Council of the european union


ANNEX I: Financing for development and aid effectiveness: delivering more, better and faster - Council conclusions



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ANNEX I: Financing for development and aid effectiveness: delivering more, better and faster - Council conclusions

"THE COUNCIL AND THE REPRESENTATIVES OF GOVERNMENTS OF THE MEMBER STATES MEETING WITHIN THE COUNCIL

1. RECALLING the UN Millennium Review Summit of September 2005 and welcoming the confirmation of the Millennium Declaration and the Millennium Development Goals as the galvanising framework for development;

2. RECALLING the Monterrey Consensus on Financing for Development of 20021 and the EU "Barcelona commitments" adopted in March, 20022, and the new EU commitments, adopted in May 20053;

3. RECALLING the High Level Forum on Harmonization held in Paris, March 2005 and the adopted Paris Declaration4;

4. RECALLING the Council Conclusions of November 2004 and November 2005 on the effectiveness of EU external action5, and of December 2005 on Aid for Trade6;

5. RECALLING the adoption of the European Consensus for Development on 20 December 20057;

6. HAVING REGARD to the three Commission Communications on financing for development and aid effectiveness8, namely "EU Aid: Delivering more, better and faster", "The challenges of scaling up EU aid 2006-2010"’, and "Increasing the Impact of EU Aid: A common framework for drafting country strategy papers and joint multi-annual programming";

7. NOTING that the EU will contribute about 80% to scaling up of ODA worldwide, providing collectively at least fifty percent of this increase to Africa,

Have adopted the following Conclusions:

A) ON MONITORING OF PROGRESS ON FINANCING FOR DEVELOPMENT AND AID EFFECTIVENESS

8. RECONFIRM the EU's continued commitment to operationalising the "Barcelona Commitments", the EU commitments of May 2005, and the Monterrey Consensus to make progress on both the quantity and the quality of Financing for Development and underline the close links between the promised scaling up of EU aid and aid effectiveness.



Scaling up of EU ODA

9. WELCOME the Commission Communication on the progress made by the EU Member States in implementing the Monterrey Consensus. NOTE with satisfaction that the EU is well on track in meeting its commitments made in Barcelona in March 2002 to increasing aid volumes by 20061, namely to individually reach 0,33% ODA/GNI and collectively reach 0,39% ODA/GNI.

10. REAFFIRM their determination to reach the new EU targets, agreed on 24 May 20052, concerning the commitment to increasing ODA volume to individually achieve 0, 51% ODA/GNI and collectively achieve 0,56% ODA/GNI by 2010. This would result in additional € 20 bn ODA annually and represents an intermediate step towards achieving the UN target of 0,7% by 2015. Collectively, at least 50% of increases in aid volumes will be dedicated to Africa. PARTICULARLY WELCOME in this respect the efforts and commitments made by the new Member States, namely to strive to increase their ODA to reach 0, 17% ODA/GNI by 2010 and 0,33% ODA/GNI by 2015.

11. NOTE WITH SATISFACTION that several Member States have achieved or are planning to achieve and sustain higher ODA levels close to or above 0,7/% ODA/GNI.

12. ENCOURAGE those Member States that are not on track to achieve the respective individual baselines set for 2006 and 2010 to make all efforts to reach those targets.

13. COMMEND the Member States that are sustaining substantially higher ODA levels than most non-EU OECD/DAC donors, remaining well above the DAC average of 0,33% ODA/GNI.

14. CALL ON other donors to commit more substantially to mobilising adequate financing for the Millennium Development Goals and other internationally agreed development objectives, notably in Africa, in the medium- and long-term.

15. NOTE that increasing aid budgets may require the adaptation of aid systems of some Member States and of the European Community alike.

16. TAKE NOTE in this context of the Commission’s intention to propose new methods or adapted instruments aimed at harmonised, efficient implementation of strategies agreed at EU level, while building on comparative advantage and providing added value.

More predictable, less volatile aid mechanisms

17. RECALL the EU commitments to more predictable, less volatile aid mechanisms and explore ways of adapting aid modalities.

18. SUPPORT further work by the Commission with Member States, relevant international organisations and other donors towards the creation of a long-term, flexible and harmonised tool to support the achievements of the Millennium Development Goals and particularly towards harmonising aid modalities and conditionality rules. This harmonised tool should be aligned to recipient country systems.

