The new German government is committed to the implementation of the Millennium Goals and principles of the Millennium Declaration, the Monterrey Consensus, and the Action Plan of the Johannesburg World Summit on Sustainable Development. This should ensure that poverty reduction remains one of the key objectives of development cooperation. Over recent years, Germany has made considerable progress in adjusting its policies and approaches to increase poverty focus, but it still faces ongoing challenges. For this reason, the current government must continue with these efforts. In particular, the OECD argues that there is a need for a systematic approach to assessing the poverty impact of German programmes.

The current Government has also affirmed its commitment to increasing aid effectiveness. Germany is signed up to the 2005 Paris Declaration on Aid Effectiveness and also adopted an action plan for its implementation. This action plan will be complemented by a guidance paper disseminated at the end of 2006, and by (forthcoming) revised guidelines on a programme-based approach and other Paris issues. Nevertheless, full implementation of the Paris Declaration will require further modification of German aid practices and modalities. In recent years Germany has run a number of pilot efforts to modernize its aid procedures – it should now start to build upon these experiences. This should include increased cooperation and a better division of labour with other donors, as suggested by the new government.

In addition the new government is committed to the increased integration of Germany’s technical and financial assistance. German aid has been compartmentalized across this distinction and is split across different agencies, each with separate funding instruments, financial conditions and reporting requirements. This means high transaction costs for developing country recipients. While progress has been made in streamlining and integrating agencies, the OECD suggests that the opportunities for further efficiency gains within the existing structure are limited, and recommends that the new Government consider a more fundamental restructuring