred (Art 1,2);

• clearly state that development cooperation has to pursue ownership (Art 1,2);

Development cooperation strategy

• have the strategic plan approved by the ICDC, not by the Cabinet (Art 3,2);

• maximize ICDC potential, by focussing its mandate only on assessing policy coherence for development (Art 6-bis);

• allow the Agency to provide support during the planning phase (Art 14,1),

• specifically include debt cancellations, concessional loans, country strategies and allocations, development banks disbursements, and Ministerial actions for policy coherence in the multi-year strategic document (Art 3,2);

• state that the Minister for foreign affairs is responsible for concessional loans (Art 3,3) and for the relations with multilateral institutions (Art 9,1);

• actively engage the Minister of Finance in the planning phase (Art 3,5);

Pool Fund

• clearly set the Agency as the Fund only managing authority (Art 14,3,d);

• include all-budget resources for development cooperation in the Pool Fund, including those for financial institutions and regional development banks (Art 6,2),

• set the Agency to manage the Fund dealing with concessional loans (Art 9,1)

Development cooperation implementation

• enhance the link between the strategic document and the Minister for Foreign Affairs that must control its implementation (Art 3,3);

• state that the Minister for foreign affairs act to coordinate development cooperation initiatives by Regions (Art 12,3–bis);

• set the Agency as being the only body responsible for implementing the multi-year strategic plan ( Art 3,2);

• exclude that the Minister for foreign affairs issue binding instructions about implementation to the Agency (Art 14,3, a),

• simplify the disbursement procedure to development funds and banks, by allowing the Agency to directly disburse following the Minister of finance request and the strategic document instructions (Art 3,5);

• allow the Agency to sign agreement with multilateral agency, whether in line with the planning document (Art 11);

• have the Agency to link with multilateral organizations during the implementing phase;

• have all aid specific initiatives approved by the Agency, in line with the strategic document (Art 14,4 f);

• allow the establishment of Agency field offices to be responsible in implementing the country chapters of the strategic document (Art 14,8);

• establish an independent evaluation office, to assess the impact of bilateral and multilateral initiatives (Art 14,4 e);

Actors in development cooperation

• acknowledge civil society organizations from partner countries among the actors for development cooperation (Art 15);

• make compulsory the opinion by civil society during the planning phase (Art 16,3);

• allow the ICDC to hear civil society to assess policy coherence (Art 6-bis);

• compel the Agency to consult with civil society in sketching the implementing initiatives;

acknowledge private sector as implementing actor, if abiding to ILO standards (Art 15).