Spain donor profile

Excluding a one-off debt-relief package, Spanish ODA has been rising since 2015

Spain’s ODA stood at US$2.9 billion in 2018, making it the 13^th-largest donor country in the Organisation for Economic Co-operation and Development’s (OECD) Development Assistance Committee (DAC). This amounted to 0.20% of Spain’s GNI, making it 20^th-largest donor in relative terms. These numbers are based on the new methodology for measuring ODA loans which the OECD DAC will apply to ODA reporting for 2018 onward. Preliminary ODA figures for 2018 using this new methodology were first released in April 2019. This methodology, called ‘grant-equivalent’ methodology, provides a more accurate way to count donor efforts in concessional ODA loans because only the ‘grant’ portion of loans, expressed as a monetary value, is counted as ODA. In turn, the repayments of previous ODA loans are no longer subtracted. Until 2011, Spain delivered large amounts of ODA loans, the repayment of which was subtracted from its ODA. This is no longer the case with the new methodology, and the reform thus had a positive impact on Spain’s ODA levels: according to the previous ‘cash basis’ methodology, Spain’s net ODA stood at US$2.6 billion in 2018 (current prices), 11% below ODA figures using the new grant-equivalent methodology.

To allow for comparison overtime, the OECD still publishes net ODA disbursements according to the cash basis methodology. After dropping by 41% between 2016 and 2017 due to an exceptional US$2.2 billion debt relief agreement with Cuba in 2016, net ODA decreased by 5% between 2017 and 2018. According to the OECD, this is due to a further decrease in debt relief volume.

Excluding debt relief, Spanish ODA increased by 79% between 2015 and 2017, following nearly seven straight years of cuts. Between 2008 and 2015 Spanish ODA declined by nearly three-quarters (from US$5.5 billion to US$1.4 billion) due to economic downturn and EU and International Monetary Fund (IMF) directives to cut public spending.     

Excluding 2016’s Cuban debt actions, bilateral ODA in 2017 reached its highest point since 2013 at US$1.1 billion. The largest driver of this increase has been costs of hosting refugees on Spanish soil, which grew more than five-fold since 2015 to reach US$217 million in 2017. Pressure from Spanish media and civil society to take in more refugees mounted in 2015 and culminated in approval of an additional €200 million (US$225 million) in funding. In parallel, multilateral spending reached a new peak in 2017 of US$1.9 billion, an increase of 75% since 2015.

The spending levels established in the 2018 budget will remain in effect until Spain passes a 2019 budget.

In November 2016, the Congress of Deputies’ Development Committee unanimously approved a non-binding resolution to increase ODA to 0.4% of Spain’s GNI by 2020, and Sánchez’ government supports it. The 2019 budget, proposed by the minority government of the Spanish Socialist Workers’ Party (PSOE), further increased ODA to €2.9 billion (US$3.3 billion), but it failed to pass in a February 2019 parliamentary vote. The spending levels established in the 2018 budget will remain in effect until Spain passes a 2019 budget (US$2.9 billion).

The failure of the budget to pass was caused by Catalan secessionist parties’ withdrawing support from the socialist government they had previously helped bring to power in June 2018. Following this, Prime Minister Pedro Sánchez called a snap general election for April 28, 2019, which saw his party win 28% of the votes. Pedro Sánchez is likely to remain in power during the coming four-year term. In order to form a government, the Socialist Party needs to seek parliamentary support from other political parties.

Spain focuses on the SDGs, development effectiveness, and new cooperation models

The Spanish government outlines its strategic orientations for development in the ‘Master Plan for Spanish Cooperation 2018-2021’ (Master Plan), which underlines Spain’s commitment to advance the implementation of the 2030 Agenda for Sustainable Development and increase ODA to 0.7% of GNI. It outlines four cross-cutting development principles: human rights, gender equality, cultural diversity, and environment. Seven strategic goals are highlighted, in line with the SDGs: 1) zero hunger; 2) good health and well-being; 3) quality education; 4) gender equality; 5) clean water and sanitation; 6) decent work and economic growth; and 7) peace, justice and strong institutions. According to the Master Plan, these sectors are to account for 87% of Spain’s bilateral funding.

