Innovative Financing for Development
Achieving the Millennium Development Goals and addressing global challenges such as climate change require considerable financing. Finding the necessary resources is challenging, especially for least developed countries. Official development assistance (ODA) is falling short of what countries need, and ODA commitments remain unfulfilled.
The need for additional and more predictable development financing has led to a search for alternative, innovative sources. The Monterrey Consensus recognized “the value of exploring innovative sources of finance provided that those sources do not unduly burden developing countries”, and encouraged “exploring innovative mechanisms to comprehensively address debt problems of developing countries, including middle-income countries and countries with economies in transition.”
Various initiatives to develop and implement innovative development financing mechanisms have emerged. Aiming to complement ODA and address existing imbalances, these initiatives and proposals range from international solidarity levy on air tickets, to international financial and currency transaction taxes, debt for development swaps, and other ideas. In the absence of an internationally agreed definition of innovative financing, the amounts raised by innovative finance mechanisms differ according to what is classified as “innovative finance”.
The General Assembly, in its resolution 65/146, highlighted the considerable progress in innovative sources of financing for development achieved to date, and stressed the importance of scaling up present initiatives and developing new mechanisms, as appropriate. The Assembly reiterated that such voluntary mechanisms should be effective, should aim to mobilize resources that are stable and predictable, should supplement and not be a substitute for traditional sources of financing, should be disbursed in accordance with the priorities of developing countries and should not unduly burden such countries.
The Financing for Development Office provides substantive support to the work of Mr. Philippe Douste-Blazy, Special Adviser to the United Nations Secretary-General on Innovative Financing for Development.
For more information:
- ECOSOC special event on “Innovative mechanisms of financing for development” (12 July 2012)
- Side Event “Innovative Financing for the MDGs: A Precondition for Success” (21 September 2010)
- GA Informal event on innovative sources of development finance (3 June 2010)
- High-level panel on Innovative Sources of Financing for Development (15 June 2004)