Financing the post-2015 Sustainable Development Goals: a Rough Road-Map Andrew Rogerson Senior Research Associate Accra, 18 March 2015 (Drawn from Kharas, Prizzon and Rogerson, Dec 2014, and Carter et al, forthcoming)

Addis 2015 FFD-a shifting world odd LICs; 30-odd “donors”; 130-odd are neither What is in it for this majority? Is aid (a la Monterrey) a ritual sideshow? From where else will “big” new finance be unlocked? What incentives do UMICs have to make any commitments? Why show one’s hand before New York and Paris (eg on carbon taxes)? 2

Finance flows and development goals

Top-line recommendations 4 concessional assistance redirect this finite resource towards most vulnerable, least creditworthy countries, lowest tax capacity market-related public borrowingraise far more of it, especially through MDBs and bilateral official credits, for countries doing relatively better. private financeImprove the “deal flow”, reduce distortions across uses and unblock regulatory obstacles to wider access

2- The ‘Missing Middle’: International flows fall faster than tax revenues rise 5

Missing middle-again (Kharas/MacArthur 2015) 6

Boost market-related lending Review demand for non-concessional MDB financing Leverage receivables of concessional windows Smoothen graduation to market-related funding Improve competitiveness of MDB delivery Agree on a new international indicator for “official finance” (OF) Set a new international target for OF 7 The missing middle (3) :

Incentivize private finance and align it with development objectives Establish basic metrics for private finance for development (PFFD) Encourage guarantees, insurance and other contingent finance Increase supply of “bankable” projects, partnerships, hubs, regulatory support, for key investment groups: transport, energy, ag, ITT, SEs.. 8

Market Aid Index 9

Minimise allocation distortions inherent in public climate mitigation finance Finance mitigation mainly on market-related loan terms, with grants reserved for demonstration programmes in less creditworthy countries Establish a target of 50% for the share of concessional assistance for adaptation going to LDCs and SIDS 10

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