Exogenous shocks

19. EMPHASISE the importance of a coordinated donor response to exogenous shocks, including through the FLEX1, market-based instruments like the Global Index Insurance Facility, Exogenous Shocks Facility and other relevant instruments, determined on a case by case basis, and making full use of existing instruments.

20. SUPPORT the forthcoming work to review the FLEX mechanism to improve its speed of delivery and the anti-cyclical impact in view of a joint decision by the ACP-EC Council of Ministers. Moreover, NOTE the Commission's intention to explore options to transform the FLEX into a common tool open for funding by the European Community (10th EDF) and by voluntary contributions of Member States.

Innovative sources of financing

21. WELCOME innovative finance mechanisms introduced and supported on a voluntary basis by Member States, especially those initiatives, already under implementation (solidarity contribution on air tickets, IFF-Im) or envisaged (i.e. IFF, and transaction levy) by some Member States with a view to mobiliseing increased stable sources of finance. Such initiatives should be undertaken in accordance with the principles for aid effectiveness established in the Paris Declaration and be based on existing mechanisms for aid delivery to the extent possible.



Remittances

22. UNDERLINE the importance of remittances, as a complement of Financing for Development, and recognises that there is a need to address and to promote conditions for cheaper and safer transfers of remittances in both source and recipient countries, and to facilitate the impact on the development of recipient countries. 1



Debt

23. WELCOME the work on the implementation of the Multilateral Debt Relief Initiative, resting on the two pillars of deepening debt relief to HIPCs and safeguarding the long-term financial capacity of the IFIs. In this respect appropriate monitoring mechanisms and capacity building are needed to assist countries in reaching and maintaining sustainable debt levels, based upon the WB/IMF debt sustainability framework.

24. UNDERLINE the need to ensure that debt relief efforts remain in keeping with the spirit of the Monterrey Consensus2, the EU commitments as well as with the OECD/ DAC criteria on accountable ODA amounts.

Untying of aid

25. UNDERLINE the adoption of two regulations in 2005 on access to Community external assistance that establishes an unprecedented level of untying of Community aid. CALL UPON the donors that have not yet untied their aid to make efforts in this direction.

26. WILL CONTINUE their efforts to promote the further untying of food aid and food aid transport, in line with the negotiation mandate adopted in view of the revision of the London Convention. In the context of the DDA, the Council invites the Commission to promote untied food aid. In that perspective, the Council recalls that all food aid should be absolutely on grant terms only, completely untied, based on systematic evaluation of needs and delivered in cash.

27. SUPPORT a further extension of the “OECD/ DAC recommendations of untying to Least Developed Countries” of 2001.



International Public Goods

28. LOOK FORWARD to the pending release of the final report from the Task Force and the contribution it can make to the discussion on International Public Goods.



International Finance Institutions

29. SUPPORT the strengthening of informal coordination mechanisms between European Union Members of the Board of Regional Development Banks, where collective EU shareholding is significant, with participation of the Commission. The coordination shall be inspired by the established good practices between the EU Executive Directors and the Commission on World Bank issues. This mechanism shall also ensure that EU coordination meetings take place systematically, prior to important decisions to be taken by the Boards of those Institutions.

30. COMMIT themselves to further improving [where necessary1] existing EU coordination in the IFIs in this respect, with the participation of the Commission, notably through improved exchange of information, common statements, where appropriate, better follow-up on agreed common positions and early involvement in decision-making processes, inter alia in order to ensure coherent measures.

Trade-related Assistance

31. CALL ON the Commission and the Member States to implement their collective ODA volume commitments concerning “aid for trade”1 as part of the general scaling up of EU aid.

32. REQUEST Commission and Member States to strengthen the integration of trade-related assistance into donor policies and programming and poverty reduction and development strategies. In this context the Council reaffirms the importance of supporting an enhanced Integrated Framework and credible assistance to trade adjustments as important elements.

