Italy

Summary

ODA Spending 

ODA in Context 

In 2021, Italy spent a total of US$6.1 billion on ODA, making it the 7^th-largest donor country among members of the OECD DAC.

Italy’s ODA only represented 0.29% of the country’s GNI in 2021, putting it below the UN target of 0.7% but almost on par with the DAC average of 0.32%.

Preliminary data for 2022 shows that Italy spent US$6.5 billion in ODA, putting it in the 8^th place. It marks an increase of 16% from 2021. However, the increase was due to in-donor refugee costs; excluding the costs, Italy’s ODA dropped by 2% from the previous year.

ODA Trends 

Following steady decreases between 2018 and 2020 due to a reduction in in-country refugee costs, Italy’s ODA jumped back up sharply in 2021 in response to the COVID-19 pandemic. Italy’s ODA in 2021 equated to US$6.1 billion, bringing development assistance nearly back to 2017 levels (0.3% of GNI).

In-donor refugee costs have also taken up a significant share of Italy’s ODA. In 2022, as preliminary data shows, Italy spent US$1.5 billion or 23% of its total ODA on these costs.

Italy’s ODA/GNI ratio increased from 0.22% in 2020 to 0.29% in 2021. In the country’s 2018 Update to the Economic and Financial Document, Italy committed to gradually increasing its ODA to GNI ratio to 0.36% in 2020, to 0.4% in 2021, and 0.7% by 2030—targets Italy has not been on track to meet.

In December 2022, Deputy Minister of Foreign Affairs and International Cooperation Edmondo Cirielli, in an interview with the Catholic newspaper Avvenire, reiterated the Italian government’s commitment to the 0.7% ODA to GNI ratio by 2030.

NGOs are optimistic about the increased international cooperation budget for the next five years. Campaign 070 presented a bill to parliament in 2022 to integrate the ambitious goal of reaching a 0.5% ODA/GNI target in 2027 and a 0.7% ODA/GNI target in 2030.

In 2022, Italy's Parliament voted to approve a budget for 2022-2026, which includes an increase in the international cooperation budget by EUR99 million ( US$104 million) for 2022, EUR199 million ( US$210 million) for 2023, EUR249 million ( US$262 million) for 2024, EUR299 million ( US$315 million) for 2025, and EUR349 million ( US$368 million) per year starting from 2026.

In-country refugee costs once again jumped in 2022 to US$1.5 billion based on OECD's preliminary data, following previous increase between 2020 and 2021. The 2022 budget clarified the practice of counting in-donor refugee costs as funds for Italian ODA, in addition to counting the resources for hosting refugees and asylum seekers in their first 12 months in Italy. The unspent part of these funds intended for the reception of refugees and asylum seekers will be redirected from the Ministry of Interior to the Ministry of Foreign Affairs and International Cooperation.

ODA Breakdown 

Italy traditionally disburses most of its ODA multilaterally. On average, Italy directed 62% of its ODA to multilateral institutions between 2012 and 2021; however, between 2012 and 2017, Italy’s share of bilateral contributions increased due to the high costs associated with hosting refugees; this trend reversed in 2018 and has continued until 2020, before it rebounded in 2021 and subsequently in 2022 too. While this shift brought Italy’s bilateral and multilateral contributions more in line with the DAC average, around 41%, Italy has tended to revert to greater multilateral spending in recent years.

In 2021, Italy channeled 59% of its ODA multilaterally, well above the 41% average of all members of the OECD DAC. Meanwhile, Italy provided 41% of ODA bilaterally, or US$2.7 billion. Of the US$2.7 billion in bilateral ODA, US$1.9 billion was direct bilateral funding and US$789 million was earmarked funding through multilaterals.

Bilateral Spending 

Italy’s bilateral contributions decreased significantly after 2017 but rebounded in 2021. Italy’s overall bilateral ODA increased from US$1.5 billion in 2020 to US$2.7 billion in 2021, marking a significant jump of 82%, including earmarked funding through multilaterals. The increase was partly driven by an increase in the cost of hosting refugees, which rose from US$241 million in 2020 to US$556 million in 2021. The cost of hosting refugees and debt relief accounted for 21% and 24% respectively of the 2021 bilateral total.

The majority of Italy’s bilateral ODA is disbursed through the public sector (60%), far above the DAC average of 44%, followed by multilateral organizations as earmarked funding (26%), in line with DAC average. Bilateral funding through multilateral organizations jumped in absolute terms from 2020 to 2021, most likely due to ongoing COVID-19 response.

Italy currently provides the majority of bilateral ODA in the form of grants (87% in 2021), almost on par with the DAC average of 91%, in part due to increasing earmarked contributions to multilateral organizations. Following a drop in grant proportion in 2020, it has climbed back up in 2021 reaching almost 90%, a pre-2020 level. Meanwhile, the proportion of loans has declined by half from 26% in 2020 to 13% in 2021. 

