Written by Alessandro Alviani
Creative financing influences Germany’s policy on development cooperation. The government doubts that it will be able to keep its promise of donating 0,7% of GDP to development aid through the sole use of public funds. Development Minister Dirk Niebel confirmed the intention to reach the objective but acknowledged this will require a big effort. For this reason Berlin is now considering “innovative financing tools”, as they are defined by the guidelines of the 2012 financial bill. Part of the Environment and Climate Fund for the development of environmental projects, will be devolved to development cooperation. The most interesting economic solution worked out by the government however is the creation of the “Development Treasury Bond” which represents the German attempt to resort to private funds in order to honor public commitments. According to Niebel “this type of bond is not intended as a donation. It’s for people who want to have their money back but who do not aim to have an income”. The question arises as to whether Germans will be interested in this type of bond which is expected to come out next year. The German debt agency finished studying the new product at the beginning of April and the proposal is now being examined by the Ministry of Finances. Germany failed to reach its objective to devolve 0.51% of its GDP to development aid by the end of 2010 and now it is stuck at 0.4%. To honor its commitments the German government should invest an extra 1.5 billion Euros a year. According to the first draft of the 2012 financial bill the national income will only increase of 112.8 millions.
