OECD Donor countries need to reform development finance to meet 2030 pledge

OECD Finance

(OECD, 2018)

This article is brought to you in association with OECD.


External finance to poor countries is declining, despite a promise by the international community three years ago to increase development finance flows, in particular through private investment, according to a new OECD report.

The Global Outlook on Financing for Sustainable Development 2019 shows there was a 12% drop in external finance to developing countries from 2013 to 2016, a decline that casts serious doubt on the world’s ability to achieve the 2030 Sustainable Development Goals.

Of the external financing data that is available beyond 2016, foreign direct investment to developing countries fell by 30% over 2016-17 and project finance was down 30% in the first quarter of 2018, the report shows. Official Development Assistance (ODA) from advanced economies is steady but below target, while other flows such as remittances and philanthropy are increasing but comparatively small.

< Download the data >

The decline comes as the need for financing for sustainable development is growing due to population growth, conflict and environmental degradation. The international community pledged at a 2015 United Nations conference in Addis Ababa to ramp up development finance, using private investment as a lever.

“Donor countries have not followed through on their 2015 promise to expand development finance flows,” said OECD Development Co-operation Director Jorge Moreira da Silva, launching the report at the Paris Peace Forum. “Development finance is not a cost – it is an investment that will help us achieve peace and prosperity on a global level, as defined by the Global Goals.”

The report calls for more efforts to mobilise domestic resources, which are at least as important for sustainable development as external flows. For example, tax revenues are by far the biggest financial resource for poor countries. Yet tax revenues in low-income and least-developed countries average just 14% of GDP, less than half the OECD country level of 34% and below the 15% that is the recommended minimum for effective state functioning.

As another example, the transaction cost of migrants sending money home to relatives in developing countries can be as high as 14-20%. The report says that reducing transfer costs by just 1% would increase the value of total remittances (USD 466 billion in 2017) by USD 30 billion – equivalent to nearly a quarter of total ODA flows.

The report calls for an overhaul of the development finance system to improve transparency, set clear international standards and empower recipient countries to make optimal choices. It also calls for more to be done to measure the impact, rather than just the volume, of development finance, and for a more strategic interplay of suppliers, intermediaries and beneficiaries to ensure the maximum impact of each dollar spent.

On domestic resources, the international community should support trade and private sector development, identify and remove barriers to investment, build tax revenue capacities and help developing countries to prevent tax avoidance and evasion.

Advertising

Advertising

Advertising

Advertising

Featured Stings

Stopping antimicrobial resistance would cost just USD 2 per person a year

Germany to help China in trade disputes with Brussels

Road use charges: reforms aim to improve fairness and environmental protection

Germany loses leading export place

German opposition win in Lower Saxony felt all over Europe

‘No safe way’ into battle-scarred Afghan city of Ghazni to deliver aid as traumatized children search for parents

The Europeans back Russia-Turkey on Syria: A ‘Waterloo’ for Saudis and their Crown Prince

COP21 Breaking News_05 December: Ban Ki-Moon Closing Address at COP21 Action Day Innovation, Imagination, Faster Climate Action

The London City-EU connection holds despite of Brexit and the ban of LSE-Deutsche Börse merger

High internet taxes are restricting access and slowing economic growth

Medical Doctors in Industry 4.0: pure science fiction

Commission: Raising the social issues that can make or break the monetary union

EU budget: Boosting cooperation between tax and customs authorities for a safer and more prosperous EU

Understanding the gender gap in the Global South

Copyright: MEPs update rules for the digital age

COP21 Breaking News_10 December:#ParisAgreement: Points that remain in suspense

Income inequality threatens the socio-political structures in developed countries

Restore hope that peace will come to the Middle East, UN negotiator urges Security Council

Everybody for himself in G20 and IMF

‘More support’ vital to put Afghanistan back on a ‘positive trajectory’ – top UN officials

Lack of investment and ambition means Youth Guarantee not reaching potential

Entrepreneurship’s key to success showcased by a serial young entrepreneur

ECB readies itself for extraordinary monetary measures defying Germany

One year on: EU-Canada trade agreement delivers positive results

18th European Forum on Eco-innovation live from Barcelona: What’s next for eco-labelling?

Madagascar: UN Secretary-General reaffirms support for electoral process

Can China deal with climate change without the U.S.?

Lagarde’s metamorphoses, not a laughing matter

Draghi: printing a full extra trillion non negotiable to help all borrow cheaply

Global leaders and companies pledge to reduce the gender pay gap by 2030

EU crisis aggravates structural differences, threatens cohesion

MWC 2016 Live: Industrial world prepares to reap digital benefits

5 facts about global military spending

The Stray

UN chief saddened at news of death of former US President George H.W. Bush

Nigeria floods: Guterres ‘deeply saddened’ by loss of life and rising need

As the Universal Declaration of Human Rights turns 70 – is it time for a new approach?

Chinese Premier Li Keqiang’s speech from World Economic Forum’s Annual Meeting of New Champions

Restoring government control across Central African Republic is ‘key’ to lasting peace, stability – UN envoy

Every year, South Korea comes to a standstill for an exam marathon

Millions at risk if Syria’s war moves to last redoubt of Idlib, warns senior aid official

Inflation and interest rates indicate urgent need for action

Has the treacherous theory about the ‘French patient’ finally prevailed?

European Commission presents comprehensive approach for the modernisation of the World Trade Organisation

Commissioner sings “Volar-e” but the European driver no “Cantar-e”

Modern humanitarian aid at times of global crises

China Unlimited: the dragon’s long and winding road

Will Europe be a different place this Monday?

The financial war touches Frankfurt and Berlin

New book honours UN women who made HERstory

Halting spread of drug resistance from animals to humans: deal with Council

The United Kingdom’s decision to leave the European Union will impact young people’s future the most

The Japanese idea of ‘chowa’ – and how Asia can thrive in the future

Seaweed, enzymes and compostable cups: Can ‘Big Food’ take on plastic and win?

Financiers can turn the world into a dirty and dangerous place

China will be the world’s top tourist destination by 2030

The role of public affairs in student NGOs

These refugee children have danced in the snow for the first time

Reject passivity and embrace ‘responsibility for our future,’ Lithuania’s President tells UN Assembly

Brexit: No withdrawal agreement without a “backstop” for the Northern Ireland/Ireland border

Is Germany’s political landscape becoming a breeding ground for extremism?

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s