33. CALL ON the Commission and the Member States to improve EU coordination efforts at headquarters and field level, namely by ensuring regular exchange of information and best practices; at field level the enhanced IF or, where applicable, trade needs assessments should include a strong coordination mechanism;

34. INVITE the Commission and Member States to reflect on possible tools of an EU collective contribution to the aid for trade agenda. Moreover, CALL ON the Commission and the Member States to support effective monitoring and evaluation of aid for trade at global, regional and country levels, and provide timely and full reporting on TRA commitments to the Doha Data Base.

Fragile states

35. REAFFIRM their commitment to focusing particularly also on fragile states or countries in post-conflict situations with a view to considering new approaches to making a more effective contribution to the MDGs in these countries.

B) ON DELIVERING ON AID EFFECTIVENESS

General

36. welcome the Commission’s efforts in its communications to take stock of work on aid effectiveness and to bring attention to the implementation of the agreed aid effectiveness commitments with a view to reaching concrete results prior to the International Review Summit on Harmonisation planned for early 2008 in Ghana (HLF III). In this respect, the Council reaffirms its conviction of aid effectiveness being an essential and integral part of the fight against poverty in its multidimensional aspects in the context of sustainable development.

37. reconfirm their commitment to the UN High Level Summit in September 2005 as well as the commitments to the Paris Declaration and the four additional commitments by the EU1made at the Paris High-Level Forum in March 2005 and the recommendations in the Council Conclusions of November 2004 on advancing coordination, harmonisation and alignment, that were prepared as the EU contribution to the High-Level Forum.

38. stress the importance of implementing without delay the recommendations from the UN Summit in September 2005, the commitments and principles as set out in the Paris Declaration (ownership, alignment, harmonisation, management for results, and mutual accountability), the four additional EU commitments and within this context, the recommendations as formulated in the report of the Ad Hoc Working Party on Harmonisation – Advancing Coordination, Harmonisation and Alignment; the contribution of the EU.2

39. REAFFIRM their commitment to applying the common principles agreed in the Joint Development Policy Statement – The European Consensus on Development.



40. recall that the recommendations of the Ad Hoc Working Party on Harmonisation were made in close collaboration between the Commission and Member States reflecting the principles for furthering the aid effectiveness agenda: to focus on a country-based and country-led approach to harmonisation and alignment; to avoid duplication and to work in a complementary way; to focus not on exclusivity but on donor-wide initiatives; to aim for a wide coverage of aid modalities and procedures; to use agreed guidelines on coordination; and to focus on implementation.

41, emphasiSe the need for a strong and continuous monitoring process with the active participation of both the Commission and the Member States, within existing EU3 and OECD/DAC mechanisms, as an essential tool to keep track of the pace of reforms and their results.

42. EXPRESS the following views as regards operational deliverables based on the aforementioned points:

Roadmaps

43. WELCOME the Commission's report on the status of local processes on aid effectiveness. CONSIDER that the EU has a real added value in promoting processes at country level and in supporting and encouraging in-country initiatives.

44. WELCOME that it in a number of cases EU roadmaps have been developed including non-EU actors as part of a wider process; and emphasise that such a comprehensive process should as far as possible include other donors, especially where this is requested by partner countries.

45. NOTE that progress in establishing roadmaps has been steady but slow. HIGHLIGHT the diversity and specificity of each local process. In going forward it is essential to support roadmap processes where they have locally been deemed feasible and appropriate as a mean to ensure the attainment of the commitments made.

Joint Programming Framework

46. UNDERLINE that the partner country has primary responsibility for its own development and shall play a leading role. The Joint multi-annual programming will be aligned with country-led strategies, policy analysis and budget cycle. The EU will support partner countries to be the leading force in the preparation, coordination and monitoring of CSPs and of joint multi-annual programming of all donor support to the country. Preparation and coordination should be based on, and aligned with, the partner country’s Poverty Reduction Strategy or similar strategy and budget cycle. Member States should, within their respective competences, ensure flexibility in their own procedures to meet the alignment principle.

47. WELCOME the Commission’s proposal and AGREE to develop a two-step approach towards joint multi-annual programming, consisting in a joint analysis of the country situation and, gradually, a joint response strategy, duly taking into account the competences of the Community and of Member States.

