Italy
Italy
At a glance
Funding trends
- Italy is the eighth-largest donor country, spending US$4.9 billion (in current prices) on official development assistance (ODA) in 2019. This represented 0.24% of its gross national income (GNI).
- Italy’s ODA decreased significantly (by 16%) between 2017 and 2018. This can partly be explained by the decrease in costs of hosting refugees; however, bilateral funding has also dropped in other sectors. In 2019, ODA was comparatively stable compared to 2018, with overall ODA decreasing by 1%.
- Italy’s government committed to gradually increasing ODA to 0.7% of GNI with an intermediate goal of reaching 0.33% in 2019, however, the latest OECD data suggests that Italy’s ODA has actually decreased, setting ODA back to 0.24% of GNI in 2019.
Strategic priorities
- Italy is a strong supporter of multilaterals and health multilaterals in particular. It has continuously increased its contributions to the Global Fund to Fight AIDS, Tuberculosis and Malaria. Italy also supports Gavi, the Vaccine Alliance and because of the COVID-19 crisis, Italy announced funding to Coalition for Epidemic Preparedness Innovations (CEPI).
- In 2021, Italy will host the G20 Summit. This will be the first time in history that the G20 takes place in Italy. The summit will have four central priorities: public health, population, planet and prosperity. In the aftermath of COVID-19, global health and rebuilding the global economy will be high on the political agenda. Italy will also emphasize gender equality and sustainable development in Africa.
- Italy’s development assistance focuses on Africa and on mitigating the root causes of migration and displacement. Italy also shows leadership on agriculture, food security, and nutrition.
Outlook
- Despite a commitment to increase ODA to 0.4% in 2021 and 0.7% of GNI by 2030, projections from Civil Society Organisations (CSOs) suggest that ODA will only reach 0.26% of GNI in 2021. Given the effect of COVID-19 on the Italian economy, it is difficult to say whether these projections will hold.
- The Italian Agency for Development Cooperation (AICS) has recently increased its staff to boost capacity for project implementation. This will likely have a positive effect on Italy’s bilateral cooperation.
- The approval and publication of the next three-year Programming and Policy Planning Document which sets out the new strategic focus of development cooperation is delayed and the new strategy document for 2019-2021 is expected to be published before the end of 2020.
ODA Trends
In 2019, Italy’s ODA remained stable following a sharp decrease between 2017 and 2018 due to a reduction of in-country refugee costs
In 2019, Italy spent a total of US$4.9 billion (current prices) on ODA, making it the eighth-largest donor country among members of the Organisation for Economic Co-operation and Development’s (OECD) Development Assistance Committee (DAC). In 2019, Italy’s ODA only represented 0.24% of the country’s GNI, putting it below the UN target of 0.7% and below the 2018 DAC average of 0.3%. It also made achieving of the country’s own target — published in the ‘2018 Update to the Economic and Financial Document’ — of reaching a 0.36% ODA to GNI ratio in 2020 seem unlikely.
Following sharp decreases between 2008 and 2012 as a result of the economic crisis, Italy’s ODA has steadily increased, reaching a peak of US$6.2 billion in 2017 (or 0.3% of GNI). In 2018, ODA growth was reversed for the first time since 2012, falling by an alarming 16% compared to 2017 levels. The drop set back the overall ratio of ODA to GNI from 0.3% in 2017 to 0.25% in 2018. In 2019, the overall ODA to GNI ratio further declined.
For 2020 Italy has budgeted €4,752 million (US$5,608 million) for ODA. In absolute terms, this represents an increase from 2018 and 2019 levels, however, it is still less than Italy spent on ODA in 2017 (US$6.2 billion). In 2018, Italy committed to gradually increasing its ODA to GNI ratio to 0.4% by 2021 and 0.7% by 2030, however, these specific targets were not mentioned in the 2019 Economic and Financial Document. In a recent interview, Emanuela Del Re, the Vice-Minister of Foreign Affairs and International Cooperation, stated that Italy’s goal remains to reach the 0.7% target.
