CONFIDENTIAL
1994/95
£m
1995/96
Total baseline
2308 (0)
2363 (0)
1996/97
2363 (0)
o/w
Aid Budget
2182 (+5)
2230 (-2)
2216 (-16)
Global Environment
8 (0)
16 (+8)
24 (+16)
Overseas
Superannuation
118 (-5)
117 (-6)
123 (0)
9. The difference between the two scenarios is the steepness of
the decline in the Aid Budget. However much we compress our multilateral aid spending figures, the steeper fall in the Aid Budget under the second scenario will show up in a sharper decline in bilateral aid when we come to finalise the Aid Framework.
10.
On balance, I recommend pursuing the second course of action.
We will still be able
able to argue
argue in next year's
year's PES for some
increase in ODA's resources in order to stem the decline in bilateral aid (an argument recognised in the Chief Secretary's earlier letter of 8 November) and the fall
8 November) and the fall in the aid/public expenditure and aid/GNP ratios.
11. It is quite likely that the Treasury reaction to this latter proposal will be to demand that the Global Environment Assistance sub-programme be amalgamated into the Aid Budget. We should resist this for now because it would be unhelpful to our position in the GEF replenishment negotiations (which will be completed after the sub-programmes are made public on Budget day) and in the DAC. In both fora we are continuing to press for tight parameters for the GEF to distinguish it from traditional aid activities.
12. Because of the proposal on the handling of the GEF, a Prime Ministerial commitment, I believe it would be more appropriate for the Secretary of State to write to the Chief Secretary than for officials to exchange letters. I attach a draft letter on the
basis of the above recommendations.
Suma Chakrabarti
Aid Policy Department
SC652/hw
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