Development Policy? A Comparative Analysis of Soft Loan Policies in Austria, Denmark, Germany and the Netherlands

Transcription

1 19 EDITIOn Export Promotion or Development Policy? A Comparative Analysis of Soft Loan Policies in Austria, Denmark, Germany and the Netherlands Livia Fritz, Werner Raza, Manuel Schuler, Eva Schweiger March 2014 OFSE Austrian Foundation for Development Research

2 Contents List of Figures, Boxes and Tables Abbreviations XI XV Acknowledgements 1 PART I: Introduction and Definitions 3 1. Introduction Context Research Questions and Aim Methodology Desk Research and Literature Review Field Research Structure of the Publication Preparing the Gmunds: Definition of Key Terminology The Concept of Official Development Assistance Economic Weifare and Development as the Main Objective Concessional in Character and a Minimum Grant Element of 25 /o Measures to Express Concessionality of a Loan: Grant Element vs. Concessionality Level Soft Loans, Tied Aid Credits, Associated Financing: Almost the Same but not Quite? 27 PART II: Historical Evolution and Institutional Structure of Tied Aid The DAC's Development Agenda The Aid and Development Effectiveness Debate Evolution and Principles: From Rome to Busan via Paris and Accra Excursus: The Idea of Partnership in Development Co-operation Paris Declaration on Aid Effectiveness as a Benchmark 42 eoition 19

3 Untying Aid: A Long-Iasting Matter of Concern Policy Coherence for Development (PCD) Critical Remarks 4. An Introduction to the International Regulatory Framework The Participants Group and "their" Arrangement Purpose and General Provisions of the Arrangement The Masters of the Arrangement Legal Status of the Arrangement WTO Legislation Development Assistance Committee (DAC) Historical Genesis of the Arrangement on Officially Supported Export Credits: Evolution and Status Quo of the Tied Aid Disciplines Contextualization: an Export Credit Race on the Rise The Early "Consensus": Establishing a Level Playing Field Packages Adopted and Alternatives Discussed up to Helsinki The Wallen Package (1987) An Inquiry into the Logic of Concessionality Failure of the Wallen and Negotiation of the Helsinki Package Agreement on the Helsinki Tied Aid Disciplines The Helsinki Package (1991/1992) Country Eligibility Project Eligibility Minimum Concessionality Level Exemptions from the Helsinki Disciplines De Minimis Projects: Small Transactions as Circumvention Strategy? The Consultations Group and the Development of the Ex Ante Guidance for Tied Aid (1 996, 2003, 2005) Financial Terms and Conditions for Export Credits According to the Arrangement Repayment Terms Interest Rates ÜFSE

4 Credit Risk Premiums Recap and Concluding Remarks Aid Considerations and the Role of the Development Assistance Committee Pushing Development Interests -in and through the DAC/FA Concerns Over Limited and/or Negative Development Impact of Tied Aid Credits Approaching the Issue: ODA Stretching and Debt Servicing Capacity Distorting Aid Distribution Patterns "Development Safeguards" in Historical Perspective Strengthened Role of Aid Agencies Development of a Consensus on Objective Development Criteria for Pre-Mixed Financing Aid Quality: Improved and Mandatory Aid Quality Assessment Greater Importance of Development Content in Consultation Procedures Communicating Aid Considerations: the DAC/FA's Relation to the Participants Monitoring the Participants Group Forms of Interaction between the Two Groups "(Re-)Claiming its Territory": Adoption of Complementary Guidelines by the DAC Guiding Principles for the Use of Aid in Association with Export Credits and Other Market Funds (1 983) DAC Guiding Principles for Associated Financing and Tied and Partially Untied Official Development Assistance (1987) New Measures in the Field of Tied Aid (1992) Global Untying and Good Procurement Practices: Mutual Concern and Ongoing Struggle? Tracing Development Policy Aspects in Today's Arrangement The Key Tests - Capable of Assessing Aid Quality? Explicit and Implicit References to DAC Principles Grasping the Participants' Notion of Development Assessment of the DAC/FA's Influenae on the Participants Group Recap and Concluding Remarks 147 EDITIOn 19 III

5 7. Statist!es on Tied Aid Credits Introduction to the DAC Statistical Concept Evolution of Quantitative Importance of Tied Aid Donors Recipient Countries and Regions Sectors Summary of the Rindings of the Statistical Data Reading and Interpreting the DAC Statistics Problems of Statistical Recording of Development Assistance The Tying Status of ODA and "De Facto" Tying Reporting of Credits According to their Motivation The Term "Concessional in Character" in the ODA Definition Critical Assessment of the Institutional Framework for Tied Aid Assessment of the Arrangement Terms Assessment of Eligibility Criteria Assessment of Minimum Concessionality Levels Assessment of Tied Aid Credit Policies against the Principles of the OECD's Development Agenda The OECD - Living up to Policy Coherence (for Development)? In Line With the Paris Principles on Aid Effectiveness? Harmonization Ownership Alignment Aid Quality Matters: Assessing the "Demonstrated" Development Quality of Tied Aid Credit Projects In the Spirit of Partnership? Global Partnership and the Role of Recipient aka Partner Countries Untying : Is the OECD Coherent in Its Quest for an Untying Regime? Provisions for Least Developed Countries Concluding Remarks: Of Conflicting Policy Goals and Magic Bullets 199 IV OFse

