Aid transparency: Italy among the least transparent in the UE

The CONCORD 4th edition of the Aidwatch report includes the first transparency ranking of the EU 27 official development cooperation. Increased transparency is considered a vital item for aid effectiveness and it is an international commitment signed in 2008. The European NGOs respectively ranked its official development policies according to a fixed set of transparency criteria. In this first ranking, Italy resulted 6th last EU donors, scoring just a little better than Greece, Latvia, Bulgaria, Slovak and Slovenia. This poor performance is due to the dearth of information publicly available and linguistic barrier preventing from access citizens in partner countries.

2008 Italian ODA at 0.22%

OECD/DAC data on ODA released at the end of Mach will need to be corrected on the rise for Italy.
As a matter of fact, following one moth later re-calculation, Italy notified the DAC to have reached 0.22% of GDP from the previusly stated 0.20%. The previously missing 300 million euros came from the lack of conversion from euro to dollar of some multilateral contributions. Though the last Governemnt can be praised for this, this positive result is well below the politically set quantitative target of 0.33%, set by the Prodi's government for 2008.

DAC Reviewers start their field visit in Italy.

On May 11th , the 10 people DAC peer reviewers team, consisting of France, Greece and the DAC secretariat, has started their first field visit. This is part of the DAC Peer review process, expected to produce an official report by the end of November. In April Italy had presented to the DAC a 100 page long report listing the Italian development cooperation progresses since the last peer review in 2004. During this week long visit the DAC reviewers will be on a fact finding mission to gather firsthand information on the Italian development cooperation. They will meet many stakeholders, including members of Parliament and NGOs. The Reviewers are to visit Lebanon in their second filed visit as one of the priority country of the Italian development cooperation to assess it at field level. NGOs will present their own assessment on the lack of progresses and missed opportunities of the past five years. Moving from the official report of the Italian development cooperation, the NGOs counter memorandum acknowledges that while the overall legislative reform of Italian development cooperation framework has not yet produced any results, the Directorate-General for development cooperation (DGCS) has attempted to implement some of the recommendations of the DAC peer review conducted five years ago, especially during last year.

Driven by the pressure of the DAC approaching deadline, the DGCS has quickened the pace and attempted to conclude and finalise processes that started in past years. In September 2008, an internal Task force was set up to overcome Italian cooperation management inertia and implement international policies on aid effectiveness, even without a legislative reform. Despite these efforts, this late undertaking will not enable results to be available in time for the OECD examination, postponing the implementation of the expected changes to a future date. The Italian Memorandum to the DAC in many section often refers to these processes as “on-going” or “underway”. This “underway-ism “ tone indirectly makes clear that no major Peer-review oriented reform was fully implemented over the last 5 years. In the same line, despite the current analysis on aid effectiveness, and on aid quality, in the past there had been no strategic reflection on how to comply with the Paris Declaration commitment till the Accra conference. Three years were wasted while other OCED countries were attempting to implement their aid effectiveness national Plans.

Current policy and planning processes will start being implemented and face institutional resistance in the second half of 2009. Yet, the lack of financial resources and the reduced international screening on Italy after the G8 Summit will mean that two of the main incentives will be lost in the implementation phase, increasing the risk of a renewed stalemate.

The 2004 DAC review acknowledged that its 2000 recommendations were still not implemented. Now, the almost 10 year old recommendations are still valid as there was no protracted effort to implement them.

Italian development cooperation following migration flows

The Italian Parliament is about to approve a bill enabling the government to streamline and speed up bilateral cooperation agreements with countries signing migration repatriation agreements.

This controversial article is part of a broader bill, aiming at boasting Italian economic productivity; particularly it specifically entrusts the government to review its development cooperation administrative procedures in order to speed up development cooperation interventions, including management, in emergencies contexts and with partner countries that signed up to migration control and repatriation agreements. The article clearly details that additional priority is to be given to countries agreeing to jail their citizen that were initially jailed in Italy. This article is an infringement of international human rights and of the main aims of the Italian development cooperation, as stated in the Law. Eventually the article approves a 2 million euro cut of the Italian development cooperation to fund the expenditure stemming form the implementation of the Italian-Israel Treaty.

