The MDG contracts (short presentation) 
President
The next item is a short presentation of a series of reports, eight in total, therefore I would kindly ask all Members to adhere strictly to their allotted speaking time for this particular procedure, and I would also ask the Commission to please keep their answers to the point, otherwise we will have problems in keeping to the agenda. This will also assist the interpreters.
The next item is the report by Mr Hutchinson, on behalf of the Committee on Development, on MDG contracts.
Alain Hutchinson
Mr President, Commissioner, ladies and gentlemen, for almost three years the European Union and the Member States have been committed to improving the effectiveness of our cooperation with developing countries. Things have been done, but there is strong resistance, above all within the Member States, and therefore there is enormous progress that has yet to be made.
Access to healthcare and basic education is just a dream for millions of people, many of whom are women. Every day, 72 million children - mainly girls - do not go to school. Every minute, a woman dies from complications linked to pregnancy or in childbirth, while a child dies every three seconds from a disease that a doctor could have easily prevented.
From a geographical perspective, it is sub-Saharan Africa, as we just recalled as a matter of fact, which continues to experience the most catastrophic situation and, with things going as they are, the risk is that this will continue for many more years.
In this context, it is true that budget support - that is, financial aid directly included in the budget of beneficiary countries - could usefully contribute to providing more predictable aid that is targeted at priority sectors and is therefore more effective. That is why the Commission has come up with the idea of concluding Millennium Development Goal (MDG) contracts, which it intends to propose to certain countries in order to commit funds for a six-year period and put in place annual monitoring that emphasises the achievement of results regarding health and education.
Our report stresses the importance of such an initiative, but it also raises a series of questions that require clear answers. What criteria, for example, will the Commission propose that developing countries must meet in order to aspire to concluding this type of contract? What will the lifespan of such a project be and what will be the conditions for carrying it out? We would also like to emphasise that the Commission has not yet published any official communication on the subject; if you wish to know more there are currently no internal documents to which to refer, only the basic information available on the Committee on Development's website.
Although the Commission's budget support has several positive features, such as being linked to the achievement of results regarding health and education, or generally being planned over three years, you should know that it is far from perfect. For example, I remind you that the Commission, just as with the majority of other aid providers, will only grant budget support to countries that have implemented an International Monetary Fund programme. This situation is particularly problematic when we know that such programmes can limit the government's capacity to invest in development and when overly ambitious goals are set, particularly as regards inflation and the budget deficit.
Then, even if the Commission decides to provide budget support in the long term, there is nothing to guarantee that this aid will not itself become the object of bureaucratic procedures that, as we know, lead to significant delays in disbursement.
Finally, budget support suffers from a serious lack of transparency and ownership by the countries involved and their populations. Financing agreements are only rarely made public, nor does the Commission include as a matter of course civil society organisations and members of parliament in its dialogues with the governments of developing countries, as we mentioned earlier.
Nevertheless, it is widely recognised today that for the sake of effectiveness, development must be fully in the hands, not just of the governments, but also of the peoples of developing countries.
In summary, the MDG contracts project will only be an opportunity to improve the effectiveness of our aid if it is defined very clearly, along with its conditions of eligibility, execution and evaluation. Our report therefore stresses the initiative's importance, whilst urging caution and stressing the need for the Commission to be far clearer about its intentions and respond to the specific questions raised in the report.
I do not want to finish without touching for a moment on the Court of Auditors' recent Special Report on European Commission Development Assistance to Health Services in Sub-Saharan Africa. The report's conclusions are worrying. From a financial point of view, we see that public aid contributions to the health sector have not increased since 2000. Furthermore, it appears that budget support has been very little used for the health sector in sub-Saharan Africa. Consequently, Commissioner, you understand why in our report we return to the idea that it is absolutely essential for us to be more focused on the health sector, but also that there is nothing to guarantee that it is the MDG contracts that will enable us to achieve this.