Spain’s key development priorities:

• Strong focus on MICs: Spain seeks to develop new models of cooperation with its middle-income partner countries. It focuses on triangular cooperation and knowledge transfers.
• Gender, governance, and climate change: These sectors are prioritized as cross-cutting areas of intervention.
• 2030 Agenda implementation: The seven SDGs prioritized by Spain are to account for 87% of bilateral funding.
• Zero Hunger: Zero hunger is the first sector mentioned in the Master Plan, with a focus on food security.

Further underscoring the centrality of the 2030 Agenda in Spain’s priorities was the creation in 2018 of the new High Commissioner for the 2030 Agenda, based in the Prime Minister’s office (La Moncloa). The Spanish government has also launched an ‘Action Plan for 2030 Agenda Implementation’, which places development cooperation, including ODA, as a cornerstone to accelerating and achieving the SDGs.

In addition, the new Master Plan expects a growing ODA focus on sub-Saharan Africa

Within its development policy, Spain adopts a differentiated strategy depending on the status of its partner countries. When cooperating with middle-income countries (MICs) – Spain’s traditional top recipients are countries in Latin America, such as Peru and Colombia, that are transitioning to upper-middle income status – the Ministry of Foreign Affairs and Cooperation (MAEUEC) seeks to progressively substitute traditional ODA with new models of development cooperation. This includes triangular programs (carried out jointly by an industrialized country, an emerging economy, and a recipient country), blended finance (financial instruments involving a mix of public funding and private investments for development), knowledge-transfer programs, and an increasing use of equity investments. Democratic governance, infrastructure, and climate change are among Spain’s preferred interventions in MICs. For example, Spain contributed to the creation of a water sanitation program in Bolivia, a project that was jointly carried out with Brazil. The current MAEUEC leadership is aiming for Spain to lead global efforts – specifically for MICs – to influence the global debate around managing the middle-income transition and to attract emerging markets in Latin America to the global development community.

In addition, the new Master Plan expects a growing ODA focus on sub-Saharan Africa. In these countries Spain prioritizes traditional ODA disbursements (mostly grants) to support the provision of basic social services and strengthening institutions.

Since the 2008 crisis, Spain’s ODA has increasingly come from core contributions to multilaterals

Several years of economic turmoil between 2008 and 2013 resulted in Spain’s channeling an increasing share of its ODA through core, obligatory contributions to multilateral organizations. They have remained high even as economic growth has returned and in 2017 accounted for 63% of Spanish ODA, well above the OECD Development Assistance Committee (DAC) average of 40%. Despite recent gains in overall ODA, bilateral ODA in 2017 was only a quarter of where it stood in 2008 (US$1.1 billion compared to US$4.3 billion), accounting for 37% of Spain’s development assistance.

Spain channels a large part of its ODA through CSOs: 46% in 2017, much higher than the DAC average of 17%. This share was inflated in 2017 by high spending on refugees that went through national NGOs (US$214 million), but Spain is typically well above the DAC average of channeling ODA through NGOs.

Main sectors of bilateral ODA are in-country spending on refugees and debt relief

In 2017 the largest share of Spain’s bilateral ODA was used for in-country costs of hosting refugees: it accounted for 20% of total bilateral development assistance, or US$217 billion, above the DAC average of 16%. This was more than double 2016’s refugee costs and more than six times 2015’s. The spike could be attributable to two factors. First, pressure from Spanish media and civil society to host more refugees a resulted in the approval of €200 million (US$225 million) in additional public spending in 2016. Secondly, DAC members can report the costs of hosting refugees up to one year after application, which can result in a reporting lag.

A year after Spain took a series of extraordinary measures to ease Cuba’s debt burden, debt action still accounted for a sizable portion of Spain’s bilateral ODA at 11% or US$123 million, making it the second-largest sector of bilateral assistance. ‘Government and Civil Society’ was the third-largest sector of bilateral ODA, increasing to US$105 million (10%), from US$88 million in 2016. Within this sector, Spain focuses on gender equality and democratic participation, a reflection of the cross-cutting themes set out in the ‘Master Plan for Spanish Cooperation 2018-2021’ (Master Plan).