Italy to push DAC on Tied aid definition

Ahead of the next DAC WG on statistics, Italy is asking the DAC to classify local procurement of good and services as either “untied” or “partially tied”. Italy is putting forwarded its requests following Accra commitment to favour local procurement responding to demands. The overall results of the this change will be mixed. On the one hand, it will encourage donors policy reforms to favour local procurement. On the negative side, its insertion within the untying heading will allow all donors to immediately improve their scores on aid untying, with no policy change needed, possibly disliking national business.

Italian strategy for multilateral organizations

In 2009 the Italian development cooperation has issued its first strategy on multilateral organizations (3 page document). The strategy is only an annual document and does not include all the multilateral organizations. It does not refer to Regional Banks, as the document was published by the Ministry of Foreign Affairs with no clear engagement by the Ministry of Economic and Finance ( responsible for dealing with Banks).

However, contradictory, the documents breaks down the sectoral multiannual investment for multilateral organization with emergency 27% and food-agriculture 22% as the main sectors. The selection criteria followed the priority issue of the G8 presidency and evaluations by the Italian embassy. In line with the 2009-2011 strategy, the Italian development cooperation deems an asset for the multilateral organization having an headquarter in Italy, worth investing. There is no reference to any coordinated evaluation of multilateral effectiveness among partners, including donors and partners countries.

According to the document, Italy is to reduce its financial contribution to fewer multilateral organization due to financial constraints and will to further concentrate. 40 multilateral organizations are mentioned throughout the text, with FAO, WHO and UNPFA, being the most frequently referred to. This strategy commits the Italian development cooperation to develop multilateral organizations specific guidelines in case the Italian contribution be above 10 million euro.

2009 Italian ODA

According to the Italian Financial Perspective 2008/2011, the Italian ODA / GDP should have been 0.33% but it is 0.20%. Although there is an increase of 1% increase compared to 2007, if you take into account data in real terms, the level of ODA has remained broadly stable. European objectives remain far apart. The shares of Official Development Aid to be distorted by the accounting of the cancellation of the debt of developing countries, for 2008, net of cancellations, it has gone from 0.16% in 2007 0.15% ODA / GDP. In real terms, there was a reduction of 100 million dollars on the values for ODA in the period 2007-2008. Taking into account the commitments made in the past, this is a gap estimated at 3 billion dollars for 2008.

Italy working towards aid effectiveness

Last December the Italian development cooperation approved the 2009-20011 strategic plan that was meant to also provide some political direction to the work of the newly established task-force on aid effectiveness. The strategic plan states that aid effectiveness is deemed as a key priority as a response to Italian ODA quantitative limits. The dearth of financial resources could threaten any major reform as the management structure has no incentives and future perspectives. The Task-force is supposed to steer the internal debate and produce the national plan on aid effectiveness in close collaboration with the national civil society.

The 2009-2011 strategic guidelines for the Italian development cooperation officially endorses the principle of democratic ownership and commits to align future Italian country strategy paper to Partners countries national development strategies. In terms of processes the Italian commitment to ownership aims at engaging local civil society in strategic talks and a more-structured consultation with Italian-based civil society. However, there is no mention to increase transparency and accessibility of aid information to allow a better quality and timely reporting of aid. Italian reporting to the DAC is poor with non systematic reporting of DAC sectoral markers, such as gender, governance or environment. Moreover, with a view to enhance mutual accountability, the language barrier – all aid documents mainly available in Italian- should be tackled to allow citizens in Partners countries to be aware of the Italian interventions.

Despite this important effort to set clear and accountable policy criteria, the strategic guidelines does not help the effort to increase Italian aid predictability. The taskforce on aid effectiveness should explore some change to ensure a stable amount of financial resources, and at least establish a commitment to promptly communicate to partners countries financial changes. Eventually, so far the multi annual country planning is not transparent and its final documents are not publicly available to the Italian and partner country citizen.

The strategic plan shortly refers to the issue of common donors arrangements by mentioning the possible use of general budget support but no reference neither to any plan for increase nor to preliminary conditions to use the modality is made. Moreover, last September an amendment to the current legislation on development cooperation was approved to allow the Italian cooperation offices on the field to receive financial transfers from the European Commission and EU member States in order to be able to fully take part in the future EU work on division of labour. Italy is taking part into the EU exercise into 4 countries (Albania, Lebanon, Mozambique and Ethiopia).

