Financing the Millennium Development Goals and Beyond: The Challenge in 2005 Arabella Fraser, Policy Adviser, Oxfam GB Research Team

The price of failure 45 million more children under five will die between 2005 and million more people in sub-Saharan Africa living on less than $1 a day in million more children still out of school in million more people without proper sanitation facilities

1.The case for aid 2.Increasing aid to meet the MDGs and beyond 3.Making aid work better for poverty reduction Structure

1. The case for aid Econometric studies, case study evidence Economic marginalisation of the poorest economies Evidence for productive use of aid in many low-income countries

Fig. 1 Aid levels up, but generosity down Net ODA, $ million and as a percentage of GNI, , OECD countries, 2003 prices

Fig. 2 Progress on meeting the 0.7% target Net ODA as % of GNI, OECD donors, 2004 preliminary data

Fig. 3 Projected donor shortfalls in aid Volumes of ODA under different scenarios, based on average growth rates

Fig. 4 Developed country expenditure priorities

A Debt Relief Deal HIPC too limited to meet the MDGs Importance of additional finance Current proposals inadequate: UK ‘debt holiday’ and US ‘bold plan’

Fig. 5 ‘Effective’ aid volumes Net ODA by purpose, 2002

Making aid work better for poverty reduction The DAC process Aid allocation criteria Conditionality: undercutting ownership

Fig. 6 Bound in red tape Responses to the question ‘How much of your ministry’s time is spent in reporting to the donor?’

Fig. 7 Expect delays in aid delivery Responses to the question `Generally speaking, how late do the donor’s aid disbursements arrive?’

The DAC process Monitorable, ambitious, relevant targets Robust accountability mechanisms Integration into the MDGs process

Real aid allocations Average income per capita (PPP, 2003 estimates) of the top three recipients of gross aid (ODA and Official Aid (OA)) in absolute terms, 2002

Aid conditions: undercutting ownership Ongoing administrative burden of conditions Undermining domestic accountability mechanisms and ‘ownership’ of policy reform Need greater independent impact assessment

Conclusions and recommendations: Cancellation of multilateral debt for countries that require it to meet MDGs; resources available from additional contributions and use IMF gold reserves Immediate $50 billion and binding timetables to meet 0.7 by 2010 Full implementation of Rome and Paris commitments; strong targets and monitoring mechanisms Focus on poorest countries and communities Restriction in use of conditions to financial accountability and poverty reduction; respect national processes and independent impact assessment

Financing the Millennium Development Goals and Beyond: The Challenge in 2005 Arabella Fraser, Policy Adviser, Oxfam GB Research Team