At nearly 10% or US$104 million, administrative costs account for a large proportion of Spain’s bilateral ODA. Agriculture fell from the sixth-largest to the ninth-largest sector of Spain’s bilateral ODA in 2017, amounting to US$62 million or 6% of spending. Food security remains one of the top priorities of Spanish development policy, which is also reflected in its international leadership in the sector: Spain hosts the humanitarian logistics hubs of the World Food Program (WFP), the International Committee of the Red Cross (ICRC), and of the United States Agency for International Development (USAID) on the Canary Islands.

Almost all of Spain’s bilateral ODA in 2017 consisted of grants (97%), consistent with previous years.

Spain focuses bilateral ODA on Latin America, sub-Saharan Africa, and the MENA region

Spain contributed the largest shares of bilateral ODA in 2017 to Latin America (28%), sub-Saharan Africa (23%), and the Middle East and North Africa (MENA) region (14%). Further, six out of the 10 largest ODA recipients from 2015 to 2017 are in Latin America, and three are part of the MENA region. Due to Spain’s focus on those two regions, the largest proportion of bilateral ODA is allocated to middle-income countries (MICs): MICs received 74% of bilateral funding on average between 2015 and 2017. In 2017, only 11% was allocated to low-income countries (LICs), well below the OECD DAC average of 24%.

The government plans to concentrate its ODA on fewer countries going forward, reducing the number of priority countries from 50 in 2013 to 21, as outlined in the Master Plan. From these priority countries, seven are LICs and 14 are MICs.

Core contributions to multilaterals reached new high in 2017

Core contributions to multilaterals reached a new peak in 2017 of US$1.9 billion. Since 2015, core funding to multilaterals has increased by 75%, driving much of the recent growth in Spanish ODA. The increase was driven by a US$300-million increase to the World Bank’s International Development Association (IDA), from US$11 million in 2015 to US$314 million in 2017.On top of this, Spain also provides earmarked funding to multilateral organizations tied to particular regions, countries, or themes. This stood at US$157 million in 2017, its highest point since 2011. Earmarked funding has steadily increased each year since 2013.

While the proportion of EU contributions within ODA is diminishing as overall spending increases, they still accounted for 39% of total ODA in 2017. These contributions have grown by 25% in absolute terms since 2015. These EU-level increases have been to fund the response to unprecedented arrivals of asylum seekers that occurred in 2015 and 2016, while the IDA increases reflect the beginning of a return to previous funding levels as budget austerity is lifted.

At US$253 million, contributions to regional development banks doubled compared to 2016. 2017 marked Spain’s first contributions to smaller regional development banks and multilateral funds in years, including US$172 million to the Asian Infrastructure Investment Bank and US$50 million to the Andean Development Corporation.

Development of a new multilateral strategy is ongoing and expected to be released in 2019. The former multilateral review from 2015 said funding would focus on United Nations (UN) agencies, including the UN Refugee Agency (UNHCR), the UN Children’s Fund (UNICEF), the International Fund for Agricultural Development (IFAD), and the World Food Program (WFP). While those agencies specifically named in the multilateral review have not seen funding increases from Spain, UN contributions overall amount to US$85 million in 2017, an increase of 23% over 2015, when they stood at US$69 million, according to data from the OECD. 

Spain’s voluntary contributions have been hampered in recent years by budgetary limitations and have yet to resume to previous levels.  

MAEUEC steers strategy; AECID leads implementation

Prime Minister (PM) Pedro Sánchez of the Spanish Socialist Workers’ Party (PSOE) has led a minority government since a no-confidence motion ousted former PM Mariano Rajoy and his conservative People’s Party (PP) in June 2018. His office (La Moncloa) provides leadership at high-level forums like the UN General Assembly or the group of 20 (G20), in addition to steering and coordinating Spain’s efforts to achieve the SDGs through the High Commissioner for the 2030 Agenda. Under the PM’s leadership, the Ministry of Foreign Affairs, European Union, and Cooperation (MAEUEC) sets the strategic orientation of Spanish development policy.  

Following a parliamentary rejection of the government’s 2019 budget proposal in February 2019, Sánchez called for a snap election to take place on April 28, 2019. The upcoming election will mark the third time the country elects a new parliament since December 2015.

MAEUEC is headed by Josep Borrell, a former president of the European Parliament and member of the PSOE. Within MAEUEC, the secretary of state for international cooperation and for Ibero-America, Juan Pablo de Laiglesia, oversees global development. In this role, Laiglesia also supervises the work of the General Directorate for Sustainable Development Policies (DGPOLDES), an administrative body that steers development policy and defines ODA priorities of MAEUEC and the Spanish Agency for International Development Cooperation (AECID; see below). MAEUEC also drafts the development budget.

