Blog survey on Italian G8 priorities for Africa

The blog Survey on the most important issues for Africa to be addressed in the Italian G8 ended after 6 moths. With 122 votes cast by international aid-watchers - Health, Agriculture and Education - resulted as the 3 main areas.

Table showing detailed results

	Italy	Intertional	Total	%
Agriculture	9	13	22	18,03
Education	15	5	20	16,39
Health	19	17	36	29,51
Energy	1	3	4	3,28
Infrastructures	4	1	5	4,10
Debt	3	3	6	4,92
Water	9	5	14	11,48
Remittances	0	1	1	0,82
Governance	6	3	9	7,38
Private sector	2	3	5	4,10
Total	68	54	122

The Libya connection: more and worse aid

Despite the heavy cuts for the development cooperation in 2009 Budget bill and the expected low levels of debt cancellations, Italy aid could have an unexpected quantitative boost by the Italian foreign policy. The Parliament has just started discussing the ratification of the Treaty between Italy and Libya. The agreement binds Italy to financially support various aid-reportable activities in Libya (roads construction, and students grants) for 20 years. Thanks to this Treaty, Italian ODA will increase by around 200 million euro each year ( around 0.012% of the Italian GDP) with predictable and additional money to the current ODA budget. In fact, the Parliament is also supposed to increase a profit-tax on oil-firms, in order to meet the Treaty financial requirements.

On the negative side, this additional money is going to worsen the quality of Italian aid, particularly its tied share- still 40% of the Italian bilateral ODA in 2007. As a matter of fact, all ODA–reportable interventions are 100% tied to the implementation by Italian firms. The possible injection of 200 million euro in tied aid will have an impact, as it represents 60% of the average 2006-07 Italian tied commitments. Finally due to the low levels of the Italian bilateral aid, this 200 million euro will also worsen the poverty focus of the whole Italian development cooperation. As the Italian annual country-allocated aid between 2006-2007 was around 400 million euros, the future Italian aid shares of Sub-Saharan Africa and the Least Developed Countries are going sharply to decrease.

Decree to extend Italian international peace operation does not provide extra-money for ODA: unlike last year

At the very end of 2008, the Government issued a Decree extending the Italian participation to international peace missions for 6 months, and allocated 763 million euro to meet foreseen expenditure. Required financial resources had already been appropriated by the 2007 financial bill. Last law approving the Italian participation to international military missions over the whole 2008 provided for 1 billion euros.

As for development cooperation, last year 94 million had been specifically earmarked for development cooperation activities in Afghanistan, Iraq, Lebanon and Somalia. 94 million added up to the development cooperation resources already appropriated by the 2008 Financial bill -732 million euros. Unfortunately, the last decree does not earmark any additional resources for development cooperation to lift up its minimal level -321 million- approved by the 2009 financial bill. If additional money is not appropriated during the Parliamentary debated, available financial resources are too scarce to allow Italy delivering on its commitment in fragile countries. For instance, in Afghanistan, the recently approved development cooperation 3-year plan had clearly stated the need to appropriate additional resources to be drawn from the international peace operation bill to meet its annual financial commitments for the country – around 50 million.

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