However any improvement on the Paris Declaration indicators is linked to the possibility for Italy to participate into pooled funds or multi-donors funds, obliging to review internal administrative procedures. The strategic guidelines do not refer to any work on procedural reform to ensure greater flexibility, being specifically targeted to the aid effectiveness commitment. Yet, over the last two years, the Directorate General for Development Cooperation has being working on procedural reforms, that should be accomplished and also steered to comply with Paris Declaration targets.

Eventually the multi-year strategy is apparently silent on the problematic areas for the Italian development cooperation to meet the 2010 targets on aid effectiveness.

As for the use of country systems, the guidelines still refer to article 15 as the sufficient condition to meet the Paris declaration objective, not referring to the poor results score in 2008. The Italian development cooperation used art.15 as legal basis to take part into the General Budget Support in Mozambique, but there is scope to reduce the administrative burden. The internal on-going work on procedural reform could provide an opportunity to move forward towards the use of country systems. It has to be borne in mind that by using country systems, donors countries accept Partner countries, budget, reporting and auditing procedures. As for local procurement target, a recent DAC study assumes that Italy’s procurement for the development programme by the Ministry of Foreign Affairs Directorate General for Development Co-operation and other public organisations follows competitive procedures in line with the EU Procurement Directive, but was unable to establish to what extent bids from local or regional firms are allowed. In both cases, if the on-going procedural reform is on opportunity, policy guidelines need to be developed to clearly state the level of fiduciary risk.

The three-year plan acknowledges the recent efforts on decentralisation of decision making, increasing the number of Local Technical Units in the field, with both a national or local staff. However they do not announce for any further delegation for decision making at local level, including in financial management. A general finding from the Paris Declaration Survey is that those donors whose operations are more decentralised to their country offices or embassies tend to be more supportive of partner ownership and the use of country systems. In the Italian context the increase in delegate authority at filed level is also linked to the increase in number of the implementation units. The positive effort to move decentralization forwards should be coupled with a time table plan of parallel implementation unit reduction or restructuring. Italian PIU increased by 33% between 2005 and 2007, mainly thanks to those in Morocco, Ethiopia and Egypt.

As for joint missions and analytic work, despite the most improvement Italy recorded in 2008 survey, Italian performances are still respectively second last and third last within the EU. In the first aid effectiveness survey Italy was the second last EU donors concerning its joint work, two years later, it is still the second furthest donors from joint missions and analytic work targets. Joint work in Albania and Mozambique was particularly critical, while in Ethiopia had already met the Paris Declaration Target. Improvements on the two targets do not require any complex administrative reform to take place, it only needs a clear directives to encourage and monitor joint work. In the Italian context, it is important to note that missions by the Italian local authorities contribute to the overall result on joint work, hinting to the need of better coordination of the whole Italian cooperation system.

In the Plan, despite the specific section on concessional loans – representing the greater share of the Italian tied aid - there is no reference to further untying or support to local procurements of good and services throughout the document. As for local procurement, last December the Italian development cooperation increased the percentage of locally purchased services for some sectors for concessional loans. This move is in line with Accra commitments and further progress could be built on this. More importantly, despite the fact that article 6 of the current development cooperation legislation ties all loans, a non-legal reform was approved in 2002 to comply with the DAC recommendation on aid untying for Least Developed Countries. More specifically the Inter-ministerial Committee for Economic Planning approved the reform to allow the LDC untying. The same process is envisaged to extend the untying to the Heavily Indebted Poor Countries, proving that further untying can be quickly achieved.

http://www.cininet.org/download/CINI_Document_Planning.pdf

2008 Italian geographical aid commitments

According to ActionAid estimates on Italian aid commitments on different regions, sub-saharn Africa is ( 30%) followed by Asia (24%), Middle East (22%), America (11%), Eastern Europe (9%) and North Africa (4%). Only 50% of total committed aid has a geographical allocation. It is important to note that North Africa, Middle East and Easter Europe count as one single Region (Mediterranean ) for the Italian development cooperation . Therefore accounted for 35% of the Italian commitments. From 2009, according to the new multi-year strategy, Sub-saharan Africa should receive 50% of commitments while the Mediterranean region only 25%. A signficant re-shift within just one year.

