Germany, foreign aid, and the elusive 0.7%

At €12.2 billion ($12.7 billion), Germany’s 2023 development budget will fall €190 million short of its 2022 core budget total after the Bundestag, the country’s federal parliament, signs off on final budget totals this week. But it is still a dramatic reversal from the €1.3 billion in cuts to the development budget originally proposed by the cabinet in its draft budget earlier this year. It is also likely to keep Germany on track to hit its target of spending 0.7% of gross national income on official development assistance in 2023, though it is unclear if the government will keep its promise to spend 0.2% of GNI on low- and middle-income countries. The budget falls short of the expectations of civil society groups, who interpret it as Germany reining in its broader contributions to focus on specific crises, including the impact of the war in Ukraine and global warming. “The planned financial resources are not sufficient to meet the current challenges.” --— Martina Schaub, CEO, VENRO “There is a disappointment that some core funding for multilaterals and other [development ministry] priorities is going down at the expense of emergency funding, which is of course very much needed but should ideally come fully on top of all of the sustainable, long-term development cooperation that Germany should be doing,” Cora Lüdemann, an expert at SEEK Development, which runs Donor Tracker, told Devex. The drop in the budget for the German development ministry, or BMZ, comes amid broader budget cuts. Overall spending is set to fall from €495.8 billion this year to €476.3 billion in 2023 as Germany looks to reintroduce the debt brake, which limits new debt to 0.35% of the country’s gross domestic product. Though it is incorporated into the constitution, Germany had suspended the brake during the COVID-19 pandemic. Restoring the brake meant cuts were imminent — it was just a question of how hard the development ministry and other departments would be hit. But even parliamentary members of the Social Democratic Party, or SPD, the leading party in the current tripartite governing coalition, were critical of the proposed cuts of €1.3 billion to BMZ that emerged in the budget draft that the cabinet released in August. SPD Member of Parliament Sanae Abdi told the Bundestag, “We are sending the wrong message to the international community,” following the release of the earlier draft. Parliamentarians set about reversing some of those cuts. That included tapping into a pool of money reserved for addressing global crises. BMZ was allocated an additional €1 billion from that envelope, with more than half of it directed at “crisis management and reconstruction, infrastructure.” Most of those funds are likely to go toward the Ukraine response. The Federal Foreign Office also received an additional €1 billion from that pool, much of which will be directed at humanitarian assistance. BMZ actually requested €3.3 billion from the extra money, but an additional €2 billion still remains in the pool and Lüdemann said it is still possible BMZ could access some of that funding. One of the key criticisms of the draft budget was that funding for multilateral agencies had been slashed, with the cabinet budget proposing a drop in money for the United Nations and allied agencies from €1.01 billion this year to €506.7 million in 2023. The final budget offered some respite, lifting the total to €573.2 million, and last year’s totals reflect some emergency funding for the Access to COVID-19 Tools Accelerator that will not be included in 2023. But the reduced amount also signals cuts to programs like the Global Partnership for Education and to UN Women, despite Development Minister Svenja Schulze’s promise to pursue a feminist development policy. BMZ is also left with an additional €41.5 million under the U.N. budget line to distribute as it wishes after the Bundestag failed to determine where to assign it. The reversals did not go far enough for VENRO, the umbrella organization of development groups in Germany. “The planned financial resources are not sufficient to meet the current challenges,” Martina Schaub, the CEO of VENRO, said in a statement. “The economic recovery after the corona pandemic is being slowed down by the global energy crisis. The war against Ukraine is increasing hunger and extreme poverty worldwide and many people in the global south are suffering from the far-reaching consequences of global warming.” Civil society groups say that the drop in development funding is steeper than the comparison of core budget numbers indicates, because the ministry was allocated additional money throughout 2022 to respond to the Ukraine crisis and the global food emergency. According to SEEK calculations, that actually puts the funding level for 2023 12% lower than in 2022, though much of this year’s additional allocations are likely to be spent in 2023. The groups also dinged the government for continuing to apply the domestic cost of attending to refugees toward their 0.7% goal. Speaking in defense of the budget this month, Schulze called it a “good basis for 2023” that sends a message of Germany’s ongoing commitment to funding development efforts. At the same time, there is a clear focus on multiple global crises, including growing global hunger. €1 billion of Germany’s overall budget is going toward global food security, with €495 million coming from the BMZ budget. The Bundestag also upped the contributions to the World Food Programme from €28 million in the cabinet budget to €78 million.