Sub-Saharan Africa and the MENA region are priority regions for Italy’s bilateral development cooperation, receiving 37% or US$984 million and 10% or US$269 million respectively in 2021. Italy’s bilateral funding to the SSA region exceeded the DAC average of 24%. These regions are expected to remain Italy’s primary focus in the coming years, according to the current Programming and Policy Document. A large share of Italy’s bilateral funding, 35% or US$951 million, is unallocated by country and region.

Multilateral Spending and Commitments 

Italy is a strong supporter of multilateralism, in particular health multilaterals. In recent years, Italy has increased its contributions to health multilaterals such as Gavi and the Global Fund.

Core contributions to multilateral organizations made up 59% of Italy’s ODA in 2021, above the DAC average of 41%. A large proportion is channeled to EU Institutions, which received close to US$2.2 billion of Italy’s ODA in 2021, amounting to 57% of the country’s total contributions to the multilateral system. Other recipients of Italy’s multilateral ODA in 2021 included the World Bank Group (US$409 million, or 11% of multilateral ODA), UN agencies (US$292 million, or 8%), and regional development banks (US$106 million, or 3%).

Recent commitments to multilateral organizations are summarized below. 

Politics & Priorities

Political Context 

Italy is a representative democracy with a parliamentary system. Elections take place every five years or in the event of a dissolution.

The last election was in September 2022. The center-right coalition led by Giorgia Meloni won the Italian political elections with 44% of the votes, making her Italy’s first female prime minister. Brothers of Italy led with more than 26%, up from just 4% in the last national election in 2018, supplanting Matteo Salving’s League for Salvini Premier party as the driving force on the right. LSP took less than 9% of the vote, down from more than 17% in 2018. The other major conservative party, Silvio Berlusconi's Forza Italia, garnered around 8% of the vote.

The voting turnout in Italy was historically low with just 64%, against 73% in the previous election. The right took full advantage of Italy's electoral law, which benefits parties that forge pre-ballot alliances. Centre-left and centrist parties failed to align, and even though they collectively won more votes, they ended up with far fewer seats. The center-left Democratic Party received 19% of the vote, while the left-leaning, unaligned Five Star Movement received around 15%, exceeding pre-election expectations. The centrist coalition, Azione, led by former Prime Minister Matteo Renzi and Carlo Calenda, won almost 8%. Enrico Letta the head of the main opposition, PD said he would not contest the leadership in the next party congress. 

Italy is facing a looming recession due to its gas dependence. In January 2023, the IMF raised its Italian growth estimate to 3.9% for 2022, 0.7% higher than previous forecast in October 2022. In 2021, the IMF put Italy’s growth at 6.7%. As for 2023, the IMF has put Italy’s growth estimate at a slow 0.6% before slowing picking up to 0.9% in 2024.

The IMF also noted that Italian unemployment would fall to 8.8% in 2022 before rising to 9.3% in 2023. However, the reality seems rosier as the first data in early months of 2023 shows unemployment stable at 8%. Year-on-year inflation is also expected to fall to 3.3% in December 2023, compared to 12.3% in December 2022 with respect to the previous year.

Main Actors 

Key Bodies  

Development cooperation is defined as an ‘integral and qualifying part’ of Italian foreign policy and builds on the following architecture:

• Parliament is composed of the 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 final decisions.
• MAECI headed by Antonio Tajani since October 2022 is responsible for defining the strategic direction of Italy’s development policy. Within MAECI, the Vice-Minister of Foreign Affairs and International Cooperation plays a key role in overseeing the development of the ODA budget as well as the development of the tri-annual programming guidelines, which define the country’s overarching development objectives and priorities.
• MEF led by Giancarlo Giorgetti ( League for Salvini Premier) has joint control over the cooperation with and contributions to development banks as well as funds together with MAECI. MEF collaborates with MAECI on the ODA budget. The Directorate III on International Financial Relations is an important part of MEF, which consists of 10 specific offices that participate in informal government groups such as the G7 and the G20, and deal with development-related initiatives.
• CICS established in 2014 usually meets twice a year to approve the three-year programming guidelines and overall ODA budgets. CICS is chaired by the Prime Minister and is composed of the Minister and Deputy Minister of Foreign Affairs, as well as representatives from other ministries, including finance and the environment.
• The Joint Development Cooperation Committee decides on operational issues, including all projects worth over EUR2 million ( US$2 million). It is chaired by MAECI and composed of the heads of MAECI’s DGCS and AICS.
• AICS develops, supervises, and implements Italy’s development programs. It was set up in January 2016 and is led by Luca Maestripieri since April 2019.
• The DFI, CDP, is a joint-stock company under public control, which provides technical and financial support to MAECI and AICS. It acts as the administrative manager of development financing, by signing agreements with the governments of partner countries or by managing Italian, European, international, and private sector funds. CDP itself can also finance development projects, using its own resources or private/public blending instruments.
• 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. At the country level, regional departments at DGCS’ headquarters develop and approve projects after consultation with the embassies.
• Civil society is involved in the policy-making process mainly through the CNCS. It is a consultative body bringing together 50 members of different backgrounds, including private-sector organizations, CSOs, as well as public authorities, to provide feedback on the government’s development policies. The CNCS divides its work between three groups, namely ‘Agenda 2030’, ‘private sector’, and ‘migration and development’. Each group is supposed to meet every two months, but there has been public criticism that the Council remains largely inactive.