The International Monetary Fund (IMF) projects a sharp 9.5% decline in Italy’s real Gross Domestic Product (GDP) growth for 2020 as a result of the economic impacts of the COVID-19 crisis. If ODA levels are kept stable, this could mean an increase in ODA/GNI ratio in favor of reaching the 0.7% target; however, an increase in ODA in absolute terms during this time of national economic crisis seems unlikely.
Due to its geographic location, Italy is the first port-of-call for many refugees reaching Europe by sea. As a result, ODA-reportable costs of hosting refugees in Italy has risen significantly in the recent years: In 2012, Italy spent only US$240 million (or 9% of net ODA) on in-country refugees, but by 2017 the country disbursed US$1.9 billion (or 31% of net ODA) in this sector. 2018 marked the first year that refugee costs decreased since 2012, falling to US$1.1 billion. This drop partly explains the decline in Italy’s overall ODA, however, even when excluding refugee costs, Italy’s ODA between 2017 and 2018 decreased by 7% (from US$4.3 billion to US$4.1 billion). OECD has only released preliminary data for 2019, which does not include a breakdown of spending on in-country refugee costs.
Unless otherwise indicated, all data in this section is based on the grant-equivalent measurement system. For more information, see our Donor Tracker Codebook.
Policy Priorities
Italy focuses on tackling root causes of migration, particularly in Africa
Italy’s strategic priorities for development cooperation are spelled out in the three-year Programming and Policy Document and Directions for Italian Development Cooperation ('Documento Triennale di Programmazione e di Indirizzo'), developed by the Ministry of Foreign Affairs and International Cooperation (MAECI). The latest publicly available guidelines are the outdated guidelines for the 2017 to 2019 period, which cover ten priority sectors, including:
- Humanitarian aid;
- Migration;
- Agriculture and food security;
- Environment;
- Energy;
- Health;
- Education;
- Global citizenship education;
- Culture and creative industry;
- Juvenile justice.
Italy’s development priorities:
- Migration: Tackling root causes of displacement, particularly in Africa, was a key priority of Italy’s G7 presidency in 2017 and remains high on the agenda. At the Italy- Africa conference in October 2018, the Ministry of Foreign Affairs committed to increasing development assistance and economic investments in Africa.
- Health: Italy has most recently shown leadership in the health sector and has increased its contributions to health multilaterals such as Gavi, the Vaccine Alliance and the Global Fund to Fight AIDS, Tuberculosis and Malaria. Italy has also contributed to the Coalition for Epidemic Preparedness Innovations (CEPI). The COVID-19 crisis has brought the topic into sharper focus.
Italian Agency for Development Cooperation (AICS), which has been in operation since January 2016, is funded with €513 million (US$605 million), according to the 2020 budget. This represents 11% of Italy’s overall ODA. Funding to this agency has remained more or less steady in the years since it was founded. The main role for the AICS is managing the country’s bilateral development cooperation.
The new guidelines for the 2019 to 2021 period, guiding the work of the AICS, are due to be published before the end of 2020 and it are expected to maintain a similar focus.
AICS outlines five thematic areas on which it will focus its development cooperation:
- Economic development and opportunities;
- Human development (including health and education, gender equality and disabilities);
- Environment and use of natural resources;
- Rural development and food security; and
- Conflict-affected and fragile states.
The Italian Prime Minister, Giuseppe Conte, has called for greater European cooperation and investment to address the ‘mass migration crisis’ and reduce migrant deaths in the Mediterranean Sea. Nonetheless, Italy has so far not adopted the Global Compact on Migration, an intergovernmentally negotiated agreement that lays out objectives to facilitate legal migration prepared by the UN.
Throughout Italy’s G7 Presidency, it emphasized global challenges impeding the implementation of the 2030 agenda, such as the growing impact of environmental challenges on low-income countries, with a particular focus on the African continent. In January 2018, Italy showed leadership on this issue when it opened the Africa Centre for Climate and Sustainable Development (ACSD) in Rome.
