WRITTEN QUESTION E-1753/00

by Glenys Kinnock (PSE) to the Commission

(31 May 2000)

Subject: European Development Fund

The Commission has given a political undertaking to ensure a significant increase in financial disbursements for the ACP States, perhaps even doubling current disbursements, to reach 3,5 billion per year. Will the Commission outline what steps, procedures and timetable have been established to ensure that this undertaking is effectively implemented? In particular, what procedures and timetable have been adopted for the allocation of the current EDF underspend?

Answer given by Mr Nielson on behalf of the Commission

(24 July 2000)

The Community is one of the major aid donors in the world today. The Commission has responsibility for more than 10 % of total official development aid world-wide, an increase from 5 % in 1985. Resources to be administered have grown over this period without any commensurate growth in Commission staff resources.

In 1999 the Commission announced that it would commit 4 250 million from the European Development Fund (EDF) during 2000, including 1 000 million for Heavily Indebted Poor Countries (HIPC) and would make payments of 2 600 million.

At the end of 1999, about 33 % of funds committed from the EDF had not yet been disbursed. The equivalent average for the Community's external aid over the last 10 years is about 35 %, though for some individual programmes it can be as high as around 50 %. This is partly due to the nature of the projects, which require investment over a number of years (e.g. major road infrastructure). It is also explained by the cumbersome procedures, a less than optimal organisation of the services and chronic understaffing. At the same time, when dealing with third countries, unforeseeable external events can upset any forecasts made. This year for example, the elections in Zimbabwe and in Haiti, the conflict between Ethiopia and Eritrea, the political unrest in Côte d'Ivoire, the Solomon Islands and Fiji, and natural disasters such as the flooding in Mozambique, have affected the Commission's programmes with these countries.

In 1999, the Directorate general (DG) Development, in close collaboration with Commission Delegations established a system of regular and detailed monitoring and review of annual commitment objectives on a monthly, country-by-country basis. This programme has built in over-programming to allow for adjustment away from countries experiencing difficulties in implementing aid for whatever reason, to countries not experiencing such difficulties, as well as for adjustments away from programmable to non-programmable aid. This system, which was a major factor in record commitments of 2 700 million in 1999, will in future be widened to ensure similar improvements with regard to payments. In 1999, payments of 1 275 million were made, which is 65 % of the forecast made in November 1998 and 87 % of the revised forecast presented to the Council in July 1999.

This year two financing decisions amounting to 1 000 million have been decided by the Commission to assist in the HIPC initiative. In addition, the Structural Adjustment Facility has been increased by 250 million. However other commitments have been slow in the first half of 2000. To address this, extra meetings of the EDF Committee and of the quality support group are being scheduled.

The proposed reform of external relations acknowledges the inefficiencies that have been inherent in the Commission's systems for the delivery of external aid. The reorganisation proposed in the reform, coupled with the overall policy statement issued in April, aims to tackle these inefficiencies by focussing resources on key areas and more efficient organisation. There will henceforth be one body responsible for the project cycle of external aid (from the identification phase to evaluation) based on country programmes established by geographical services in collaboration with delegations and policy directorates general.

The next six months will be critical. Personnel will be moved as the reorganisation is implemented and the new Director-Generals of the Common service for external relations (SCR) and DG Development will be appointed. However, the Commission will make every effort to reach its 2000 forecast and is examining what procedures to put in place to ensure that the work of committing external aid continues during the transitional period.

As part of the urgent measures announced in its communication of 15 May 2000 on the Reform of the management of aid to third countries, the Commission immediately introduced new joint working methods for the geographical departments and the SCR in particular to speed-up payments and reduce the so-called RAL (reste à liquider). These included the establishment of joint financial forecasts for 2000 and a work programme backed up by a monthly monitoring system and arbitration machinery. In addition, there are now regular meetings between DGs External relations and Development and the SCR to co-ordinate the reorganisation and make sure that there is as little disruption as possible.

In the longer term, there are a number of developments that should ensure that once the transitional phase is over, 3 000 million and 3 500 million will be committed from the EDF annually. For example, the overall policy statement signalled the increased use of sector programmes, where appropriate in co-ordination with other donors. Such programmes not only have a more direct impact on poverty reduction, but it is hoped that they can be delivered much more efficiently (e.g. by increased resources to delegations). Annual country reviews, covering all forms of co-operation with a particular country, would allow the Commission to assess results against objectives and to set new objectives based on past performance and needs.

The ratification of the Cotonou agreement and hence the entry into force of the 9th EDF is envisaged at the beginning of 2002. However, its programming aspects will be introduced immediately. The new rolling programming will ensure that resources are focussed where they can be used most efficiently while observing the fundamental poverty focus. In the transitional measures leading up to the entry into force of the 9th EDF, the Commission has proposed that the 6th, 7th and 8th EDFs be merged into one fund. At the same time, it has proposed the phasing out of the more cumbersome instruments such as Stabex and Sysmin. According to forecasts the 6th, 7th and 8th EDFs should be all but exhausted by the end of 2002, the first year of the 9th EDF. Resources from the 8th EDF that have not been allocated to a specific instrument, under this proposal, will be included in the programming process of the 9th EDF, which will commence after the adoption of the transitional measures (i.e. Aug 2000). These funds will then be committed in the period running up to the entry into force of the 9th EDF.

The internal agreement for the 9th EDF will be submitted for ratification by the Member States at the same time as the Cotonou agreement. Its application is to be anticipated already this year, based on transitional arrangements. The Commission has made several proposals some of them quite radical as to how current procedures and practices for the interaction of the Commission and Member States could be improved (e.g. higher thresholds for projects, comitology issues, procedures). These proposals are in discussion in the Council. While some progress has been made in these discussions, on essential elements allowing for more efficiency in the implementation of the EDF progress has been limited. The Commission has stated in these discussion that it needs the support of Member States and that without a substantial overhaul of the institutional framework for the implementation of the EDF, the impact of the progress made in the Cotonou Agreement towards rules allowing for more efficiency in implementation as well as the Commission's efforts to improve its internal system will be greatly reduced.

To sum up: the Commission has taken a number of steps internally to improve delivery of aid and is confident that these will have a visible impact over the medium to long term. However, the Commission is also reliant on a number of external developments and is dependent on the support of Member States and the Parliament to ensure that these developments are complementary to the internal efforts being made.