Development Priorities 

Italy’s strategic priorities for development cooperation are spelled out in the three-year Programming and Policy Document and Directions for Italian Development Cooperation, developed by MAECI. The most recent document for 2021-2023 confirms Italy’s focus on the African continent and on mitigating the root causes of migration and displacement as well as health, education, agriculture, food security, nutrition, and environmental protection. The priority intervention areas center around five strategic pillars:

• ‘People — human development and dignity,’ which includes food security; sustainable agriculture; health; education; cultural and natural heritage; promoting sustainable tourism; social, economic, and political inclusion; and migration;
• ‘Planet — protection of the environment, management of natural resources and the fight against climate change,’ which also includes ensuring access to reliable and sustainable energy;
• ‘Prosperity — inclusive and sustainable economic growth and decent work;’
• ‘Peace — peaceful and inclusive societies, democracy, effective and responsible institutions, rule of law and human rights for all;’ and
• ‘Partnerships for sustainable development,’ supporting the mobilization of domestic resources; debt relief and restructuring; promoting triangular cooperation and public-private partnerships; engaging civil society actors; and strengthening statistical skills.

AICS, which manages Italy’s bilateral development cooperation, focuses development cooperation in five thematic areas:

• Economic development and opportunities;
• Human development (including health, education, gender equality, and disabilities);
• Environment and use of natural resources;
• Rural development and food security; and
• Conflict-affected and fragile states.  

By issue 

Global health is a key issue for Italy and will likely continue to top the agenda going forward. Food security is another priority for Italy in light of the COVID-19 crisis. Italy is also now promoting the ‘One Health’ approach, which puts forth the interdependency between human and animal health as well as its linkage to the health of entire ecosystems.

Read more about Italy’s ODA to Global Health

Agriculture is a key issue for Italy, especially with major UN food and agriculture organizations based in Rome.

Read more about Italy’s ODA for Agriculture

Climate and gender equality: Climate change and gender equality are prioritized in Italy’s development priorities; however funding levels remain moderate.

READ MORE

Explore the Deep-Dive into Italy’s ODA related to Gender Equality

Explore the Deep-Dive into Italy’s ODA related to Climate Change

Education is not a major priority for Italy; however, the issue is largely related to Italy’s work in gender equality.

Read more about Italy’s ODA for Education

By region 

Due to Italy’s geographic location as the first port of call for many refugees entering Europe, the country’s development priorities include a strong emphasis on tackling the root causes of migration, particularly in the African continent. However, Italy has not yet adopted the Global Compact on Migration, an intergovernmental agreement prepared by the UN that lays out objectives to facilitate legal migration.

Political Outlook 

Italy is in the early stages of developing an evaluation system following Law 125, which 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 2020 recommended that Italy should strengthen evaluation to inform future program design, strategic direction, and oversight of its development initiatives.

Budget 

Budget breakdown 

Italy’s GDP for FY2022 is US$2.06 trillion (in current prices). Italy’s real GDP growth for 2023 is expected to slow down to 0.7%.

Italy’s budget documents indicate that the country would spend EUR6.2 billion ( US$6.5 billion) on ODA in 2023.

The MEF manages the largest part of Italy’s ODA budget in 2022, 46% or EUR2.5 billion ( US$2.6 billion). The MEF mainly contributes to Italy’s development funding through contributions to the EU's general budget, which includes the DCI.

The Ministry of Interior controls the portion of the ODA budget allocated for spending on refugees and migration-related issues.

MAECI manages 24% of the ODA budget in 2022. The main ODA -related budget envelope within MAECI’s budget is program 4.2 ‘Development Cooperation’. It comprises ‘chapters’ of funding to Italy’s development agency, AICS (EUR617 million, or US$650 million in 2022), and contributions to the EDF. It also includes several ‘chapters’ of contributions to the UN and other multilaterals.

Budget Process 

Parliamentary budget discussions run from October to December and overall ODA levels are set from February to June.

• The MEF develops three-year budgetary guidelines: From February to April each year, the government develops the DEF, which sets a three-year framework for economic and budgetary planning. 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 before the presentation of the draft budget, Members of Parliament and MAECI staff are frequently consulted by interest groups who hope to advocate for certain priorities within the budget during this period.
• Parliament examines, amends, and votes on the 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 in budget allocation. 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 'Milleproroghe Decree’ in February. 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 usually provides an additional opportunity for interest groups to influence the ODA budget.