DEVELOPMENT-ITALY: Overcoming Slump in Aid

By IPS Correspondents Reprint | | Print |

Jorge Pina

ROME, Jan 20 1999 (IPS) - After a long slump, Italy announced new development assistance funds for the South, in line with its aim of moving back up to the average level of aid provided by the world’s industrialised countries.

The blockage of funds experienced in the past few years will begin to change this year, under-secretary of foreign relations Rino Serri and the director-general of the foreign ministry’s development cooperation Vincenzo Petrone told IPS.

After figuring among the world’s top donor countries in the 1980s, Italy fell to the bottom of the list of members of the Organisation of Economic Cooperation and Development (OECD).

While Italy presently earmarks just 0.15 percent of Gross National Product (GNP) toward development aid, that proportion is to rise to 0.18 percent this year and to 0.25 percent – the current OECD average – over the next five years, said Petrona.

According to a World Bank report released in November 1998, ‘Assessing Aid: What Works, What Doesn’t, and Why’, OECD countries gave less than one-quarter of a percent of their GNPs in aid in 1997 – the smallest proportion since comparable statistics began in the 1950s.

But although Italy will still stand far below the international pledge by industrialised nations to spend at least 0.7 percent of GNP on development assistance, its centre-left government aims at least to return to the level currently seen in the OECD.

The overlying priorities of Italy’s development aid will be human rights and efforts to eliminate poverty, while key focuses will be women, children and the fight against drugs, said Petrona.

He added that respect for democratic principles would remain one of the uncompromising demands.

Italy will continue to carry out emergency aid programmes in countries where democratic principles are not respected, but development aid projects will only be pursued in countries with democratic regimes, he specified.

Assistance is to be provided through donations as well as credits. The countries of the southern Mediterranean, southern Africa, the Horn of Africa, India and China will have top priority for donations, while cooperation with Latin America and central Asia will be mainly comprised of soft loans.

Latin America will benefit by the new policy, as a majority of countries in the region will have access to credits in extremely favourable conditions.

The poorest countries will be extended loans repayable in 35 years after a 15-year grace period and at one percent interest. Middle-income countries will be granted credits repayable in 20 to 25 years after a 10-year grace period, at an average interest rate of two percent.

Petrone said that several countries that had achieved a certain level of development, such as Argentina and Uruguay, would not have access to the loans.

But “the prospects are excellent” for middle-income countries like Chile and Colombia, and low-income nations such as Bolivia and the countries of Central America, because 1.6 billion dollars in credit are already immediately available, he added.

The official pointed out that non-governmental organisations (NGOs), presently involved in development programmes in most of Latin America, also planned to streamline procedures for granting funds and to achieve greater disclosure of project results.

In order to boost transparency, progress reports on each of Italy’s development projects will be posted on the Internet as of mid-1999.

Serri told IPS that aid would be fully reactivated this year, and that over the next two years, the government planned to increase bilateral cooperation by close to 400 million dollars.

Another new element will be the decentralisation of cooperation, with new partnerships with national governments as well as regions, communities and private associations. NGOs will continue to play an important role, he added.

He also said other focuses like the development of small and medium-sized businesses would be introduced.

A law designed to restructure development aid, currently under discussion in parliament, will “allow for greater transparency and control” by separating the assistance programme – which will remain under the responsibility of the government – from its administration, which will be autonomous and under the direction of an agency.