Italian Cooperation in Water and Sanitation

As President of the G8, Italy to play a steering role on Water and Sanitation intervention in Sub-Saharan Africa (SSA) as it is tasked to revise the 2003 Evian Action Plan on Water and Sanitation. However, Italy is the least active in the Water and Sanitation (WSS) sector both globally and in Africa compared to the G7+EC, ranking last in the average annual disbursement to WSS in SSA with US$1.64 million. According to the OECD DAC Credit Reporting System, in 2006, the relatively higher commitment of US$3.9 million to WSS in SSA was not matched by any significant disbursements. Regarding the disbursements, this could be due to no investments made or because results were not reported. The reliability of Italy’s reporting system is questionable so these figures are at best indicative.

Only 14% of Italy’s bilateral ODA to the WSS sector went to Sub-Saharan Africa (SSA). However, according to the Italian Ministry of Foreign Affairs, SSA has been the main geographic focus of Italian bilateral ODA over the last few years. According to the OECD DAC donor profile (2008) on Italy, particular attention of Italian ODA is given to the Mediterranean and Middle East Region in the framework of the Barcelona Process (whereby Italy, France and Spain founded the Euro-Mediterranean Information System on the know-how in the water sector – EMWIS).

The priority sectors of Italian bilateral ODA are broadly those that concern the MDGs but more explicitly are reported as health and gender equality, and since 2008, rural and agricultural development and environmental protection. In a governmental report that forecasts investments and programmes for 2008, no mention is made of water and sanitation as a priority area. Moreover the Ministry of Foreign Affairs’ annual reports (2003 – 2006) to Parliament on Italian ODA refer to 4 initiatives and action plans of the G8 as part of their description of the international framework for development cooperation, namely, the Global Fund to Fight AIDS, Tuberculosis, and Malaria, the Africa Action Plan, the Geneva Plan for e-government, and Education For All. However, in the latest (2006) report to Parliament on Italian ODA, the water sector is mentioned as one of the main recipients of Italian ODA in SSA, although this could be due to the significant level of ODA directed to emergency relief activities, which often include water and sanitation activities. The OECD DAC donor profile (2008) on Italy reports that WSS activities are deeply intertwined in most operations and that water supply is often found as a subcomponent in food security initiatives. Nevertheless, without a distinctive cooperation policy on water, data from the Italian Ministry of Foreign Affairs are generally insufficient and inconsistent to determine whether the WSS sector is/was a main recipient of aid.

According to the OECD DAC Credit Reporting System and in terms of the average annual ODA disbursed to all sectors and on a global scale, the proportion going to the WSS sector is very small at 1%. Within the geographical area of SSA the proportion going to WSS is even less at 0.2%. In both instances, Italy ranks last out of the G7+EC.

Italian ODA disbursements to WSS in SSA have varied in their focus. In 2004, 67% was invested in large WSS systems, and 16% in both basic WSS and Water resources policy/administration and management. In 2005 a more pro-poor approach was adopted with 55% of disbursements to WSS in SSA going to basic WSS. Development projects promoting access to water as well as environmental sustainability also include the principles of partnership, at local and global levels, and the equitable sharing of water resources among stakeholders and across geographical and administrative boundaries. Furthermore, the Italy promotes the mainstreaming of women’s empowerment into its water projects (OECD DAC Secretariat and the World Water Council, 2008).

The majority of ODA goes through bilateral channels followed by multilateral, and multibilateral channels. In 2008, forecasts show ODA going to multilateral agencies that focus on gender issues, climate change and environmental protection, agricultural development and food security, and emergency relief. NGOs are also typically used for implementation in the WSS sector. Moreover, within the WSS sector, Italy is increasing its involvement in joint programmes and programme-orientated joint financing with other donors, in line with its adoption of the 2005 Paris Declaration, to enhance aid effectiveness and increase recipient government ownership of development projects (OECD DAC Secretariat and the World Water Council, 2008).