The Ministry of Finance and Public Function (Ministry of Finance) finalizes the budget and channels ODA to EU institutions. The Ministry of Economy and Business (MINECO) is engaged in debt-relief operations, in the management of Spain’s Development Promotion Fund (FONPRODE) jointly with MAEUEC, and in disbursements to regional development banks and finance institutions.

SPAIN'S DEVELOPMENT COOPERATION SYSTEM

AECID is currently directed by Aina Calvo and is responsible for implementing bilateral programs, humanitarian assistance, and funding to CSOs. It also advises the MAEUEC on allocation questions. AECID’s financial volume of activities was drastically decreased due to overall budget cuts and remains low relative to historical levels. Its budget decreased from €870 million (US$981 million) in 2011 to €238 million (US$268 million) in 2018.

Spain programs its bilateral funding based on the strategic, regional, and thematic priorities established in the four-year Master Plan. Low-income countries receive funding according to their development needs, cooperation with middle-income countries focuses on fostering triangular partnerships, global health research and development, and global public goods. The governing council of AECID, which includes representatives from MAEUEC, decides on allocations by region and country.

To increase ODA predictability, Spain uses multi-annual country partnership frameworks (MAPs) for its priority countries. MAPs specify sector priorities and provide estimated annual budget allocations. They are developed jointly by the AECID, the partner countries, and local civil society organizations. In addition to MAPs, Spain plans to develop New Generation Partnerships (ANG) with some of its traditional ODA recipients that have progressed to developed or upper-middle-income status, including Argentina, Brazil, Cape Verde, Chile, Costa Rica, Egypt, Equatorial Guinea, Jordan, Mexico, Panama, Uruguay, and Tunisia.

To increase ODA predictability, Spain uses multi-annual country partnership frameworks

The Development Promotion Fund (FONPRODE) is the main financial instrument for voluntary multilateral funding, loans, and equity investments. While the AECID manages day-to-day FONPRODE operations, the MAEUEC (together with the MINECO and other ministries) defines its funding priorities. FONPRODE was created in 2010, initially to separate ODA from Spanish commercial interests and ensure that no loans were allocated to heavily-indebted countries. A lack of administrative capacity has prevented FONPRODE from disbursing its entire budget approved by the Parliament.

Parliament: The Spanish Parliament is composed of two chambers (Congress of Deputies and Senate); each of them has a development committee. Members of Parliament (MPs) debate and vote on commitments related to development and can request information on all development matters, as well as require officials working in global development to give testimony in hearings call hearings. Spain has had minority governments since its June 2016 elections, which have resulted in a greater influence of the Parliament over development policy and the ODA budget.

Civil Society: Spanish civil society, which includes secular and Catholic non-governmental organizations (NGOs) and think tanks, serves a key role in development cooperation. Although NGOs have lost influence in recent years, the level of NGOs’ inclusion in policy dialogue remains high, both through bilateral platforms and the MAEUEC’s Council for Development Cooperation. Spain’s main civil society umbrella organization for development cooperation, Coordinadora de ONGD España (CONGDE), coordinates NGO activities and regularly interacts with government actors. It has 76 member organizations and 17 regional NGO platforms, counting 400 organizations in total.

Spain is a highly decentralized country: sub-national state actors (autonomous regions, local administrations, and universities) also provide ODA. According to government estimates, decentralized cooperation amounted to €287 million (US$324 million) in 2018 or an 11% of the overall Spain ODA projected for that year.

The Finance Ministry provides the largest share of ODA

The 2019 budget of the minority socialist government failed to win parliamentary approval in February 2019, triggering a snap election for April 28, 2019. That budget would have set ODA at €2.9 billion (US$3.3 billion), a 13% increase compared to 2018. Until the government that emerges from the upcoming election gets a 2019 budget through Parliament, the 2018 budget remains in effect. The 2018 budget was itself delayed by the Catalan secession crisis until June 2018.