48. underline that this process should be flexible, gradual and open, building upon existing analyses, processes and arrangements and, to the maximum extent possible include donor-wide participation. Whenever the development of common strategies is already under way, such as Joint Assistance Strategies or similar processes, joint programming should complement, strengthen, and whenever possible be part of these existing processes, in order to avoid unnecessary parallel processes.

49. RECOGNISE the need for the Commission and Member States to increase their participation in joint multi-annual programming based on partner countries’ development strategies and preferably led by the partner country, as a key element to promote more effective aid. This should progressively apply to all European official development assistance as soon as Member States’ situations permit. Joint multi-annual programming will pave the way for coordination of policies, harmonisation of procedures and opportunities and decisions relating to complementarity.

50. NOTE WITH SATISFACTION that the joint analysis will immediately be initiated in the ACP countries for the programming of the 10th EDF between the Commission and interested Member State and other interested donors. It will include an analysis of the political, economic, social and environmental situation of the country as well as a description and analysis of poverty, the partner country’s priorities, lessons from cooperation in the past, complementarity between different donors’ activities and the setting out of the harmonisation agenda. This approach will be gradual and be applied to countries of other regions as soon as possible.

51. invite the Commission and interested Member States to initiate a joint response strategy to the joint analysis, in countries selected on the basis of the following criteria a) the existence of a PRS or equivalent, b) the existence of a sufficient number of active EU donors, revising their programming, c) the existence of local coordination processes, d) specific considerations for fragile states, and e) a positive field assessment. Joint multi-annual programming must be guided by the principles of effective programming and the essential components of Country Strategies, as reflected in the annexed Common Framework for Country Strategy Papers (CFCSPs).

52. invite the Commission and the Member States to initiate these first steps towards joint programming, gradually and voluntarily, on the basis of the annexed Common Format for CSPs as a pragmatic tool.

53. ASK the Commission and Member States to review the CFCSPs in the light of experience in their use, by 2009.

Joint Financing Arrangements

54. RECALL the need to develop a flexible format for joint financing arrangements and invites the Commission to make a proposal along these lines before the end of 2006.



Complementarity

55. RECALL that partner country-led joint multi-annual programming will pave the way for improved coordination, harmonisation of procedures and opportunities and decisions relating to complementarity. NOTE in this context with interest the ongoing work of many Member States on developing and applying complementarity principles.



56. reaffirm their intention to further progress on donor complementarity, as it is a key objective of the Paris Declaration.

57. COMMIT themselves to discuss concrete steps towards the development of operational principles on how to better organise the division of labour both at country and cross country level before the end of 2006, while duly taking the competences of the Community and Member States into account. INVITE the Commission and the Member States to jointly reflect on existing good practices, such as the guidelines developed and used by some Member States, and to address principles such as comparative advantages based on presence, resources, experiences and roles developed in the field as well as modalities such as lead donors or delegated cooperation. Pending the adoption of such a set of principles, INVITE the Commission and Member States to take into account, as soon as possible, the division of labour in their programming and for the Commission and participating Member States in implementing the CFCSPs.



Co-financing/rules

58. WELCOME work on co-financing and joint financing arrangements as concrete steps to more joint actions, and UNDERLINE the need to properly reflect ongoing work on co-financing in the Financial Regulations and instruments that are currently being revised.



59. recogniSe the urgent need to revise some of the existing EC rules, in order to put them in line with the requirements of the Paris Declaration - in particular regarding joint EU co-financing activities, as well as co-financing with other donors.

60. support the Commission’s intention to adapt its own rules favouring co-financing and to develop a methodological framework, in close co-operation with the Member States, by June 2006, to allow enhanced financial co-operation addressing all Member States adequately, and in particular the growing donor capacity of the new Member States. In this regard, HIGHLIGHT the specific opportunity raised by the forthcoming “scaling up of aid”.

Decentralisation

61. WELCOME the recent achievements made by the Commission in its decentralisation process. INVITE the Commission and the Member States to further decentralise authority to the field.

62. UNDERLINE that decentralised aid management is an important assumption for any donor playing a lead role in aid coordination at field level.

Donor Atlas

63. WELCOME the Donor Atlas II of 2006, developed in close collaboration with the OECD/DAC secretariat, as a useful means of providing statistical material for the purpose of information sharing within and outside the EU facilitating discussion on enhanced planning and coordination. The Donor Atlas should continue to be developed in close collaboration with the OECD/DAC secretariat.