Besides stepping up its engagement for health multilaterals such as Gavi the Vaccine Alliance and the Global Fund to Fight AIDS, Tuberculosis and Malaria, the country has also shown international leadership on agriculture and the related areas of nutrition and food security. During Italy’s 2017 G7 presidency, leaders highlighted agriculture, food security, and nutrition as crucial development issues and committed to increase ODA to these sectors, particularly in Sub-Saharan Africa, as well as to strengthen humanitarian assistance to famine-stricken areas.
Looking ahead, Italy is preparing to host the G20 Summit in 2021 which is expected to have an emphasis on health including pandemic preparedness due to the COVID-19 crisis. Italy has been one of the countries hardest hit by COVID-19 in 2020 and, in addition to the health-related effects, the outbreak has had a significant impact on the Italian economy.
Italy is in the early stages of developing an evaluation system, as Law 125 calls for results-based management of Italian development cooperation. Italy has therefore established an Evaluation Advisory Committee. Despite these recent efforts, the OECD Development Co-operation Italy Peer Review in 2019 recommended that Italy increase evaluation to inform future program design, strategic direction, and oversight of its development initiatives.
ODA Breakdown
Italy traditionally disburses most of its ODA multilaterally
Italy provides ODA mainly through multilateral channels, a much higher share than other donors. On average the country directed 65% of its ODA to multilateral institutions between 2010 and 2018; however, since 2015 Italy’s share of bilateral contributions has increased due to the high costs associated with of hosting refugees. This has brought Italy’s bilateral and multilateral contributions more in line. Still, at 66% in 2018, Italy channeled more of its ODA multilaterally than other members of the OECD’s Development Assistance Committee (DAC; DAC average: 55%).
Bilateral contributions significantly decreased in 2018; humanitarian assistance is largest sector of spending abroad
Italy’s bilateral contributions tripled between 2013 and 2016, reaching a peak of US$3.4 billion in 2017. In 2018, however, Italy’s bilateral contributions decreased significantly to US$2.2 billion. This substantial drop can mainly be explained by the reduced cost of hosting refugees, which makes up the largest share of Italy’s bilateral ODA. In-country refugee costs fell by 41%, from US$1.9 billion in 2017 to US$1.1 billion in 2018.
Even if excluding refugee-related costs, Italy’s bilateral ODA to other sectors still decreased by 25% between 2017 and 2018. This downward trend followed a steep increase of 66% (from US$900 million in 2016 to US$1.5 billion) in bilateral ODA between 2016 in 2017.
The recent cuts to in bilateral ODA can be seen reflected in various sectors. Italy’s bilateral contributions to humanitarian assistance — its most highly funded sector — declined by 17%, from US$283 million in 2017 to US$234 million in 2018. Health and populations also saw an 8% cut, from US$131 million to US$121 million. Contributions to agriculture and environmental protection fell by 7% and 30%, respectively. Furthermore, after increasing spending in the energy sector by more than ten-fold between 2016 and 2017, Italy’s spending on energy fell to US$11 million in 2018, returning to 2016 levels.
Despite the overall decrease in bilateral ODA, investments aimed at strengthening government and civil society remained constant: Italy spend US$164 million in this sector in 2018. Funding to education actually increased by 16%. Italy spend US$124 million on education in 2018, compared to US$106 million in 2017. Interestingly, health, education, and agriculture — the three key priority areas outlined in the latest publicly available Italian Agency for Development Cooperation (AICS) guidelines (for the 2017 to 2019 period) — represent only 15% of Italy’s bilateral spending in 2018.
Italy currently provides almost all of its bilateral ODA in the form of grants: In 2018, just 4% of bilateral ODA was disbursed as loans and equity investments (DAC average: 9%). The share of ODA provided as loans and equity investments is expected to rise as Italy’s development bank is increasingly engaging in innovative financing mechanisms.
The majority of Italy’s bilateral ODA is disbursed through the public sector (65% in 2018). Funding to the public sector declined by 43% (from US$2.6 billion to US$1.5 billion) between 2017 and 2018 and the share of bilateral funding given to the public sector decreased from 75% in 2017 to 65% in 2018. This was in favor of non-governmental organizations (NGOs) and multilateral organizations which received a slightly higher share compared to 2017 (12% or US$280 million in 2018 compared to 7% or US$233 million in 2017).
