On the second day of the inaugural Economic and Social Council (ECOSOC) Forum on Financing for Development follow-up (FfD Forum), participants discussed action areas and other components of the Addis Ababa Action Agenda (AAAA) including the global framework for financing sustainable development, domestic and international public resources, and domestic and international private business and finance.
A panel discussion on the Global Infrastructure Forum also took place.
19 April 2016: On the second day of the inaugural Economic and Social Council (ECOSOC) Forum on Financing for Development follow-up (FfD Forum), participants discussed action areas and other components of the Addis Ababa Action Agenda (AAAA) including the global framework for financing sustainable development, domestic and international public resources, and domestic and international private business and finance. A panel discussion on the Global Infrastructure Forum also took place.
During the roundtable on a global framework for financing sustainable development, on 19 April 2016, Lakshmi Puri, UN Women, called on all Member States to adopt the Addis Ababa Action Plan on Transformative Financing for Gender Equality and Women’s Empowerment launched by UN Women and other partners in 2015. Maria Helena Semedo, Food and Agriculture Organization of the UN (FAO), said the AAAA must bring synergies between climate change, sustainable food and agriculture, and called for leveraging green finance. She announced a partnership between FAO and Google Earth Outreach to broaden access to technology, saying the initiative will be accessible to farmers. Isabel Ortiz, International Labour Organization (ILO), noted that even in poor countries with limited budgetary capacity, social protection can be supported, including through reallocating public expenditure, increasing tax revenues, eliminating illicit financial flows, and managing debt.
On domestic public resources, Amar Bhattacharya, Brookings Institution, noted that one of the key means to achieve the Sustainable Development Goals (SDGs) is through domestic resources. He also noted that we can “all do better” in terms of fossil fuel subsidies and carbon prices. Armando Lara Yaffar, Chair, UN Committee of Experts on International Cooperation in Tax Matters, said the AAAA mandated the Committee to have two meetings per year, but noted operational challenges, including ongoing discussions on the location of those meetings in 2016. He highlighted the importance of civil society involvement. Peter Mullins, International Monetary Fund (IMF), noted that: revenue mobilization is a central focus of the IMF; developing countries should have strategies on how they will achieve their revenue targets; and the IMF is trying to strengthen its cooperation with the Organisation for Economic Co-operation and Development (OECD) and the UN to provide better assistance on developing revenue mobilization. He announced various initiatives carried out by the IMF, including the development of a tax policy assessment framework with the World Bank. Khady Dia, Dakar Municipal Finance Program, Senegal, called on the IMF to increase partnerships with local governments for resource mobilization.
On international development cooperation, Mario Pezzini, OECD, reported that the OECD is analyzing synergies and trade-offs between different sources of financing for development, and said official development assistance (ODA) should be aligned with SDG targets. Subhash Chandra Garg, World Bank Group, said the 2030 Agenda will require a better way of delivering on resources. He remarked that ODA is more effective for leveraging private resources in emerging economies than in low-income economies, where domestic resource mobilization is essential.
On domestic private business and finance, Gavin Wilson, International Finance Corporation (IFC), explained how IFC uses the liability side of its balance sheet to promote local capital markets by issuing bonds in the local currencies of the emerging markets, which helps create a market for those bonds and promotes domestic investment and growth. Fiona Reynolds, Principles for Responsible Investment (PRI), observed that investors have become increasingly aware of the overlap between public and private interests, and highlighted the need to educate them on sustainable development matters. Steve Waygood, Aviva, said the indicator for SDG target 12.6 (on encouraging companies to adopt sustainable practices and report sustainability information) is undermining the target by measuring stand-alone instead of integrated reporting. He called for changing the mindset about capital markets, from seeing them only as a pool of resources to seeing them as a machine for delivering resources.
On international private business and finance, Keiko Honda, World Bank, explained that investors feel more comfortable when knowing that the Bank’s Multilateral Investment Guarantee Agency (MIGA) has access to the governments of the countries where they want to invest. Richard Kozul-Wright, UN Conference on Trade and Development (UNCTAD), observed the lack of evidence that governments cannot fill the financial gap needed to achieve the SDGs, and stressed that the success of development projects is not about the quantity of FDI but its strategic use. Bill Streeter, Global Clearinghouse for Development Finance, underscored the need for: establishing public performance benchmarks for companies; setting international standards; increasing financial literacy; and creating a national curriculum on financial literacy at an early stage, starting with the high school age.
On the Global Infrastructure Forum (GIF), Joaquim Levy, World Bank, said the GIF will take place annually, with a Chair-ship that rotates among the Multilateral Development Banks (MDBs). He said discussions at the first GIF, which took place in Washington, DC, US, on 16 April 2016, highlighted the need for: improving the quality and quantity of infrastructure; building long-lived infrastructure that is resilient to climate change; more finance but also better policies and project preparation, governance, and transparency; and capacity building especially in fragile and conflict-affect states and low-income countries (LICs). Pablo Pereira dos Santos, Inter-American Development Bank (IDB), suggested developing institutions that protect good infrastructure projects from the uncertainty that comes from political cycles. He explained that adding sustainability to projects brings complexity but also resilience, which private investors like. Craig Steffensen, Asian Development Bank (ADB), said ADB will increase its investment in clean energy from US$2 billion to US$3 billion, and in energy from US$4 billion to US$6 billion by 2020.
During the ensuing interactive dialogues with Member States and other stakeholders, many participants emphasized the importance of gender equality, such as gender financing and taking into account the gender perspective in infrastructure projects. Switzerland suggested tracking gender equality-related indicators in the report of the Inter-Agency Task Force on the follow-up to the FfD outcomes and the means of implementation of the 2030 Agenda (IATF). Indonesia reported that it has cut substantially its fossil fuel subsidies to increase investments in healthcare and education. A representative from the Business sector called on ministries of finance to invest part of the fossil fuel budget in renewable energy.
Several participants noted the importance of cooperation to strengthen tax administration and avoid tax evasion, and asked to fight illicit financial flows, including through collaboration at the global level. France proposed that international financial institutions (IFIs) take the lead on illicit financial flows in order to have a global agenda, and the World Bank Group said it will strengthen the global coalition against illicit financial flows.
Paraguay called for fair and free trade, especially in the agriculture sector. El Salvador and others stressed the importance of ODA, while noting the need for complementary resources, and some called for tracking ODA not only quantitatively but also qualitatively to ensure it is delivered to the most vulnerable people. Many also noted the importance of South-South and triangular cooperation, and called for greater accountability and reporting. Member States stressed the need to clearly identify what risks need to be covered by the private sector and by the public sector, and to strengthen the role of national development banks.
The FfD Forum is taking place from 18-20 April 2016, at UN Headquarters in New York, US. Discussions on other action areas of the AAAA will resume and conclude on 20 April 2016. [FfD Forum Website] [IISD RS Story on FfD Forum, Day 1] [IISD RS Sources] [IISD RS Story on Global Infrastructure Forum]