Macron’s missing billions to fulfill development aid promises

French President Emmanuel Macron promised multiple times to raise France's contribution to development aid. [Pool/EPA]

The French budget dedicated to international solidarity is expected to increase by €500 million over the next three years. But the government estimates that €6.4 billion will be needed by 2022. EURACTIV France reports.

French aid will increase this year by €100 million. The budget devoted to international solidarity proposed by the French government and endorsed by parliament will see a slight increase in budget allocations for development assistance, which will amount to €2.7bn in 2018.

This modest rise was voted by the National Assembly on 10 November and must now be discussed in the Senate. For 2019 and 2020, the government also expects small increases of €100 million and €300 million.

Macron announces U-turn on development budget

After announcing budget cuts at the beginning of July, President Emmanuel Macron has reaffirmed his commitment to increase France’s official development assistance budget to 0.55% of gross national income (GNI) by 2022. EURACTIV France reports.

International goals

During the five-year presidency of François Hollande, French aid to developing countries has declined significantly, from 0.42% of gross national income (GNI) to 0.38% in 2016.

In the wake of his election, Emmanuel Macron had repeatedly promised to put France on the road to its international commitments in this area.

“President Macron has pledged to spend 0.55% of GNI on development by 2022 and then reach the 0.7% threshold by 2025. He has renewed this commitment on several occasions since his election, especially before the United Nations General Assembly in September,” explained Michael Siegel of Oxfam France.

But between the presidential promise and the increase proposed by the government, the gap remains considerable. “This increase is not enough to reach the goal of 0.55% by 2022,” acknowledged Minister of Europe and Foreign Affairs Jean-Yves Le Drian.

The minister said the president had asked to work on “a realistic trajectory” to reach the goal of 0.55%. “The hour of truth will be in the next budget and next,” said the minister. The government’s trajectory for official development assistance should be published before the end of the year or in February 2018.

An increase in the FTT?

In fact, to reach the target set for 2022, France should devote €15bn to its development policy, against €8.6bn in 2016, the government admits in its transversal policy document. On this set, the budget appropriations discussed in the framework of the draft budget law represent only about 30% (€2.7bn).

“Given these needs, the increase of €100m proposed by the government for 2018 appears very insufficient. Just like the cumulative increase of €500m by 2020,” said Michael Siegel.

To find the missing billions, the financial transaction tax (FTT) could be put to good use. In place since 2013, this tax levies 0.3% on financial transactions in France.

In 2017, half of the revenue generated by the FTT was allocated to development aid, a contribution of €822m. During the debates in the National Assembly, some deputies proposed a reinforcement of this tax, but no amendment in this direction was finally adopted, due to lack of majority support.

“We should raise the tax threshold to 0.5%, against 0.3% today, broaden the base for intra-day operations and allocate 100% of revenue to development. With these three measures, the FTT could yield €10bn per year according to our estimates,” Siegel added.

With the planned exit of the United Kingdom from the EU, Paris hopes to pick up some of the financial business of the City of London, and is currently paying special care to the attractiveness of its financial centre. But the mystery of €6.4bn remains.

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