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Trouw : 15 May 2003

MINISTRY OF FINANCE OVERCHARGED
MILLIONS FROM ODA

The Ministry of Finance of the Netherlands unjustly claimed from 1997-99 between EUR 18-35 million from the ODA budget. This emerges from a study by the Inspection unit of the ODA department, that will be sent to Parliament today.

The expenses that the Ministry of Finance incurs because of the cancellation of export credit debts, are charged by this Ministry to ODA. This practice is quite questionable. In the first place such debts emerge from the reinsurance of export transactions. This reinsurance system should break even. In other words, the damage in terms of debt cancellation ought to be paid for out of the income of the premiums for the insurance. Cancellation of debts in this case would not cost money, and therefore should not be charged at the ODA budget.

In the second place it is questionable whether the cancellation of export credit debts may be administered as ODA. During the summit on Financing for Development in March 2002 it has been agreed that debt cancellation should not be at the expense of ODA. According to the OECD (DAC), debt cancellation may be considered part of ODA, but ODA at the same time requires a net transfer of means to developing countries. By canceling export credit debt such a transfer is not taking place.

Furthermore it needs to be questioned whether the exports that resulted in debt did contribute to sustainable development. For the provision of export credit insurances no clear and binding guidelines or standards are in place.

The Ministry of Finance is not only unjustly claiming from the ODA department, it also did claim too much. According to the Inspection study it claimed EUR 18-35 million too much over the period of 1997-99 only. The Ministry of Finance is charging ODA for the full amount of the export credit debt, while it is compensating the companies that got an export credit insurance only for 90% of that amount. The reason is that the insurance requires these companies to accept a risk of 10% of the nominal value of the transaction.

It is not new that ODA is paying for the cancellation of export credit debts. However, the problem is that these amounts are increasing quickly. In the year 2001 export credit debts were cancelled for an amount of EUR 35 million, while in 2002 an amount of EUR 285 million was cancelled. The coming years it is anticipated that this amount will continue to grow steeply, due to cancellation of debt for such countries as Sudan, Congo and Nigeria.

To address such an increase, political leaders proposed to annually commit an amount of EUR 280 million extra. This implies that annually more than EUR 500 million will be paid from the ODA budget to the Ministry of Finance. Jubilee Netherlands continues to call for a stop to this erosion of the ODA budget.

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