Italy’s ODA recipients are primarily in sub-Saharan Africa and the MENA region
Sub-Saharan Africa (US$304 million in 2018) and the Middle East and North Africa (MENA) region (US$205 million in 2018) are priority areas for Italy’s bilateral development cooperation. A large share of Italy’s bilateral funding is unallocated by country and region. When excluding these funds, Italy provided 40% of its bilateral ODA to Sub-Saharan Africa and 27% to the MENA region in 2018.
These regions are expected to remain Italy’s primary focus in the coming years, particularly as the country continues to emphasize tackling root causes of migration from Africa. The three-year Programming and Policy Guidelines for AICS between 2017 and 2019 (the latest available) also highlight these areas as geographic priorities.
Italy provides a considerably small proportion of its bilateral ODA to low-income countries (LICs): 12% on average between 2016-2018 and 15% in 2018 (DAC average: 19% in 2018). However, this is partly reflective of the large portion of ODA that is not allocated by income-level: when excluding unallocated funding, LICs received 43% of Italy’s bilateral ODA in 2018. In 2018, the main recipient countries of Italian ODA were Afghanistan (US$95 million), Turkey (US$59 million), Ethiopia (US$49 million), and Lebanon (US$45 million).
Multilateral contributions primarily go to EU institutions
Core contributions to multilateral organizations made up over half (57%) of Italy’s ODA in 2018 (DAC average: 41%). A large proportion is channeled to European Union (EU) Institutions, which received US$1.9 billion of Italy’s ODA in 2018, amounting to 65% of the country’s total contributions to the multilateral system. Most of the ODA Italy channels through the EU has been used to fund the EU’s response to the unprecedented number of asylum seekers reaching Europe in recent years.
Other recipients of Italy’s multilateral ODA in 2018 included the World Bank (US$368 million or 12% of multilateral ODA), regional development banks (US$263 million, or 9% of multilateral ODA), and UN agencies (US$169 million or 6% of multilateral ODA).
Agriculture and rural development receive a particularly high share of Italy’s multilateral funding: In 2016 the sector was funded with US$233 million in multilateral funds or 71% of total agricultural ODA.
Unless otherwise indicated, all data in this section is based on the cash-flow basis measurement system. For more information, see our Donor Tracker Codebook.
Main Actors
MAECI leads on strategy; Italy’s development agency, AICS, implements bilateral programs; embassies play a key role in partner countries
In August 2019, Italy formed a new government, comprising of the Five Star Movement and the center-left Democratic Party. The new coalition was triggered by a no-confidence motion, initiated by the right-wing League to bring down the government that it had formed with the Five Star Movement in June 2018. Matteo Salvini (former Minister of the Interior and current Federal Secretary of the League) hoped to trigger fresh elections by October; however, before then, the Five Star Movement and the center-left Democratic Party had reached a coalition agreement that forced the far-right League party into the opposition.
Giuseppe Conte survived the change of government and is now in his second mandate as Prime Minister of Italy. The Prime Minister plays a role in determining the focus of Italy’s development cooperation. He has nominated, Luca Maestripieri, the new Director of Italy’s Development Agency (AICS). Furthermore, Conte has committed to asking Europe to intensify cooperation and increase investments in Africa, in order to control the flow of unregulated migration. Conte has appointed Pietro Benassi, former Italian ambassador to Germany, as his diplomatic advisor, an influential role.
In 2014, Italy’s development cooperation system was profoundly restructured. The reform aimed to better align development policy with foreign affairs. Within government, two main ministries are involved in development cooperation:
- The Ministry of Foreign Affairs and International Cooperation (MAECI) is responsible for defining the strategic direction of development policy. It is currently headed by Luigi Di Maio (Five Star Movement) who was appointed Minister of Foreign Affairs and International Cooperation in September 2019. Within the MAECI, Emanuela del Re (Five Star Movement), acts as the Vice Minister of Foreign Affairs and International Cooperation and has played a key role in the strategic direction of Italy’s Development Cooperation. Currently, the MAECI is in the process of clearly defining the portfolios of each Vice Minister which will include supervising the work of the Italian Agency for Development Cooperation (AICS) and the Italian development bank. The MAECI’s Directorate-General for Development Cooperation (DGCS), which is in charge of defining the strategic direction of development programs and has been headed by Giorgio Marrapodi since January 2018. The multilateral department of the DGCS is headed by Leonardo Bencini.