6 PART III: Soft Loan Policies of Four European Donor Countries Introduction Austria Country Faots and Figures Economy and Foreign Trade Austria's Donor Profile ODA Performance Institutional Setting of Austria's Development Cooperation Profile of the Program Objectives of the Soft Loan Program Legal Basis of the Soft Loan Program Financing of the Soft Loan Program Institutional Environment Complementary Programs Guidelines for the Austrian Soft Loan Program Soft Loan Eligibility Criteria Soft Loan Eligibility of the Recipient Country Soft Loan Eligibility of Products and Projects Eligible Sectors Terms and Conditions for Soft Loan Eligible Countries Program Performance Development of Austrian Soft Loan Financing Recipient Countries Sectors Program Implementation Procurement in Soft Loan-Financed Projects Application Procedure for Soft Loan Financing Questionnaire Project Appraisal Engagement of other Actors Düring the Application Process Project Approval Process 227 EDITIOn 19 v

7 10.5. Monitoring and Evaluation Monitoring Evaluation Accountability and Transparency Conclusion and Outlook Denmark Country Facts and Figures Economy and Foreign Trade Denmark's Donor Profile ODA Performance Institutional Setting of Denmark's Development Cooperation Profile of the Program Background and Objectives Program Objectives Policy Framework and Legal Foundation Danida Business Finance in the Overall Development Strategy 201 2: The Right to a Better Life Strategie Framework for Priority Area: Growth and Employment Strategie Framework for Priority Areas: Natural Resources, Energy, and Climate Change (2013) Act No. 64 of 7 February The Finance Act: Institutional Environment Guidelines for Danish Mixed Credits Requirements and Eligibility Criteria Country Eligibility Project Eligibility Concessionality Requirements Procurement Guidelines Miscellaneous Specific Requirements for Small Projects (SDR < 2 million) Terms and Conditions 254 V! ÜFSE

8 Composition of Danida Subsidy in a Mixed Credit Loan Conditions Complementary Programs Danida Business Partnerships Investment Fund for Developing Countries (IFU) The Fast-Track Scheme: an EKF - DBF Cooperation Program Performance Statistical Issues Development of Mixed Credit Financing Recipient Countries Sectors Danish Untied Mixed Credits Program Implementation Application and Project Approval Process Application and Screening Procedure The Appraisal Report: Testing against Development Criteria Approval Process Composition of the Internal and External Grant Committee Working Procedures Tender Process Monitoring and Evaluation Monitoring and Evaluation at Project Level Evaluation at Program Level Evaluations of the Danish Mixed Credit Program and Meta-Evaluation 2004: Private and Business Sector Development Interventions Accountability and Transparency Involvement of the Parliament Transparency and Availability of Information Stakeholder Consultation Conclusion and Outlook 284 EDITIOn 19 VII

9 12. Germany Country Facts and Figures Economy and Foreign Trade Development Cooperation Financial and Technical Cooperation Programming of Bilateral Cooperation Country and Sector Concentration Profile of Financial Cooperation Legal Background/History Institutional Environment Terms and Conditions Financial Instruments Overview Federal Budget Funds FC Development Loans FC Promotional Loan Performance of Financial Cooperation Development of Financial Cooperation Recipient Countries Sectors Share of Financial Cooperation to Total ODA Flanning and Implementation of FC Funds Intergovernmental Agreement and Project Pre-Selection Decision-Making and Project Selection Process Implementation-Planning and International Competitive Bidding Payment Terms, Guarantees and Insurance Monitoring and Evaluation Reviewing Project-Related Progress Independent Ex-Post Evaluation Approach and Methodology Logframe and Field Missions Transparency and Accountability Involvement of the Parliament 328 VIII Fse

10 Auditing of Financial Management German Institute for Development Evaluation Civil Society and Availability of Information Conclusion and Outlook Developmental Orientation Rationale of ODA Reporting (Un)tied German Financial Cooperation? The Netherlands Country Facts and Figures Key Objectives of Dutch Development Policy A New Agenda for Aid, Trade and Investment Profile of Programs Historical Overview Legal Background Institutional Environment Government Funds Facility for Infrastructure Development (ORIO) Infrastructure Development Fund (IDF) Dutch Good Growth Fund (DGGF) Scheme Performance ORET Budget and Expenditures ORET Grant Scheme LDC Infrastructure Fund Share of ORET/MILIEV of Total ODA ORIO Grant Scheme Implementation of Programs Project Eligibility and Application Project Appraisal Process and Decision-Making Project Implementation, Tendering and Contract Management Payment Terms, Guarantee and Operations and Maintenance Phase Monitoring and Evaluation Monitoring and Evaluation Plan 372 EDITIOn 19 IX

11 Impact Evaluations Transparency and Accountability Role of the Parliament Civil Society Transparency Conclusion and Outlook 377 PART IV: Comparative Analysis of Gase Studies and Conclusions Comparative Assessment of Case Study Countries Comparative Analysis of the Case Study Results: a Tabular Presentation Comparative Conclusions of the Case Studies Program Characteristics Importance of the Program in the Field of Development Cooperation Institutional Setting Objectives of the Programs Country Eligibility Criteria Sector and Project Eligibility Criteria Ex-ante Assessment of Expected Development Impact Project Approval Stakeholder Involvement Role of Recipient Countries Monitoring and Evaluation Transparency and Accountability General Conclusions and Outlook Conclusions - Between Institutional Heterogeneity, Hybridity and Development Outlook - What Future for Soft Loans? 427 ANNEX 433 Bibliography Interview List Authors 459 X ÜFSE