EU moves to approve 2014 aid budget, but some spending areas still in limbo

After finalizing its full seven-year budget on Tuesday, the European Parliament is set to vote on its 2014 budget on Wednesday, less than two months before the start of the first financial year under a new Multi-annual Financial Framework.

CONCORD policy officer Lonne Possonnier, who closely follows the negotiations, told Devex the budget will “probably be adopted” and is expected to close commitments and payments at €142.64 billion and €135.50 billion, respectively.

Almost all of the funding instruments for development and humanitarian aid, meanwhile, will increase — slightly — as compared with the European Commission’s draft proposal in July, although still smaller when compared with the approved budget for 2013, an earlier Devex analysis shows.

The compromised budget (in commitments) for each instrument are broken down as follows:

  • European Neighbourhood Policy — from €2.11 billion to €2.19 billion.

  • Development Cooperation Instrument — from €2.31 billion to €2.34 billion.

  • Partnership Instrument — from €113.29 million to €118.89 million.

  • European Instrument for Democracy and Human Rights — from €179.30 million to €184.24 million.

  • Instrument for Stability - from €314.47 million to €318.18 million.

  • Humanitarian aid — from €905.28 million to €920.28 million.

  • Allocation for EU Aid Volunteers will remain unchanged at €12.68 million.

However, there are significant differences in terms of payment appropriations — or money the EU is expected to release in a given year — for some of the instruments: Allocations for the Partnership Instrument and EU Aid Volunteers, for example, have a difference of 21.57 percent and 30 percent, respectively — a decision set to further upset European aid groups.

In a recent report, CONCORD asked European lawmakers not to introduce further cuts to proposed payment appropriations for those funding streams related to development and humanitarian assistance in each annual budget process.

Several aid organizations, such as Oxfam, expressed their disappointment over the allocations, noting that external spending (comprised by Heading 4, the European Development Fund and the Emergency Aid Reserve) represents only six percent of the total seven-year EU budget, and yet lawmakers still decided to stick to the agreed amount in February that slightly increased the budget to €58.704 billion, 16 percent less than the Commission proposal of €70 billion.

Oxfam hopes that the “large decrease is not repeated in the 2015 budget, which is an important year for development” as the Millennium Development Goals are set to expire.

The decision will pose a challenge for the EU to meet its commitment to spend 0.7 percent of gross national income on foreign aid, although humanitarian groups are more concerned on making sure the bloc spends 90 percent of all external action funding on “genuine” official development assistance or activities that fit the Organization for Economic Co-operation and Development’s definition.

Ongoing discussions

But while next year’s budget figures are set to be rubber stamped, regulations for the Development Cooperation Instrument — the main funding stream for the EU’s bilateral development cooperation in South Africa and countries in Latin America, Asia, Central Asia and the Gulf region — remain in limbo.

Why? “Political wrangling” on how to deliver this development assistance is “effectively holding millions of potential beneficiaries hostage,” according to Alexandra Makaroff, head of Plan EU.

The Commission has proposed to cut down the number of eligible countries under the DCI under the new framework, putting it in line with the much-talked about Agenda for Change policy, through which the EU aims to focus its resources in poorer countries where it can have most impact.

Under the Commission’s proposal, countries whose growth represents more than one percent of global GDP — together with upper middle-income countries defined by the Development Assistance Committee — will no longer be eligible for bilateral assistance, although they will remain eligible for funding under the bloc’s regional and thematic programs.

The European Parliament, however, wants to broaden the criteria for this purpose, including factors such as a country’s human development index, poverty head count ratio, poverty gap index and income Gini coefficient. The institution has already filed for exceptions to be applied for South Africa and Cuba, for example.

CONCORD notes Colombia, Peru and Ecuador may also be spared the chopping block, although with potentially reduced resources and subject to a “phasing-out strategy.”

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About the author

  • Jenny Lei Ravelo

    Jenny Lei Ravelo is a Devex Senior Reporter based in Manila. She covers global health, with a particular focus on the World Health Organization, and other development and humanitarian aid trends in Asia Pacific. Prior to Devex, she wrote for ABS-CBN, one of the largest broadcasting networks in the Philippines, and was a copy editor for various international scientific journals. She received her journalism degree from the University of Santo Tomas.