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IP/09/550

Brussels, 8 April 2009

Commission first to act on G20 with strategy to support developing countries

Less than a week after the London Summit, the European Commission outlines a range of actions which the EU can take now to help developing countries weather the ongoing economic crisis.

José Manuel Barroso, President of the European Commission, said: "Europe has taken the lead in ensuring that the G20 lays foundations for a fair and sustainable recovery for all, including developing countries. The full impact of the current downturn on our partners is only now becoming clear - those least responsible for the financial crisis are among those worst hit by its economic effects. Europe is by far the biggest aid donor in the world and still growing. We are now more than half way to the 2015 deadline for reaching the UN Millennium Development Goals and some of the gains achieved so far risk being forfeited leaving poor countries worse off than before the crisis. I said it before the G20, I said it at the G20 meeting and now I say it again: the recession must not, cannot, will not be used as an excuse for going back on our promises to keep on increasing aid."

Louis Michel, Commissioner responsible for Development and Humanitarian Aid, said: "We know what we must do: meet our aid targets, advance our money to have an impact when it is most needed, refocus our existing programmes to tackle the crisis and then make every Euro count. The real value of just working more effectively together at 27 in our development action is around 7 billion euros per year – the relief in human suffering that brings is incalculable. Today's communication maps out just how we can achieve that. I am proud that Europe is first to act after the G20 in support of developing countries."

The Communication adopted today by the Commission looks at how Europe can support developing countries in coping with the crisis.

First, keeping our promises - already the largest donor in the world, EU aid rose to €49 billion in 2008, representing 0,40% of GNI. Aid volumes would need to increase to an estimated €69 billion in 2010 to meet the collective promise of 0,56% of EU GNI made at the G8 Gleneagles Summit in 2005. This would release an additional 20 billion EUR. Furthermore, the Commission proposes greater use of development aid to leverage other funds, including through the European Investment Bank - every euro spent on aid should leverage up to five euros of private investment.

Second: Frontload and refocus existing commitments on the most vulnerable. The Commission is frontloading €3 billion, or 72% of its foreseen budget support to African, Pacific and Caribbean nations thereby ensuring that social spending is not forsaken when most needed. An ad hoc "FLEX" instrument will act counter-cyclically to compensate those developing countries worst hit by falling export revenues as world trade contracts. It will be on stream before the end of 2009, directing at least €500 million to allow developing countries to continue social safety net spending. This is in addition to the €1 billion "food facility" adopted prior to the G20, €800 million of which will be made available this year. Overall, frontloading by the European Commission should bring forward €4.3 billion resources to 2009.

Finally, the EU has taken the lead in making existing aid more effective. Working together, the 27 Member States and the Commission can make real efficiency gains, making every aid Euro count and serving as a model for others across the world. First estimates, according to a study commissioned by the European Commission, are that we could free up as much as €7 billion per year by making aid more effective, implementing principles already agreed in 2008.

The Communication will be available online at the site below with four accompanying working documents:

"Financing for Development - Where does the EU go from Doha?"

"2009 Aid for Trade Monitoring Report"

"Aid Effectiveness after Accra – Where does the EU stand?"

"Millennium Development Goals – Impact of the financial crisis on developing countries"

http://ec.europa.eu/development/index_en.cfm


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