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04/12/2016

French MPs: Hollande’s presidency ‘catastrophic’ for development

Development Policy

French MPs: Hollande’s presidency ‘catastrophic’ for development

Wednesday's meeting (2 November) of the French parliament's finance committee.

[Assemblée Nationale]

Development suffered the second deepest cuts of any budget during François Hollande’s term in office, just after spending on military veterans. The French government has promised to turn the ship around in 2017. EurActiv France reports.

Since 2012, France’s development aid budget has melted away. For Jean-François Mancel, a Republican MP and rapporteur of the French parliament’s finance committee, this cumulative reduction of 20.8%, at least €646 million, is “an incomprehensible collapse”.

Aid sacrificed?

During their examination of France’s development assistance budget on Wednesday (2 November), MPs unanimously condemned the ravaging cuts inflicted on the international solidarity budget since 2012.

And a comparison with the state’s other budgets throws Socialist government’s cuts into sharper relief. “Apart from military veterans, official development assistance has suffered the biggest reduction in credits,” said Mancel.

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France’s numerous promises of aid for the Global South do not feature in the government’s 2016 budget bill, which will finally be adopted today (16 December). EurActiv France reports

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But there is light at the end of the tunnel: the downward trend is set to turn around in 2017. “For the first time in five years, the development assistance budget is going up. Just slightly, but it is going up. But over the whole of the government’s term, it is a disaster,” Mancel added.

Aiming for 0.7%

France’s Minister for Foreign Affairs, Jean-Marc Ayrault, promised change would come next year.

“I want to make sure the budget increases strongly in 2017,” he said. “Development assistance will benefit from an extra €402m compared to 2016,” he added.

This hike is the result of an extra €133m allocated to international solidarity and a further €270m from the increased Financial Transaction Tax (FTT) revenue, which was called for by MPs during the budget debate.

France strengthens financial transaction tax to fund development

France will increase its Financial Transaction Tax in an attempt to halt the decline of its official development assistance budget, which has been cut each year since 2012. EurActiv France reports.

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These extra budget credits will set Paris back on the path towards the international objective of allocating 0.7% of gross national income (GNI) to international solidarity. France spent just 0.38% of GNI on development assistance in 2016.

Next year’s increase will take the development budget to “almost 0.42%”, according to Ayrault. “We are not yet at 0.7%, but we have to get there, that’s the objective,” the minister said. “We have fallen behind and have to catch up,” he added.

The turnaround will also help France close the gap on some of its European partners. The minister cited the United Kingdom, which has achieved the 0.7% target for the last three years. And even Germany is “outpacing” France.

France rows back on development aid cuts

After four consecutive years of cuts, France will stabilise its aid budget in 2016. This is a first step towards the €4 billion increase promised by president François Hollande. EurActiv France reports

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MPs demanded that the government commit to boosting French development aid, notably by enacting the strengthened FTT adopted by parliament in October.

In a bid to increase the funds available for development, MPs voted to broaden the FTT tax base to cover ‘day trading’ (a speculative practice where shares are bought and sold on the same day) and increase the tax rate from 0.2% to 0.3%.

A large proportion of the extra revenue generated by these changes will be spent on international solidarity. But when questioned over the government’s intention to back the move during its second reading, the Secretary of State for Development, André Vallini, gave only cagey answers.

“We are all for the inclusion of ‘day trading’, the question is when and how,” he said. “We need to move forward together, at a European level.”

After years of negotiations, ten European countries have agreed, in principle, on a European Financial Transaction Tax, and the European Commission is due to present a proposal to flesh out the idea by the end of 2016.

“The government hopes to see the tax on day trading put in place in the ten countries, coming into force on 1 January 2018,” said Vallini. But the inclusion of day trading in the FTT is a controversial issue at European level, and could torpedo the whole project.