Supplementary evidence from the Department
for International Development
LOMÉ HEARING: REQUEST FOR FURTHER
INFORMATION
I attach:
(i) a note on how one decides what is satisfactory
economic performance (Q 18);
(ii) a note on the criteria used when identifying
partners: the emphasis being in a bilateral rather than an EU
context (Q 25);
(iii) information on the sectoral distribution
of commitments under past and present EDF's, especially regarding
health and education (Q 45);
(iv) information on the outcome of the October
workshop on trade and gender (Q 56).
I trust this meets the needs of the committee;
if not then please let me know.
DFID NOTE ON
SATISFACTORY MACRO-ECONOMIC
PERFORMANCE IN
DEVELOPING COUNTRIES
(Q 18)
Satisfactory macro-economic performance has
two main elements—stabilisation and sustainable growth—which
in turn are essential for achieving poverty reduction.
— Stabilisation is a prerequisite
for achieving sustainable growth. Consumers and producers require
a predictable domestic policy climate if they are to generate
the savings and make the investments necessary to underpin economic
growth. A key element of predictability is low and stable inflation.
This in turn requires a low and stable government budget deficit
which can be funded in a non-inflationary way, and a sustainable
position in the current account of the balance of payments, supported
by an appropriate exchange rate regime. Broadly speaking, we support
IMF criteria in this area.
— Structural adjustment and sustainable
growth. A number of macro-economic policy elements are key
to providing the enabling environment which required for long-run
economic growth based on the private sector. Reform aimed at this
environment is frequently referred to as structural adjustment.
Measures include:
— Price liberalisation in order to
provide non-distorted market-based signals to both producers and
consumers.
— Trade liberalisation aimed at reducing
the cost of imports to consumers and producers, to foster specialisation
in line with comparative advantage.
— Privatisation in industries where
the private sector can undertake activities more efficiently than
the state.
— Transparent government regulation
in areas of (potential or actual) market failure such as competition
policy and environmental protection.
— Poverty reduction. Economic
growth, significantly above the population growth rate and sustained
over a long period is necessary for achieving DFIDs aim, the elimination
of poverty in poorer countries. World Bank research suggests that,
across a large sample of countries, growth has usually had a poverty-reducing
effect. Nevertheless, in the short run, the implications for the
poor of the components of macro-economic reform programmes need
to be considered. In order to maximise benefits to the poor and
to promote their participation, the macro-economic framework must
be one which facilitates the development of income and employment-generating
activities that include poor people, particularly women. In addition,
protection of social sector spending (health, sanitation, education)
within the government budget during adjustment is vital. Provision
of social safety nets for those unable to participate in the market
economy provides the final element of a pro-poor government economic
policy.
RESPONSE TO
SELECT COMMITTEE:
BUILDING BILATERAL
PARTNERSHIPS (Q 25)
UK objectives
— to develop effective partnerships
with developing countries to achieve shared objectives to eliminate
poverty and promote sustainable development.
Key points
— The clear focus of our development
assistance policies is on the elimination of extreme poverty.
— We want to foster a consensus around
the international development targets. This will provide a common
policy framework and a focus on results.
— This agenda can best be implemented
through partnerships with developing countries and donors collectively
which support the country's efforts to generate pro-poor economic
growth, and enable poor people to access education, health and
create decent livelihoods.
— We expect to establish such intensive
partnerships with many of the very poor countries of sub-Saharan
Africa and South Asia. We will commit resources—long term—in
support. In middle income countries the partnership will be based
on a broader development co-operation, sharing skills, experience
and technology.
— We must enhance our partnerships
also with the private and voluntary sectors, and civil society,
to the same end.
Background
1. A White Paper on international development—the
first for 22 years—was published in early November. It promotes
the principle of building strong and effective development partnerships
with poorer countries as a vehicle for eliminating poverty. The
partnership will cover the wider development agenda (including
consistency of debt, trade, investment, agricultural policies)
and not just aid.
2. The UK's role will be to:
— encourage such partnerships to be
established and deepened; and
— actively support such partnerships
with our aid and influence.
3. Countries which we are prepared to embark
on long-term partnerships will be low income, containing a large
proportion of poor people. They will also be countries where the
UK is wanted as a partner, has the influence to play a positive
role, and a comparative advantage in being able to make a strategic
contribution to poverty reduction.
4. We would expect partner governments to:
— have a commitment to the international
development targets and be pursuing policies designed to achieve
them;
— be committed to pro-poor growth and
conservation of the environment, and be pursuing appropriate policies;
— wish to engage with the UK and with
the donor community;
— pursue policies which promote responsive
and accountable government, promote the enjoyment of civil, cultural,
economic, political and social rights; and which encourage transparency
and bear down on corruption.
SECTORAL DISTRIBUTION
OF EDF FUNDS
(Q 45)
Attached are two extracts from the "Evaluation
of EU aid to ACP countries managed by the Commission, Phase 1:
Analysis of existing documents (July 1997)".[8]
These summarise Community involvement under
Lomé in the health and education sectors. In both cases
they show an increase in commitment, particularly when "CF"
are taken into account. "CF" are counterpart funds,
which are generated by foreign currency support, such as Stabex,
or general and sectoral import programmes. With the growth in
adjustment programmes they have assumed increased importance in
total Government resources. Under Lomé IV use of these
funds became subject to conditionality and they are often allocated
for increases in budgetary expenditure for the health and education
sectors. Figures provided in the Evaluation document note that
of counterpart funds generated by EC structural adjustment finance
provided under Lomé IV between 1991 and 1995, 38 per cent
went to the health sector and 28.5 per cent to support the education
sector.
ALLOCATIONS UNDER
EDF VIII
Country allocations under EDF VIII were made
on the basis of population, adjusted for:
— social and economic development (including
GNP per capita and an indicator of human development);
— geographical situation (reflecting
Lomé priority to small island economies and landlocked
countries);
— performance in previous National
Indicative Programmes;
— progress with democratisation/good
governance;
— a factor for traditional banana producers.
To limit the overall impact of change from previous
allocations, maximum and minimum percentage variations from previous
EDF allocations were also applied.
RESPONSE TO
SELECT COMMITTEE:
WORKSHOP ON
TRADE AND
GENDER (Q 56)
On 10 October DFID held a workshop on trade
and gender, which focused on a report commissioned from the Institute
of Development Studies entitled Global trade expansion and
liberalisation: gender issues and impacts. A draft copy is
attached.1 IDS is in the process of producing a revised version,
taking into account the comments and observations from the workshop.
Although many of the issues surrounding trade
and gender are not new, this was the first time that a group from
government, the voluntary sector and academia had come together
to discuss them. The aim of the seminar was to start to bring
these issues together in a comprehensive manner with a view to
informing policy and action.
The workshop was very useful in highlighting
some of the key issues and policy approaches to consider, and
in identifying important gaps in knowledge and research. It was
agreed that the group was not yet in a position to form firm conclusions
and policy recommendations, but that work would continue.
In particular, DFID has agreed:
— to design and implement a DFID strategy
on mainstreaming gender into trade work within DFID, Whitehall,
and externally;
— to produce a Gender Checklist of
key gender issues to be considered by trade policy makers;
— to design and commission further
research, particularly on the impact of trade policies on the
informal sector;
— to build on our growing links with
NGO/academic groups on trade and gender issues.
A further seminar will be held in the New Year
in order to develop this work.
Department for International Development
10 December 1997
8 Not herewith printed. Back
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