- The Ministry of Economy and Finance (MEF), led by Roberto Gualtieri (Democratic Party-PD), is also a key player: the MEF prepares revenue and financial analysis for the MAECI and oversees and assesses the economic and financial impacts of laws and policies. In addition, the MEF jointly with the MAECI, controls the ODA budget as well as relations with and contributions to multilaterals.
Other important governmental bodies involved in Italy’s development cooperation include:
- The MAECI and MEF are members of the Interministerial Committee for Development Cooperation (CICS), established in 2014 when Italy’s development cooperation system underwent its first reform since 1987. The CICS represents the institutional setting for interaction among different ministries involved in development cooperation and aims to ensure coherence of policies and approaches. The CICS usually approves the three-year Programming and Policy Guidelines for Italian Development Cooperation and the overall ODA budget. The CICS is chaired by the Prime Minister and composed of the Minister of Foreign Affairs, the Vice Minister of Foreign Affairs, and representatives from other ministries, including Finance and Environment.
- The Joint Development Cooperation Committee (‘Comitato Congiunto’) decides on operational issues, including on funding for projects over €2 million (US$2.3 million). It is chaired by the MAECI and composed of the heads of MAECI’s DGCS and AICS.
- AICS was set up in January 2016 (following the 2014 reform) and has been led Luca Maestripieri since April 2019. AICS develops, supervises, and implements Italy’s development programs, but is only able to autonomously approve project funds of up to €2 million (US$2.3 million). Following criticisms from civil society organizations (CSOs) about inadequate staffing — which were also echoed in the OECD Development Co-operation Peer Review of Italy published in November 2019 — in 2020, the Parliament agreed to increase the number of AICS staff by more than 50%.
- The ‘Cassa Depositi e Prestiti’ (CDP) operates as Italy’s development bank and since 2014, it has been working under a new mandate as an international financial institution (IFI). The CDP’s work on development cooperation centers around its management of the Revolving Fund for Development Cooperation (RF) on behalf of the Italian government; lending to sovereign and multilateral entities, providing concessional loans and blended finance bilaterally; and technical financial advisory to the Ministry of Foreign Affairs, AICS, and other Italian public institutions.
- Embassies play a key role in programming bilateral funds on the ground. Allocations to partner countries are based on multi-year country programs developed by DGCS in consultation with Local Technical Units and embassies. Based on the country programs, the DGCS annually reviews and updates its guidelines for development cooperation which outline annual priority countries and key bilateral programs. At a country level, regional departments at DGCS’ headquarters then develop and approve projects after consultation with embassies. Due to their close relations with partner-country stakeholders, embassies have an influential role.
Civil society is involved in the policy-making process mainly through the National Council for Development Cooperation (CNCS). It is a consultative body — introduced by the 2014 reform — which brings together 50 members of different backgrounds: private-sector organizations, CSOs, and public authorities, to provide feedback on the government’s development policies. The CNCS divides its work between three groups (‘Agenda 2030’, ‘private sector’, and ‘migration and development’). Each is supposed to meet every two months, however, there has been public criticism that the Council remains inactive.
Parliament plays an important role in the budget process. The Italian Parliament has two chambers: the Chamber of Deputies and the Senate. They examine, amend, and vote on the draft budget developed by the government. The Foreign Affairs committees of both chambers give recommendations on ODA budget amendments, while the Budget committees of both chambers make the final decision.
