Spain is to be commended for the notable progress made in development co-operation since the last Peer Review. Important achievements include the adoption of a comprehensive Law on International Development Co-operation and a four-year Master Plan (2001-2004), improved annual plans, and reinforced or new co-ordinating bodies. The purpose of the reform was to enhance consistency and coordination within the diverse Spanish aid system, which includes many ministries, autonomous regions, local authorities, and civil society organisations. A significant achievement of the new policy is that it establishes poverty reduction as the overarching goal in development co-operation. Gender equality and environment are also determined as mainstreaming priorities. Spain seeks to focus its poverty reduction efforts on basic social needs and a new micro-finance programme is an important addition. Spain has a comparative advantage in its assistance to Latin America with strong linguistic, historical, and cultural ties. Spain has had recent experience of building a democratic state and can add value by sharing lessons-learned with partner countries in innovative and risk-taking areas of good governance. In this respect, it can conduct dialogue with developing countries in areas that are difficult for other donors. Major activities through institutional development include judicial reform, decentralisation, tax administration, and police force training. These are areas in which Spain could take on a lead role in pursuing a sector approach with other donors...