2009-2011 concentration is to produce a major shift in Italian geographical priorities

The 2009-2011 strategy attempts to identify priority sectors and countries to ensure the greatest concentration of the Italian interventions due to limited financial resources.

The regional aid distribution commits to international consensus with Sub.-Saharan Africa receiving 50% of bilateral aid, including loans . However, in terms of aid effectiveness, the predictability of absolute country flows on three-year period is not mention, though more significant than the share of total resources. For example, between 2008 and 2009, while maintaining 50% of available resources, Sub-Saharan Africa’s absolute aid might halve due to the 56% cut to the total aid appropriations. The strategy could have clarified its commitment to maintain constant trends in a 3 year period in the priority partner countries at least. It is important to note that predictability is different from volatility. It only refers to timely reporting of aid to Partners countries rather than constant financial flows. However, ensuring a constant flow in aid resources in the main priority countries reduces aid volatility improving its quality.

It is important to stress that the planned aid geographical shares do not reflect the current proportions of regional Italian aid allocations between 2006-2007. Balkans -the Mediterranean and the Middle East Region as a whole had received 45% net-of-debt aid, while it is supposed to receive only 25% over the next three years. Compliance with the new geographical concentration will oblige the Italian cooperation to reduce its aid share in the Mediterranean to the advantage of the American region and Sub-Saharan Africa. This change together with a reduction in total financial resources is likely to result in a significant reduction in absolute aid to the Balkans, the Mediterranean and Middle East Region.

However, this regional planned share seems unlikely to be implemented due to the financial commitments to Libya, stemming from the Italy-Libya Treaty. In fact, the agreement allocates around 200 million euros a year for the next 20 years - equivalent to the resources currently available for all DGCS aid activities in 2009- to development cooperation activities.

Furthermore, the document highlights 23 priority countries, 15 countries with medium priority and 20 countries, whereby over the next three years the Italian cooperation is to phase out. In total, there are 58 partner countries for development aid over the next three years. It is a major improvement, significantly reducing Italian aid fragmentation. In 2007 94 countries received Italian aid, 86 partner countries in 2006. The 2009 concentration is in line with other European countries. In 2007, Spain pointed out 52 partner countries, Sweden set a list of 33 partner countries and Finland only 8 countries. The list of 23 priority countries will force a partial shift in the strategic allocation of Italian aid. In fact out of the first 23 Partners in 2006-2007 only 15 were among the first 23.

The Strategy does not make clear the difference in aid activities between high and medium priority countries. Only in sub-Saharan Africa, the strategy states that in high priority country Italy will directly implement, while in medium priority country Italy will deliver- almost delegating – via international organizations.

The listed priority sectors are eight, but rise up to ten, with other areas listed throughout the document of intervention. The sectoral concentration is still poor as total DAC sectors are only 12 , far away from the EC Code of Conduct on Division of Labour.

2009-2011 strategy: no resources, focus on aid effectiveness, but forgetting coherence

The 2009-2011 Strategy for development cooperation is more transparent in terms of the financial resources available for development in 2009 - 0.11% ODA/GDP - and clarifies the policy directions on the reform of the cooperation management system. The more innovative and important aspect is the attempt to identify a limited number of geographical and sectoral priorities for the bilateral and multilateral channel. However, except for the geographical concentration, the sectoral result is mixed.

The document takes into account the 2004 DAC recommendations and the conclusions of the 2008 aid related conferences - Accra on aid effectiveness and the Doha Financing for Development for the public-private partnership . Unfortunately, the document provides little detail on the strategic policy beyond the issues part of the Directorate General for Development Cooperation mandate. This lack is possibly due to the limited contribution t provided by the Ministry of Finance, raising the question about boundaries of the strategic directions: Guidelines for the whole Italian cooperation or solely for the Directorate General for Development Cooperation?

While referring to the need to monitor the effectiveness of interventions for development effectiveness beyond aid, the document makes no reference to the need to monitor and ensure policy coherence for development. The document aims to enhance an Italian system for development cooperation, including private actors, but it has to policy guidelines for all the actors whose actions have an impact in developing countries. The pursuit of policy coherence requires a high political commitment and an institutional coordination effort. The absence of any reference to policy coherence for development limits the future compliance to the DAC recommendations.

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.