Budget Structure
Foreign Ministry manages main ODA budget line; Ministry of Interior covers costs of hosting refugees
Italy’s budget documents indicate that the country will spend €4.8 billion (US$5.6 billion) on ODA in 2020. This is overall an increase of 14% (or US$700 million) compared to latest available OECD estimate which outlines US$4.9 billion in spending in 2019.
The Ministry of Economy and Finance (MEF) manages the largest part of Italy’s ODA budget (37%, US$2.075 billion in 2020). The MEF mainly contributes to Italy’s development funding through contributions to the EU's general budget, which includes the Development Cooperation Instrument (DCI). The Ministry of Interior controls the portion of the ODA budget allocated for spending on refugees and migration related issues. In 2020, US$1.9 billion (€1.6 billion) was budgeted for the Ministry of Interior. According to OECD data, in 2018, refugee costs accounted for 22% of overall ODA in 2018 down from 31% in 2017. However, in 2020 the share of total ODA spent on costs of hosting refugees has gone up to 33% of total ODA again.
The Ministry of Foreign Affairs and International Cooperation (MAECI) managed 28% (US$1.6 or €1.3 billion) of the ODA budget in 2020. The main ODA-related budget envelope within the MAECI’s budget is the program 4.2 ‘Development Cooperation’. It comprises ‘chapters’ of funding to Italy’s development agency, AICS (€513 million or US$605 million in 2020), and contributions to the European Development Fund. It also includes several ‘chapters’ of contributions to the UN and other multilaterals.
Overview: Italy's 2020 budgetary sources |
millions
|
millions
|
| Ministry of Economy and Finance (MEF) | 1,758 | 2,075 |
|---|
| Ministry of Foreign Affairs (MAECI) | 1,324 | 1,563 |
|---|---|---|
| Transfers to AICS | 513 | 605 |
| Economic cooperation and international relations | 52 | 61 |
| European integration | 600 | 708 |
| Cooperation on migration | 30 | 35 |
| Other | 128 | 151 |
| Ministry of Interior | 1,581 | 1,866 |
|---|---|---|
| Other ministries | 1,581 | 1,866 |
| Ministry of Health | 15 | 18 |
| Ministry of Environment | 54 | 64 |
| Ministry of Education an Research | 19 | 22 |
| Ministry of Economic Development | 0.9 | 1.1 |
| Ministry of infrastructure and Transport | 0.1 | 0.12 |
| Total | 4,752 | 5,608 |
|---|
Budget Process
Parliamentary budget discussions run from October to December; Overall ODA levels are set in March and April
- Ministry of Economy and Finance (MEF)develops three-year budgetary guidelines: From February to April each year, the government develops the Economic and Financial Document (DEF), which sets a three-year framework for economic and budgetary planning. In recent years, the document has also outlined estimates of the share of GNI dedicated to ODA. Key decision-makers in this process are the Prime Minister, the Minister of Finance, the Minister of Foreign Affairs and International Cooperation, and the Vice Minister of Foreign Affairs. The DEF is presented to the parliament by April 10 each year for approval from both houses.
- Government develops the budget draft: From July to September, the Cabinet develops the budget draft. The draft budget is presented to Parliament in mid-October. Key stakeholders include the Vice Minister of Foreign Affairs, the Minister of Foreign Affairs, the Minister of Finance, and the Prime Minister. As budget negotiations between the government and Parliament start prior to the presentation of the draft budget, engaging Members of Parliament and Ministry of Foreign Affairs and Development Cooperation (MAECI) staff over this period of time may prove effective for advocacy purposes.
- Parliament examines, amends, and votes on budget draft: Parliamentary budget discussions run from October to December. The Budget committees of the Chamber of Deputies and the Senate set the final budget levels, and the Foreign Affairs committees of both houses give recommendations on amendments to the bill. Members of these committees are key stakeholders to engage when it comes to budget allocations. The full parliament votes on the budget by the end of December.
In addition to the regular budget process, the government usually issues a decree known as the ‘one thousand extension decree’ (‘milleproroghe’) at the end of December. It uses this decree to finance additional measures in the next budget year, relating to any budgetary issue. Parliament examines and may amend the decree from January to February. This may provide additional opportunities to influence the ODA budget.