Spain’s 2018 budget sets ODA at €2.6 billion (US$2.9 billion) or 0.22% of GNI. Several ministries provide ODA. The Ministry of Foreign Affairs and Cooperation (MAEUEC) used to be Spain’s primary ODA provider. Its share has decreased to 23% in 2018, as past cuts mainly affected MAEUEC’s ODA budget and it has yet to fully recover. Additionally, other budget envelopes – including the Ministry of Finance and Public Function (MINHAFP) and Ministry of Economy and Competitiveness (MINECO), both of which consist almost entirely of international obligations – have grown at faster rates in recent years.

MINHAFP now manages the largest share of Spain’s ODA (42% in 2018): it channels the country’s mandatory contributions to the EU. MINECO (16% of ODA in 2018) manages contributions to international financial institutions, including the World Bank, and channels debt relief. Its budget increased from €59 million (US$67 million) in 2015 to €486 million (US$548 million) in 2016 but has fallen since then to €424 million (US$478 million) in 2018.

MAEUEC’s budget for 2018 stands at €588 million (US$663 million), a slight nominal increase, from €559 million (US$630 million) in 2017. This budget envelope provides little information on funding channels, recipients, and spending for specific sectors. MAEUEC’s budget includes funding for the Spanish Agency for International Development Cooperation (AECID). AECID’s budget focuses on funding for bilateral programs, civil society organizations (CSOs), and humanitarian assistance. About 34% of MAEUEC’s budget (€199 million or US$224 million) is channeled through FONPRODE. Since 2012, all FONPRODE funds must be disbursed as loans or equity investments through bilateral programs, or as earmarked loans managed by multilateral organizations. While FONPRODE’s mandate is to also channel voluntary contributions or grants to multilateral instruments in addition to loans and equities, this ‘loans-only’ policy is aimed at reducing the impact of Spain’s ODA to the public deficit.

Spain’s regional governments and local administrations provide ODA mainly through CSOs and their own bilateral programs, although they can provide funding to multilateral institutions as well.

 Source: Ayuda Oficial al Desarrollo de las Administraciónes Publicas. Propuesta Presupuestos Generales del Estado para 2018

ODA levels and main funding lines are typically decided upon between March and July

This is how the budgetary cycle typically works, along with the usual timeframe, but recent political instability has led to frequent delays in budget approval.

• Government suggests overall ODA volume: In March, the government sets guidelines for overall spending per ministry, including overall ODA volume, as well as funding lines for Spain’s Development Promotion Fund (FONPRODE) and the Spanish Agency for International Development Cooperation (AECID). Key stakeholders in this period include the Prime Minister’s Office, as well as the Ministry of Foreign Affairs and Cooperation (MAEUEC) and the Ministry of Finance and Public Function (MINHAFP).
• Ministries develop their budget requests: Between May and June, each ministry, including MAEUEC and MINHAFP, develop their budget requests in accordance with overall spending levels set in the government’s guidelines to each ministry. Around June or July, ministries present their requests to MINHAFP.
• Government decides on ministerial spending caps: Once budget requests are sent to the MINHAFP, negotiations start between the ministries. In July, the government decides on caps for ministerial budgets and the government’s overall spending ceiling is presented, including the ODA volume. Key decision-makers regarding ODA levels are the Prime Minister, the Finance Minister, and the Foreign Minister.
• Negotiations take place among ministries: From August to September, the MAEUEC continues to negotiate with the Ministry of Finance for specific funding items, e.g., the share of loans or grants in the FONPRODE budget. Both ministries are key stakeholders during this period.
• Parliament discusses, amends, and votes on budget bill: From October to November, Parliament discusses and amends the ministries’ draft budgets. The Development Committee provides recommendations on budget amendments, and the Budget Committee makes the final decision. Members of Parliament may present amendments to the overall budget and to specific ODA budget lines in this period. The lack of a clear majority in Parliament since 2016 reinforces the influence of individual members regarding budget allocations, including for ODA.

Further allocations are decided upon during the implementation phase of the annual budget. The MAEUEC decides on spending to partner countries and other multilateral organizations during the course of the entire year. Allocations from the FONPRODE are made by the ‘FONPRODE Executive Board’. The Board (which includes representatives from MAEUEC, the Ministry of Economy, Industry and Competitiveness, MINHAFP, and other ministries) usually meets three to four times per year. Its funding proposals need to be approved by the Prime Minister’s cabinet weekly meeting (Consejo de Ministros).