EU Development Policy: Agenda for Change

EU The EU will re-prioritise its delivery of aid to developing countries to ensure maximum impact on poverty reduction. Today, EU Commissioner for Development, Andris Piebalgs, presented the ‘Agenda for Change’ of EU Development policy and a new policy for EU budget support. These communications set out a more strategic EU approach to reducing poverty, including through a more targeted allocation of funding.

Future EU spending should concentrate on sectors which are key for long-term and inclusive growth, target countries that are in the greatest need of external support and where aid can make a difference.

“Representing more than 50% of global aid, the EU is already the biggest donor in the world. I want to make sure it remains the most effective one, too” said EU Commissioner for Development, Andris Piebalgs. He added: “We must keep pace with changing realities in the world and adapt the way we fight poverty as a result. That’s why I’m proposing today that we refocus our aid priorities to ensure that countries are on track to achieving sustainable and inclusive growth. I want to make sure that every euro reaches those that need it most. Fighting poverty abroad is EU “insurance policy” for a more stable and prosperous world. “

Good governance, agriculture and food security and clean energy

EU aid should focus on sectors setting the foundations for inclusive and sustainable growth. These include:

  • Good governance, including respect of human rights and democracy; gender equality, role of civil society and the fight against corruption,
  • Social protection, health and education,
  • Supporting a favourable business environment and deeper regional integration,
  • Sustainable agriculture and clean energy, helping to provide safeguards against external shocks and turn challenges of food security and climate change into opportunities for growth.

In order to generate more resources, the EU will explore innovative ways of financing development, like the blending of grants and loans.

The Commission will also encourage the EU and its Member States to jointly prepare strategies and programmes (so called “joint programming”) and better divide labour amongst themselves in order to increase aid effectiveness.

A new contractual approach for EU Budget support

A significant share of EU aid is delivered in the form of budget support: financial transfers to government budgets in developing countries, coupled with policy dialogue, performance assessment and capacity building. The Commission proposes an EU approach to make budget support more effective and efficient in delivering development results by strengthening the contractual partnerships with developing countries.

  • “Good governance and Development contract” will be set up for providing general budget support where the partner country can demonstrate a commitment to fundamental values. The EU will put more emphasis on human rights, democracy and the rule of law through a focus on dialogue with partner countries, creating incentives for reform and asking countries to commit to fundamental values.
  • The promotion of sector service delivery will go through “Sector reform contracts”. Sector budget support remains a useful tool even when the conditions do not exist to permit the use of a Good Governance and Development Contract.
  • Budget support will be used in fragile countries on a case by case basis to ensure vital state functions and support the transition via “State Building contracts”.

Budget support should contribute to the fight against corruption and fraud, and help countries to build their own financial resources, in order to reduce dependence on aid in the long run.

Background and next steps

In autumn 2010, the European Commission launched a consultation on the future of development policy and on the instrument of budget support. Today’s proposals draw on the analysis of the feedback received from global partners, governments, NGOs and the private sector.

The proposals come in the form of two Communications:

  • Increasing the impact of EU Development Policy: an Agenda for Change
  • The future approach to EU budget support to third countries

The main principles of the 12-point Agenda for Change will be progressively reflected in the remainder of the current programming cycles, and then in future EU programming. In spring 2012, the Commission will ask EU Foreign Ministers to endorse the new EU budget support approach.

The EU as a donor

The European Union as a whole (Member States plus EuropeAid, Commission-managed funds) is the biggest donor of official development aid worldwide. In 2010, it provided €53.8 billion (more than 50% of global aid). The European Commission is responsible for the management of €11 billion of aid per year, putting it in second place among donors globally.

Further information

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