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ODA MODERNISATION - PRIVATE SECTOR INSTRUMENTS

ODA MODERNISATION - PRIVATE SECTOR INSTRUMENTS. TUAC, 8 April 2019 Valérie Gaveau OECD Development Co-operation Directorate. Outline of the presentation. WHY MODERNISE ODA AND THE DAC STATISTICAL FRAMEWORK?. 1. 2. PRIVATE SECTOR INSTRUMENTS - OVERVIEW. 3.

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ODA MODERNISATION - PRIVATE SECTOR INSTRUMENTS

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  1. ODA MODERNISATION - PRIVATE SECTOR INSTRUMENTS TUAC, 8 April 2019 Valérie Gaveau OECD Development Co-operationDirectorate

  2. Outline of the presentation WHY MODERNISE ODA AND THE DAC STATISTICAL FRAMEWORK? 1 2 PRIVATE SECTOR INSTRUMENTS - OVERVIEW 3 PRIVATE SECTOR INSTRUMENTS - DETAILS

  3. Ultimate goal of modernisation: maximiseresources available for development WHY MODERNISE ODA AND THE DAC STATISTICAL FRAMEWORK? 1 The DAC statistical system should promote: • Maximisation of resources for development, their smart allocation and catalytic use. • International standards for measuring & monitoring of development finance. • Transparency and accountability of development finance.

  4. OVERVIEW OF THE MODERNISATION ODA MODERNISATION - Concessionalloans - Privatesector instruments - Peace and security - In-donorcosts (refugees) TOSSD TOTAL OFFICIAL SUPPORT FOR SUSTAINABLE DEVELOPMENT CROSS-CUTTING ISSUES TAXONOMY OF FINANCIAL INSTRUMENTS AMOUNTS MOBILISED FROM THE PRIVATE SECTOR

  5. OVERVIEW OF THE MODERNISATION ODA MODERNISATION - Concessionalloans - Privatesector instruments - Peace and security - Refugees TOSSD TOTAL OFFICIAL SUPPORT FOR SUSTAINABLE DEVELOPMENT CROSS-CUTTING ISSUES TAXONOMY OF FINANCIAL INSTRUMENTS AMOUNTS MOBILISED FROM THE PRIVATE SECTOR

  6. Outline of the presentation WHY MODERNISE ODA AND THE DAC STATISTICAL FRAMEWORK? 1 2 PRIVATE SECTOR INSTRUMENTS - OVERVIEW 3 PRIVATE SECTOR INSTRUMENTS - DETAILS

  7. PRIVATE SECTOR INSTRUMENTS - OVERVIEW 2 15 principlesagreedfor ODA modernisation of PSI Launch of a high-levelpoliticalprocess. DAC meetings & negotiationsto discuss possible compromise. DAC/ECG Task Force mandated to adjust the proposal. No work on PSI. DAC committed to reach a conclusion by consensus on this topic. HLM Feb. 2016 Sep. 2018 DAC Dec. 2018 HLM Dec. 2014 DAC July 2017 SLM Oct. 2016 HLM Oct. 2017 No agreement on the package proposal. Agreement on provisionalreporting arrangements. Mandate “We agree to urgently undertake work to reflect in ODA the effort of the official sector in catalysing private sector investment in effective development.” No agreement on the package proposal. Institutional approach is legitimised. No agreement on the implementation details of the 2016 HLM principles. Concernsraised by the Export Credit Group (ECG) community.

  8. Outline of the presentation WHY MODERNISE ODA AND THE DAC STATISTICAL FRAMEWORK? 1 2 PRIVATE SECTOR INSTRUMENTS - OVERVIEW 3 PRIVATE SECTOR INSTRUMENTS - DETAILS

  9. PRIVATE-SECTOR INSTRUMENTS - DETAILS 3 2014 High Level Meeting agreement: • New measurement system where only the grant equivalent of loansis counted in ODA. The grantequivalentbecomes the standard for measuring ODA in 2019 on 2018 data. • Mandate to work on private-sector instruments. 2016 High Level Meeting agreement: • Decision to reflect in ODA the effort of the official sector in providing private sector instruments (15 principles). • Objective: setincentives (remove existing disincentives) for the use of PSI in development co-operation and strengthen the private sector in developing countries. • Twoapproachesfor reporting – institutional or instrument.

  10. PRIVATE-SECTOR INSTRUMENTS - DETAILS 3 Twoapproachesfor reporting – institutional or instrument Outflows Private enterprise or institution in partner countries DFIs or other PSI vehicles Provider governments Inflows Loans Guarantees Equity Instrument approach Institutional approach

  11. PRIVATE-SECTOR INSTRUMENTS - DETAILS 3 Provisional reporting arrangements for reporting on PSI, as agreed in December 2018 • Pending agreement on the calculation of the grant equivalent for PSI. • Based on prior years’ decisions and procedures. • Applying either the so called institutional or instrument approach, counted on a cash-flow basis. • With the institutional approach, contributions to Development Finance Institutions and other PSI vehicles may be counted at face value. Any reflows (including profits) from PSI vehicles to the government are counted as negative ODA. • With the instrument approach, loans and equities made directly to private sector entities shall be counted on a cash-flow basis.

  12. PRIVATE-SECTOR INSTRUMENTS - DETAILS 3 Calculation of 2018 ODA • Grant equivalents (grants and grant equivalents for official and multilateral loans) and net disbursements for PSI. • This is not ideal as it affects the quality of the measure, but as PSI only represent 1.5% of ODA, this was deemed an acceptable practical solution. • The provisional reporting arrangements still represent a positive development in the short term: • they enforce some of the safeguards embedded in the principles agreed in 2016, • in particular transparent reporting at the level of activities which will allow for public scrutiny of the data. Next steps • The DAC is committed to reach a conclusion by consensus on this topic, and to make the reporting of private sector instruments consistent with the new grant equivalent method.

  13. Thankyou! Modernisation of the DAC statistical system: http://www.oecd.org/dac/financing-sustainable-development/development-finance-standards/modernisation-dac-statistical-system.htm HLM agreement in 2014: http://www.oecd.org/dac/OECD%20DAC%20HLM%20Communique.PDF HLM agreement in February 2016: http://www.oecd.org/dac/DAC-HLM-Communique-2016.pdf Provisionalreporting arrangements for PSI: https://one.oecd.org/document/DCD/DAC/STAT(2018)9/ADD3/FINAL/en/pdf

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