After the vote: Future of Italian aid still uncertain

Photo by: Sinistra Ecologica Liberta / CC BY

2012 has been Italian aid’s annus horribilis. Will next year mark a radical change of direction?

Aid officials are expressing cautious optimism, especially after last week, when an initial budget document which reaffirmed the commitment to continue increasing official development assistance was approved.

Moreover, the Organization for Economic Cooperation and Development recently predicted that Italian aid should expect a moderate recovery in 2013.

But the political situation is far from stable in Italy, where on Thursday, a new president is supposed to be chosen yet no government has yet to be formed after recent elections. A call for new elections cannot be ruled out.

Learning from the past

Italian official development assistance decreased 34.7 percent in 2012 as the government gave out less in grants and aid to refugees, according to OECD data confirmed by the Ministry of Foreign Affairs.

ODA as a percentage of gross national income dropped from approximately 0.2 percent in 2011 to 0.13 percent last year, a far cry from the 0.7 percent target for Western nations.

Funding for the Directorate General for Cooperation and Development of the Ministry of the Foreign Affairs, which manages grants and loans, decreased from €265 million in 2011 to €200 millions in 2012. Debt relief grants, managed by the Ministry of Economy and Finance, experienced a severe decline from $648 million of dollars in 2011 to just $7 million the next year, due to the decreasing number of agreements between Italy and developing countries. Aid to refugees fell from $360 million in 2011 to $125 million of dollars in 2012. The cuts impacted nearly all Italian aid program, with multilateral funding reaching its lowest level in years.

Meanwhile, aid has shifted from the poorest countries to middle-income nations. Aid to LDCs dropped from $781 million in 2011 to $155 million last year.

“Of those $781 million, $648 million are for debt cancellations. Of course, cancellations benefit first of all less developed counties,” said Donato Scioscioli, deputy desk officer for policy planning and resources at the DGCS.

Last year was a tough one not just for Italian aid officials, but also for their implementing partners, said Gianfranco Cattai, president of FOCSIV, an association of aid NGOs. The situation was made even harder by the fact that cuts occurred throughout the year and were quite unexpected, he noted.

“We underwent a progressive shrinking of resources in ways we didn’t expect,” he told Devex. “Some organizations continued to submit proposals that have never been approved [thinking that maybe] due to the lack of funds, it wasn’t impossible to take them into consideration.”

Projects and initiatives were postponed, even as the government worked to minimize the impact of cuts using “residual funds,” resources set aside during the previous year. But by the beginning of 2013, these funds were also almost depleted.

Quite aside from that, years of shrinking budgets have forced the DGCD to study new strategies to improve the efficiency of the system, such as focusing on sectors and countries where the agency sees a competitive advantages, leading to a wave of staff reductions at Italian NGOs over the past year, especially at headquarters.

“We have to equip ourselves to avoid rapid shutdowns,” said Cattai, “and for changing our operations.”

To lessen the burden of Italy’s aid cuts, Italian aid groups have been setting up permanent bases in Southern countries and looking for funding elsewhere, including with the EU and other donors.

Dealing with uncertainty

Under Prime Minister Mario Monti, who remains the caretaker of Italian government until a government is formed, Italy committed to increasing ODA to between 0.15 percent and 0.16 percent of GNI in 2013. Aid officials are cautiously optimistic the trend remains.

But, “the commitment to a progressive increase has to be verified in the light of the imminent elections,” said Giampaolo Cantini, appointed director-general of the Italian aid agency in January, who spoke with Devex just before the February general election.

In 2013, the DGCS will have a total of €319 million ($415 million) for its operations, “a significant increase” from 2012, Cantini said. According to the Foreign Ministry’s 2013–2015 cooperation spending blueprint, approved before Christmas, some 90 percent of the funds will be allocated to aid projects, 57 percent for bilateral and 43 percent to multilateral interventions.

In terms of fund availability, Monti’s government promised to step up ODA not just in 2013 but also until 2015. So far, though, only the funding for 2013 has been allocated. An economic and financial document approved last week by the outgoing government, though, has sparked hopes of an Italian aid revival. The document proposed a 10-percent increase for DGCS and boosting aid to reach between 0.28 percent and 0.31 percent of GNI by 2017.

The document notes that Italy would have to reform its foreign aid law to achieve that target.

And more funding doesn’t necessarily mean more business for implementing partners, Cattai cautioned. The money might as well be used for debt relief instead of funding technical assistance projects.

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About the author

  • Elena L. Pasquini

    Elena Pasquini covers the development work of the European Union as well as various U.N. food and agricultural agencies for Devex News. Based in Rome, she also reports on Italy's aid reforms and attends the European Development Days and other events across Europe. She has interviewed top international development officials, including European Commissioner for Development Andris Piebalgs. Elena has contributed to Italian and international magazines, newspapers and news portals since 1995.