64. CONFIRM the trends of creating orphans or forgotten countries and sectors as well as fragmentation of activities in darling countries/sectors. CALL UPON the Commission and Member States to address this issue with other donors within a coordinated approach.

C) EUROPEAN DEVELOPMENT DAYS AND DEVELOPMENT RESEARCH CENTRES



European Development Days

65. welcome the organisation of the first “European Development Days” in 2006 - as an opportunity to reflect on their collective input and strengthen the European vision highlighted by the “European Consensus for development”, while keeping a visible profile and transparency towards their constituencies and public opinion.

Network of Development Research Centres

66. WELCOME the Commission’s proposal to promote a European network of research centres on development issues and look forward to further elaboration of this initiative."



(for complete text, see 8043/1/06).

1 Conclusions of the Council and of the Representatives of the Governments of the Member States meeting within the Council on accelerating progress towards attaining the Millennium Development Goals: EU contribution to the review of the MDGs at the UN 2005 High Level Event, doc. 9266/05.

2 OJ C46, 24.2.2006, p. 1.

1 UN doc. No° A/CONF.198/11.

2 7176/02.

3 9266/05.

4 www.oecd.org/dac

5 15142/04, 14821/05.

6 15791/05.

7 OJ. C 46, 24.02.2006, p.1.

8 7067/06, 7066/06 + ADD 1, and 7068/06.

1 Barcelona commitments: "In pursuance of the undertaking to examine the means and timeframe that will allow each of the Member States to reach the UN goal of 0,7% ODA/GNI, those Member States that have not yet reached the 0,7% target commit themselves – as a first significant step – individually to increasing their ODA volume in the next four years within their respective budget allocation processes, whilst the other Member States renew their efforts to remain at or above the target of 0,7% ODA, so that collectively an EU average of 0,39% is reached by 2006. In view of this goal, all the EU Member States will in any case strive to reach, within their respective budget allocation processes, at least 0,33% ODA/GNI by 2006."

2 Document 9266/05 of May 2005 including annexes I and II. May 2005 new commitments: "…the EU agrees to a new collective EU target of 0, 56 % ODA/GNI by 2010, that would result in additional annual € 20bn ODA by that time.

i. Member States, which have not yet reached a level of 0,51 % ODA/GNI, undertake to reach, within their respective budget allocation processes, that level by 2010, while those that are already above that level undertake to sustain their efforts;

ii. Member States, which have joined the EU after 2002, and that have not reached a level of 0,17 % ODA/GNI, will strive to increase their ODA to reach, within their respective budget allocation processes, that level by 2010, while those that are already above that level undertake to sustain their efforts;

iii. Member States undertake to achieve the 0,7% ODA/ GNI target by 2015 whilst those which have achieved that target commit themselves to remain above that target; Member States which joined the EU after 2002 will strive to increase by 2015 their ODA/GNI to 0,33%."

1 Art. 68 of the Cotonou Agreement.

1 Scrutiny reservation (CZ).

2 From paragraph 51 of the “Monterrey Consensus” :”…We encourage donor countries to take steps to ensure that resources provided for debt relief do not detract from ODA resources intended to be available for developing countries…”

1Reservation (Commission) because this term weakens the commitment to improvement.

115791/05.

1From the EU Statement at Paris HLF: "In the meantime the EU commits itself to work towards the following overall targets:

- to provide all capacity-building assistance through coordinated programmes with an increasing use of multi-donor arrangements;

- to channel 50% of government-to-government assistance through country systems, including by increasing the percentage of our assistance provided through budget support or Swap arrangements;

- to avoid the establishment of any new PIUs;

- to reduce the number of un-coordinated missions by 50%."


2 Document 14670/04 Report of the Ad Hoc Working Party on Harmonisation – Advancing Coordination, Harmonisation and Alignment, the contribution of the EU.

3 Para 33 of May 2005 Council Conclusions: "The Council invites the Commission to monitor and regularly report on the implementation of these EU commitments on MDGs, including annual reports on the follow-up of the EU commitments on financing and on the effectiveness of aid, and a biennial report on Policy Coherence for Development."

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7939/06 (Presse 95)



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