Portugal's official development assistance/gross national product (ODA/GNP) ratio recorded 0.26% in 1999 and ranked 16th out of 22 Development Assistance Committee (DAC) Member countries. Portugal rejoined the DAC in 1991 and, although narrowing the gap with its neighbours, has the lowest per capita GNP amongst the Members. However, its ODA has grown continuously in recent years, and amounted to USD 276 million in 1999. The economy remained strong in 2000 and was projected to grow further in 2001 and 2002. Portugal is aiming to re-attain 0.35% ODA/GNP in the near future.
In general, Portugal's aid programme remains characterised by the heritage of its former colonial relations. Maintaining Portuguese historical, linguistic, and cultural ties appears to be the underlying basis for the Portuguese programme. Until recently, its bilateral ODA was exclusively directed towards the five Portuguese-speaking African countries (PALOPs): Angola, Cape Verde Guinea-Bissau, Mozambique, and São Tomé and Príncipe. Since 1999, there has also been a high level of public support towards East Timor, which has subsequently become the largest recipient of Portuguese bilateral aid.
Due to its colonial history which ended around 1975, Portuguese co-operation has been largely based on institutional and personal relationships. The programme is highly decentralised and is spread among 17 ministries and several agencies, universities, and municipalities. The Portuguese Institute of Co-operation (ICP) of the Ministry of Foreign Affairs (MNE) co-ordinates the entire aid programme, as well as carries out policy reviews and evaluations. In 2000, the Portuguese Development Support Agency (APAD) was created to promote Portuguese investment, support social and economic infrastructure, and foster the private sector in beneficiary countries. The instruments to be used are preferential loans, guarantees, equities, and grants whose terms and conditions are still being determined.
Portugal has achieved major accomplishments in introducing political control over its decentralised programme by enhancing co-ordination and integration. First, a Council of Ministers for Co-operation Affairs was created to approve the draft of an annual aid programme and the overall aid budget, which would be submitted to the Parliament. Second, an Inter-ministerial Committee for Co-operation was re-established to strengthen the co-operation policy among the ministries through regular meetings. Third, ICP has started to utilise a database system which consolidates all budgets and expenditures of development co-operation projects by the ministries and other entities. Furthermore, Portugal acted rapidly to play a leading role with other key donors in responding to the East Timor crisis in August 1999. It established the Office of the Commissioner to Support the Transition in East Timor and increased its budgetary allocation to 68 million United States dollars (USD) in 2000.
Although poverty reduction is one of the major goals in Portuguese co-operation, the aid programme still gives insufficient attention to poverty issues. To concentrate on poverty reduction, Portugal states that it is prioritising support to education and health. However, high proportions of these are allocated to scholarships and individual medical treatments in Portugal, which do not strictly amount to targeting the poor. Portugal's disbursements toward basic education and health, population, water supply and sanitation remain low, although there seems to be a tendency to increase. Furthermore, focus on sector-wide approaches is not yet prominent.
Portugal's proportion of actions relating to debt has been significantly higher than those of other DAC Members. For 1999, it totalled USD 126 million and was 35% of total gross ODA disbursements, while the DAC average was 4%. This category includes debt forgiveness, debt rescheduling, and debt for equity swaps. Most of these actions result from defaults on state guaranteed private export credits and loans, as it is the case for many other DAC Members. Portugal is no longer extending such credits to Highly Indebted Poor Countries (HIPC) to avoid further debt accumulation.
ICP's strategic role in co-ordination is still insufficient to minimise overlaps of aid programmes implemented by different ministries and entities. It is also yet to grow into a full fledged co-ordinating body by developing operational tools and useful guidelines to mainstream the various cross-cutting issues among the ministries. Evaluations are still not carried out in a comprehensive and effective manner - there is a need for a regular, thorough and independent system that covers activities implemented by all administrations involved in development co-operation. Only one or two officials from ICP are posted in each main partner country to co-ordinate the activities. Staffing and skills mix in the field are therefore insufficient to fulfil the increasingly demanding partnership efforts with partner countries, other donors and civil society. Furthermore, despite being one of the largest bilateral donors to all the PALOPs, Portugal's interventions in multilateral forums such as the World Bank remain relatively weak. Finally, although ICP financing of non-governmental organisations (NGOs) has been slowly increasing in recent years, Portuguese NGOs have limited resources and are still not able to function effectively as a political force nor as a strong presence in the field.
Based on these findings, the DAC encourages Portugal to:
Under ICP leadership and guidance, gear its programme towards a clearer poverty focused orientation, in line with the International Development Goals and the framework of country strategies.
Consider its potential for enhancing policy coherence.
Consolidate similar types of activities under the responsibility of one ministry or entity in order to substantially minimise overlaps as well as to reduce administrative costs.
Complete APAD's transformation and clarify further its roles and instruments as a multi-purpose executing agency.
Allocate increased resources towards basic social services as opposed to tertiary support such as scholarships and curative health care.
Give more comprehensive information in annual reports on actions related to debt, especially on the debt equity swaps.
Accord ICP more financial and human resources so it could: undertake a stronger role in policy formulation and co-ordination; develop operational tools and guidelines; mainstream cross-cutting issues; and implement a comprehensive monitoring and evaluation system throughout the entire aid system.
Step up its involvement in the multilateral forums, especially in discussions at the Bretton Woods Institutions on the PALOPs and East Timor.
Reinforce staffing in the field with greater delegation, especially to mainstream cross-cutting issues, carry out enhanced national and international co-ordination, and participate in sector-wide approaches.
Continue its increasing support towards Portuguese and recipient country NGOs and civil society in public education and project implementation.