The tenth CONCORD AidWatch report “Looking to the future, don’t forget the past – aid beyond 2015” finds that:
• As a group, the EU remains well short of the target having spent 0.42% of its GNI on aid, with only four of 28 Member States meeting the 0.7% target;
• Only 4 EU countries are meeting aid targets: Luxembourg, Sweden, Denmark and the UK;
• Aid budgets are increasingly being used to cover refugee and asylum seekers costs (The Netherlands 145%, Italy 107%, Cyprus 65%, and Portugal 38%). Luxembourg, Poland and Bulgaria have already decided not to report refugee costs as ODA, contrary to Spain, Malta and Hungary;
• EU aid is still seen by many as a tool to drive policy change or liberalization in partner countries – much aid remains directly tied or comes with a ‘suggested’ policy agenda;
• Development aid commitments by European Union countries are also at risk of being greenwashed to meet climate finance promises to poorer nations and that these existing aid commitments could be relabeled to qualify as climate finance. Also the growing costs of climate change should not replace existing development priorities.
Agenda 2030 will require ambitious financing from all actors – on that we’re all agreed. What’s been lacking to date is real action from most – though certainly not all - of the donor community to meet their own commitments and promises on aid which we’ve seen again this year as the EU misses its own 2015 target to deliver on the 0.7% promise. Aid will remain a vital development source for years to come – it is focused on reaching the hardest to reach which is vital for the leave no one behind agenda and is more flexible, predictable and accountable. To ensure the new development framework delivers as expected, EU should reach the 0.7% target by 2020 in line with the commitment made in Addis
Aid budgets increasingly covering refugee and asylum seekers costs
ODA should be used for stepping up international protection, tackling root causes of forced migration and displacement and investing in inclusive development. If the current trend of using aid budgets to host refugees continues, the biggest recipient of European aid in the future could paradoxically be Europe.
“We recognize the urgent nature of the current refugee crisis, but remain convinced that aid should be used to support development in third countries. The World’s poorest should not foot the bill for the refugee costs in Europe. Aid is essential to prevent more people having to flee their homes. Continuing investing in fighting poverty and inequality in developing countries is ultimately the most sustainable way of dealing with the crisis in the long term”, said Jessica Poh-Janrell from CONCORD Sweden.
Billions lost– how the EU over counts its aid
Aid should be a real transfer of resources to developing countries, yet the EU inflated its aid by some €7,1billion in 2014, that represents 12% of all aid flows.
Effective aid, coupled with greater policy coherence for development on fiscal issues, could provide a great boost to development efforts in developing countries. In the long term, aid is only one cog in the wheel, which will turn only if we make all the other parts work as they should. The Addis Ababa Action Agenda recognizes the importance of effective, progressive and fair tax systems in the fight against poverty and inequality
The role of aid in the new development agenda
The 2015 CONCORD AidWatch Report looks at the new development framework and what the EU can do to ensure it delivers real benefits for those suffering from poverty and inequality. Aid will remain a key development flow for years to come because it can reach farther than any other flows and is more flexible, predictable and accountable. Aid is also bound to play an enabling role in many issues on the future development agenda. It is increasingly being presented as a way to leverage private resources for development. Existing tools for measuring the development impact of leveraged private flows, however, make it very difficult to ascertain the real impact of these flows and compare results across projects. In addition, this report discusses aid and domestic resource mobilisation. Many developing countries collect very little money in taxes, and aid can strengthen tax systems and build the capacity of domestic tax agencies. To ensure the new development framework delivers as expected, EU member states should take on board the following recommendations:
• Reach the 0.7% target by 2020. If the EU increases its aid and delivers it as effectively as possible, it will change the lives of millions of people across the world and help put many countries on track to meet the Sustainable Development Goals (SDGs) by 2030.
• Launch a consultation on how to develop a common methodology to measure the additionality of private-sector flows supported through blending mechanisms. This
methodology should lead to a better understanding of the development impact of these flows and ensure that results are comparable between projects.
• Use aid to support developing countries in mobilising additional domestic resources for development, in line with the commitment made in Addis. EU member states need to state publicly how they plan to support pro-poor fiscal systems in developing countries. Major improvements could also be achieved if the EU were to take steps to tackle tax avoidance and evasion in partner countries, in line with the principle of policy coherence for development.
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