Financing For Development Post 2015: A Framework for Discussion
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The document discusses financing frameworks for post-2015 development goals. It notes that the original MDGs were created without a financing plan, so future goals need an integrated framework. Good policies and institutions are important to generate more domestic resources and leverage foreign funds. The document outlines various sources of development financing including taxes, aid, climate funds, global health partnerships, Islamic bonds, sovereign wealth funds, and private investments. It emphasizes mobilizing different sources of funding tailored to country contexts to implement post-2015 goals.
Financing For Development Post 2015: A Framework for Discussion
- 1. The Seoul Post-2015 Conference: Implementation and Implications Seoul, Korea October 7, 2013
- 2. • The original MDGs were articulated independently of a financing framework (Monterrey 2002). • In a context of fiscal consolidation and an evolving landscape of development financing, discussion of post-2015 goals would need to be integrated with consideration of a supporting financing framework for implementation. • The purpose of this presentation is to present some elements of a financing framework for the post 2015 development goals. 2
- 3. Increase impact of available resources Leverage additional resources 3 Good policies and credible institutions enhance the impact of available resources and leverage additional resources from both domestic and foreign sources. Good policies and credible institutions to:
- 4. At the country level: Globally: • Design targeted, evidence- based policies and support sound institutions • Generate more revenues • Ensure efficient public spending • Promote financial deepening and inclusion Maximize the impact of ODA Support new development partners Leverage the private sector Tap into new sources of finance Deliver global public goods 4
- 5. 21.2 28.4 28.4 29.3 18.8 17.1 19 19.3 11.3 10 10.5 13.6 0 5 10 15 20 25 30 35 1994 1998 2003 2009 High Income Middle Income Low Income 5 Tax Revenue (in % of GDP) by Income Groups, 1994-2009 Source: World Development Indicators
- 6. 6Source: World Energy Outlook, IEA, Fossil fuel consumption subsidies measure what developing countries spend to provide below-cost fuel to their citizens. High-income countries offer support to energy production in the form of tax credits or loan guarantees, which are not included in these calculations since they are directed towards production rather than consumption of the fuel. Subsidies are an inefficient means of assisting the poor: only 8% of the $409 billion spent on fossil-fuel subsidies in 2010 went to the poorest 20% of the population.
- 7. How do financial institutions contribute to economic growth? Improve the allocation of resources Lower the cost of financial and nonfinancial transactions Facilitate efforts to reduce and trade risks 7
- 8. 8 Source: World Bank CFP Working Paper No. 8, Finance for Development Source: Fragile States 2013, OECD NB: Based on OECD definition of fragile states
- 9. 9 Source: World Bank CFP Working Paper No. 8, Finance for Development For the purpose of comparison, in 2009, net ODA from DAC members was 119.8 bn USD. 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 2003 2004 2005 2006 2007 2008 2009 Estimated aid from BRICS, 2003-2009 (USD billion) China India Russia Brazil South Africa
- 10. 10 ODA from Saudi Arabia, South Korea, and Turkey, 2003-2009 (Gross disbursements, US$ billion) ODA from non-DAC donors excluding BRICS, 2003-2009 (Net disbursements, US$ billion) DAC Annual Reports and IDS Statistics; Zimmerman and Smith, 2008
- 11. • Global funds: trust funds that pool resources for specific issues of global importance – Global Partnership for Education – GAVI Alliance (formerly the Global Alliance for Vaccine and Immunization) – Global Fund to Fight AIDS, Tuberculosis and Malaria (GFATM) – Global Environment Fund (GEF) • Scattered data – available estimates for private aid to developing countries in 2009 range from USD 22 billion to USD 53 billion • Low estimate is equivalent to 16 percent of ODA from all donors in the same year, and up from 2005 (12 percent of ODA) • Private philanthropy to fragile states increasing in recent years • South-South philanthropy also on the rise, especially in the Arab world • Philanthropic giving highly sensitive to factors such as media coverage, timing, geopolitical considerations 11
- 12. 12 M a h a r a s h t r a & T a m i l N a d u , I n d i a C L I F F C O M M U N I T Y S AN I TAT I O N P R O J E C T T o t a l i n i t i a l i n v e s t m e n t : $ 7 . 2 m i l l i o n - H o m e l e s s I n t e r n a t i o n a l - S P A R C ( N G O i n I n d i a ) - C o m m u n i t y - b a s e d O r g a n i z a t i o n s K e n y a P R I VAT E S E C T O R P O W E R G E N E R AT I O N P R O J E C T T o t a l i n i t i a l i n v e s t m e n t : $ 6 2 3 m i l l i o n - K e n y a P o w e r a n d L i g h t i n g C o m p a n y - I F C - M I G A - C o m m e r c i a l B a n k s S a o P a u l o , B r a z i l M E T R O L I N E 4 T o t a l i n i t i a l i n v e s t m e n t : $ 4 5 0 m i l l i o n - C o m p a n h i a d o M e t r o p o l i t a n o d e S a o P a o l o - 5 E q u i t y S p o n s o r s - I D B - C o m m e r c i a l B a n k s L a k e K i v u , R w a n d a K I V U WAT T T o t a l i n i t i a l i n v e s t m e n t : $ 1 4 2 . 2 5 m i l l i o n - C o n t o u r G l o b a l - E n e r g y A u t h o r i t y o f R w a n d a - M I G A - E m e r g i n g A f r i c a I n f r a s t r u c t u r e F u n d - F M O - A f D B - B e l g i a n D e v e l o p m e n t B a n k Source: Emerging Partnerships, IFC, 2013 and World Bank, Africa Region. Emerging Partnerships
- 13. 13 Total assets by type of institutional investors in the OECD, 1995-2011 (USD trillions)
- 14. AgResults Initiative I n t e r n a t i o n a l F i n a n c e F a c i l i t y f o r I m m u n i z a t i o n ( I F F I m ) Inputs increasing yields Outputs post harvest management Livestock Nutrition 14 Linking spending to actual development outcomes
- 15. • Global public goods lie at the intersection of national development priorities and global interests • The under-provision of GPGs disproportionately affects the poor • GPGs are at the center of the post-2015 agenda: – International financial architecture – Trade/market access – Peace and security – Climate change – Communicable diseases – Knowledge for development – Statistical capacity-building 15
- 16. • Promote targeted policies and support accountable, efficient institutions for shared growth • Mobilize domestic resources for development through: – Broader tax coverage and increased taxation capacity – Efficient public spending and greater accountability – Management of natural resource revenues – Deeper domestic financial sector – Vibrant private sector development for job creation and shared growth • Maximize the impact of ODA • Leverage more private resources • Draw on emerging and innovative sources of finance • Deliver global public goods The range of financing sources and instruments have different challenges and comparative advantages. Mobilizing a broad range of financing and using the right combination of instruments to meet a given goal, in a given country context, would be important tasks ahead to implement the next development framework post-2015. 16
- 17. 17 Marilou Uy Senior Adviser The World Bank muy@worldbank.org