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Brussels 'could save €4 billion in development aid'

Published 09 September 2011 - Updated 13 September 2011
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The EU, which is the world's biggest aid donor and gives over €53 billion a year to developing countries, could save €4 billion by managing more effectively the grants and loans it provides to help reduce poverty and achieve the Millennium Development Goals by 2015.

"I am aware that efforts are still too slow and more efforts are needed. In a period of crisis, we cannot spare any effort to save money whilst increasing the impact of aid," said the EU commissioner in charge of development, Andris Piebalgs, presenting today (9 September) the position that the European Commission believes the 27-country bloc should adopt with regard to the effectiveness of international aid.

Piebalgs said he would come up with proposals for better coordination of EU donors, for instance through joint programming, in the coming weeks ahead of the Fourth High Level Forum on Aid Effectiveness, which will take place in Busan, South Korea, from 29 November to 1 December.

He argued that the EU's performance in aid effectiveness is above the global average among donors.

"No time should be lost in ensuring that international aid helps to lift even more people out of poverty so that we reach the Millenium Development Goals," Piebalgs said.

According to the survey and independent evaluation of the Paris Declaration (see 'Background'), EU aid is more transparent, predictable and coordinated than ever, as well as better adapted to developing countries' national priorities, but development NGOs are voicing a greater need for reform.

"What's missing is a clear way forward for the EU to commit to reform and lead by example," said Franz Josef Berger, an aid effectiveness expert at CONCORD, Europe's development NGO confederation.

Concretely, CONCORD calls for stronger EU action to give developing countries more control over aid resources by providing funds directly to governments, spending more aid money locally, untying aid and ending policy conditionality.

"The Commission recommends blending loans and grant and using innovative ways of raising money to leverage additional development funds, but it does not say how financial institutions are going to be chosen and how they can effectively track the social impact of the aid they channel," Berger added.

Next steps: 
  • 14 Nov.: EU development ministers to adopt their position based on Commission communication.
  • 29 Nov.-1 Dec.: World governments and development organisations to gather in Busan, South Korea for the High Level Forum on Aid Effectiveness.
Background: 

Aid reform originated in the Monterrey Consensus on Financing for Development (2002), in which the international community agreed to more effective Official Development Assistance (ODA).  

Subsequent High Level Forums in Rome (2003), Paris (2005) and Accra (2008) added principles, concrete commitments and a monitoring framework to strengthen the reform.

The 4th High Level Forum, to be held in Busan from 29 November to 1 December 2011, is supposed to assess progress against agreed commitments, review the aid effectiveness agenda and link it with the wider agenda on development financing. The Forum does not want to duplicate the international agenda on Financing for Development but focus more on the added value of aid effectiveness in reducing poverty and achieving the Millennium Development Goals by 2015.

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