Louis Michel
Member of the Commission. - (FR) Mr President, ladies and gentlemen, I wish first of all to thank the Committee on Development and its rapporteur, Mr Hutchinson, for this report which returns to a number of issues and concerns that we completely share.
More and better development aid is necessary if we want to achieve the Millennium Development Goals (MDG) by 2015, but also aid that is far more predictable and less volatile, as your report very rightly reminds us.
These efforts will obviously be made using a combination of multiple instruments. However, from my point of view, in the countries that allow it, budget support, whether general or sectional, remains the best adapted and most appropriate instrument.
Budget support is the best way of strengthening national systems and processes, increasing ownership by the countries, facilitating harmonisation, reducing transaction costs and so improving the management of public expenditure, and accelerating the achievement of development goals.
The Commission has already greatly increased the use of budget support and will do so again over the course of the next six years, within the framework of the tenth European Development Fund (EDF). It is to make this instrument more effective and more predictable and so the Commission has, in consultation with the Member States and other stakeholders, devised a longer-term form of budget support, which we have called the MDG contract, for countries that meet certain criteria: good past performance, reliable public finance management, appropriate sectional policy, and so on. The MDG contract is the natural evolution of general budget supports, not just because it is more predictable but above all because it is focused on results and can have a response that is graduated according to performance. These are partner states that commit to focusing their policies, and consequently their spending, on the MDG.
The MDG contract offers the following key elements: a six-year commitment, that is six full years as opposed to the normal duration of three years for general budget supports; a guaranteed, fixed payment of at least 70% of the total commitments, provided that there is no breach of the conditions in which payments become due or of the essential and fundamental elements of the cooperation; a variable component of up to 60%, intended to reward performance with a view to achieving the MDG and linked to results indicators, mainly in the fields of health and education, as well as progress in public finance management.
Countries are eligible if they have already put budget supports into practice in a satisfactory way as part of the ninth EDF, as well as those that demonstrate a strong commitment to ensuring the monitoring and achievement of the MDG. This is to improve the budgetary resource management of countries where donors have their own coordination.
After evaluating 10 countries, the Commission awarded MDG contracts in seven of them: Burkina Faso, Ghana, Mali, Mozambique, Rwanda, Uganda, Tanzania and Zambia. These programmes were presented to and awarded by the Member States last December. Three contracts have already been signed: Zambia and Rwanda - which I signed personally - as well as Mali. The others will be finalised in the next few weeks. Collectively, these seven programmes represent approximately EUR 1.8 billion. In other words: some 50% of the overall general budget support and some 14% of the tenth EDF's total for national indicative programmes.
It is understood - in fact, your report encourages this - that we will seek to extend this measure to other countries, including non-ACP ones, according to experience gained from these first countries. Obviously, other approaches will have to be devised for countries that are still not eligible for budget support, but the MDG contract already constitutes an important contribution to improving the effectiveness of aid and the acceleration of progress towards achieving the Millennium Development Goals.
President
The presentation is closed.
The vote will take place on Tuesday, 24 March 2009.
Written Statements (Rule 142)
Toomas Savi  
in writing. - The MDG contracts promise to constitute a significant shift towards a clearer road map for achieving the Millennium Development Goals. It is of course important that the potential of those contracts will not be diminished by excessive administrative procedures of the Commission, as the rapporteur has pointed out.
The conditional nature of the EU development assistance could only prevail if the EU operated in a monopoly, being the sole provider of development assistance. At the moment our efforts in Africa for example are to quite some extent in vain as the People's Republic of China is exercising 'political dumping', when providing aid with no requirements for transition to democracy, rule of law and respect of human rights.
Some governments in Africa might cut the Commission red tape by disregarding our offer of development aid, which is extremely dangerous, since by that we lose our opportunity to guide those countries in the right direction.
I would like to ask the Commission to address this concern by simplifying procedures while retaining sufficient control over the disbursement of the resources that are provided.
