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Financing for Development Post 2015: A Framework for Discussion

Financing for Development Post 2015: A Framework for Discussion. The Seoul Post-2015 Conference: Implementation and Implications Seoul, Korea October 7, 2013. Lessons from the existing MDGs framework.

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Financing for Development Post 2015: A Framework for Discussion

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  1. Financing for Development Post 2015: A Framework for Discussion The Seoul Post-2015 Conference: Implementation and Implications Seoul, Korea October 7, 2013

  2. Lessons from the existing MDGs framework • 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.

  3. A two-pronged approach to supporting a post-2015 development framework Good policies and credible institutions to: Good policies and credible institutions enhance the impact of available resources and leverage additional resources from both domestic and foreign sources.

  4. Parameters to consider in the post-2015 financing framework • 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 At the country level: Globally:

  5. Generate more domestic revenuesTaxation capacity improving in MICs, more progress needed in LICs Tax Revenue (in % of GDP) by Income Groups, 1994-2009 Source: World Development Indicators

  6. Ensure efficient public spendingFossil fuel subsidies do not target the poor 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. Source: World Energy Outlook, IEA, 2011

  7. Financial sector development for growthA thriving private sector creates opportunities for entrepreneurship and job creation

  8. Maximize the impact of ODAODA and remittances are especially critical for fragile states 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. Collaborate with new development partnersAid from BRICS, led by China, has been rising over the past decade. For the purpose of comparison, in 2009, net ODA from DAC members was 119.8 bn USD. Source: World Bank CFP Working Paper No. 8, Finance for Development

  10. Collaborate with new development partners 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. Collaborate with new development partners • 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

  12. Leverage the private sector: PartnershipsWell-structured initiatives with a diverse range of partners help governments raise the large sums of capital required to meet infrastructure needs and consequently spur development Emerging Partnerships Source: Emerging Partnerships, IFC, 2013 and World Bank, Africa Region.

  13. Leverage the private sector:Tap into new sources of financeAttracting even a fraction of institutional investor resources can scale up development finance Total assets by type of institutional investors in the OECD, 1995-2011 (USD trillions)

  14. Leverage the private sector: Advance market commitmentsInnovative, results-based mechanisms can contribute to addressing market failures AgResults Initiative International Finance Facility for Immunization (IFFIm) Linking spendingto actual development outcomes

  15. Support Global Public Goods • 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

  16. Key Messages • 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.

  17. Thank you for your attention Marilou Uy Senior Adviser The World Bank muy@worldbank.org

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