Transcript DCD Engagement meeting

TUAC / TUDCN SEMINAR
ON FINANCING FOR
DEVELOPMENT
Wednesday 29 October 2014 – Room E
Guillaume Delalande
Development Finance Architecture Unit, DCD/SDF.
Overview of the presentation
• Context and rationale for the reform
• The main topics of the reform
– The reform of ODA and concessionnality
– Broader measures of donors’ contribution to
development (TOSD)
– Action plan to reverse the downward trend of ODA to
LDCs
• Expectations from the HLM in December 2014
The context of the reform : gearing up to a post-2015
financing for development framework
•
Major changes in the Development Finance Landscape
– New actors
– New instruments
•
The necessity to modernize measurement in a post-2015 world
– A need to maintain the credibility of ODA as a reliable measure of “provider
effort”; A need to maintain the international commitment of 0.7% ODA to GNI;
– A need to valorise broader efforts towards development through a
comprehensive measure of Total Official Support for Development;
– Develop a comprehensive measurement system for development finance
statistics, which captures providers’ efforts and as well as recipients’ perspective.
– An optimal use of the different types of finance: recognise providers’ efforts in
using market-like instruments to incentivize private sector flows;
•
Status quo is not an option
The mandate from our ministers
(DAC 2012 HLM) – 4 objectives
• Investigate whether any resulting new measures of
external development finance (including any new
approaches to measurement of donor effort) suggest the
need to modernise the ODA concept.
• Agree on a clear, quantitative definition of “concessional
in character”
• Elaborate a proposal for a new measure of total official
support for development (TOSD).
• Explore ways of better representing both “donor effort”
and “recipient benefit” of development finance.
 By end 2014/early 2015
Implementation of the HLM mandate:
Process up until 2015
•
Numerous studies to inform the technical / political level
discussions among DAC members and beyond (e.g. UN)
•
Intensive outreach and consultation (Expert Reference Group,
side events at WB/IMF spring meetings, Mexico GPP
ministerial, Organisation Internationale de la Francophonie,
CommonWealth, Partner Countries workshop…)
•
Modernisation of the DAC statistical system – methods
discussed at Working Party on Development Finance Statistics
(WP-STAT) and with providers beyond the DAC and
developing countries
•
Proposals for new measures for consideration by DAC Senior
(October 2014) and High-level (December 2014) meetings
Is it ODA ?
• Official Development Assistance is defined as those flows
to countries and territories on the DAC List of ODA
Recipients (available at www.oecd.org/dac/stats/daclist)
and to multilateral development institutions which are:
i.
Provided by official agencies, including state and local
governments, or by their executive agencies; and
ii.
Each transaction of which:
a) Is administered with the promotion of the economic
development and welfare of developing countries as its
main objective; and
b) Is concessional in character and conveys a grant element of
at least 25 % (calculated at a rate of discount of 10%)
Modernisation of ODA:
concessionnality and measurement of loans
• Concessionnality - 2 dimensions being discussed
and membership is divided.
– The discount rate – Risk free and risk adjusted
(Assessment based on lenders’ funding cost plus a
premia?)
– The measurement of loans: Grant equivalent vs. Cash
flow
• High level working group on concessionality
chaired by Mark Lowcock is expected to negotiate
a political compromise in time for the HLM – first
meetings held on 29 Sept and 21 october.
ODA modernisation:
Incentivise greater use of market-like instruments
by recognising donors’ effort in ODA
•
Have gained more and more attention and should be included
to incentivise greater use.
•
Broad agreement that at least current disincentives in current
statistical system should be removed (e.g. if donor reports an
equity investment as ODA, any positive sales proceeds from
successful investments score as negative ODA).
•
A proposed two-phased approach for measuring donor effort:
– Recognising in ODA, governments contributions to DFI.
– An assessment instrument by instrument (e.g. guarantees and
insurances)
Valorising broader contribution for development:
Sources of external finance beyond ODA are
becoming more prominent
1000000
900000
800000
24%
700000
Remittances
Private grants
4%
600000
17%
500000
FDI
400000 20%
1%
300000
14%
200000
29 %
100000
2%
11%
28%
Export credits
1%
8%
OOF - excl. export credits
Total ODA
23%
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Bonds and securities
18%
2011
2012
Total Official Support for Development (TOSD)
Summary
•
Scope: The totality of official resources in support of sustainable
development, regardless of the terms under which they have been
granted.
•
TOSD would have the objective of promoting the
“economic development and welfare of developing
countries” but also of addressing global challenges (GPGs,
enablers). The latter allow the blending of interests – some
degree of self-interest would be permissible (trade and
exports).
•
Complements ODA: ODA will remain the cornerstone of donor
accountability (no backing away from existing commitments!).
•
Name competition: International public finance for development?
LDCs & the composition of external finance
in developing countries (2012)
LDCs: Reversal of recent trends
DAC ODA to LDCs / GNI
Consensus on the need to collectively reverse the downward trend of
aid to least developed countries (LDCs)
The HLM in December 2014
• At the HLM, DAC Ministers and Heads of Agency are
expected to:
– Conclude on concessionality (how to treat concessional loans in the
DAC statistics);
– Endorse in principle the main features of TOSD (to be shaped by the
final SDGs);
– Agree on an action plan to reverse the downward trend of ODA to LDCs;
– Measure donor effort in using market-like instruments to incentive
private sector flows;
– Propose for an international standard for mobilisation / leveraging
effect of private sector / market-like instruments and a system for
tracking such resources;
13
Thank you !