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A Farewell to ODA? The Future of Development Finance Hedwig Riegler, Chair DAC Working Party on Development Finance Statistics Input to Panel Discussion.

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Presentation on theme: "A Farewell to ODA? The Future of Development Finance Hedwig Riegler, Chair DAC Working Party on Development Finance Statistics Input to Panel Discussion."— Presentation transcript:

1 A Farewell to ODA? The Future of Development Finance Hedwig Riegler, Chair DAC Working Party on Development Finance Statistics Input to Panel Discussion organised by OeFSE 24 October 2013

2 OVERVIEW 1.What are the issues? 2.What is being discussed and by whom? 3.Why a new measure – what is wrong with the current ODA measure? 4.What reform ideas are around?

3 What are the issues?  A new development paradigm with new (quantified) goals to follow MDGs developed by international community  A financing strategy to underpin the new goals  A new measure to monitor the implementation / progress towards set goals and quantitative targets  New developments requiring this change: –New sources of financing, financial instruments, new actors –New priorities of financing (global public goods like climate finance) –Stronger role by South-South Cooperation and non-DAC actors –ODA under pressure (volumes and concept of counting ODA) –Statistical measure to track development finance have not kept pace with emerging new financing schemes

4 What is being discussed by whom? (1) UNITED NATIONS  UN High Level Panel (of Eminent Persons on the Post-2015 Development Agenda) – report (June 2013) outlining visions for eradicating extreme poverty and creating a new development paradigm based on inclusive, sustainable growth  UN Intergovernmental Committee of Experts – a financing strategy to underpin post-2015 development agenda  UN decision process: –Over 2014: preparation of post-2015 development agenda, collection of inputs, counting on strong support from UN system –Beginning of 69 th UNGA session (Sept. 2014): synthesis of full range of inputs available until then –Finalisation in 2015 culminating in adoption of post-2015 development agenda in a Summit at SG level (Sept 2015)

5 What is being discussed by whom? (2) OECD/DAC and its role  Operationalisation of framework decisions coming from UN, inputs to UN decision process  Analytical work to guide policy discussions at DAC level and give inputs to UN process ; prepare for implementation  Prepare for modernisation of statistical systems and new measure(s)  Implement DAC High Level Meeting (HLM) mandate to –Elaborate proposal for new measure of total official support for development –Explore ways of representing both „donor effort“ & „recipient benefit“ of DF –Investigate whether any resulting new measures of external DF suggest need to modernise the ODA concept Supporting implementation of HLM mandate: DAC Expert Reference Group (ERG) – international experts (ensuring outreach to all stakeholders) to guide analytical work and DAC decisions WP-STAT – technical analytical work and preparations, as steered by ERG and DAC OECD and Post-2015 Reflections Website:

6 What is being discussed by whom? (3) Other Fora  Research Collaborative on Tracking Private Climate Finance (donor-initiated forum hosted by the OECD) – analytical/research work on private climate finance  Forum of South-South Cooperation partners: RIS (Research and Information System for Developing Countries), an India- based autonomous think-tank, coordinates the SSC partner dialogue on how SSC could be incorporated in the emerging post-2105 global measure of development finance  Tidewater Meetings: “Club of big donors” discussing development finance issues and the future of ODA to develop positions (June 2013 hosted by Germany, 2014 hosted by Switzerland)

7 Why a new measure – what is wrong?  New paradigm with new (quantified) goals requires new measure(s) (re-defining purpose of measurement may be required)  Main criticisms of current measure (only one headline figure – net ODA flows - has contributed significantly to the flaws criticised)  TOO BROAD: Overestimates actual transfers; is a mixture of actual transfers and in-donor-country expenditure (no cross-border flow); some components inflate figures and lead to unfair donor effort comparison: debt relief, loans, refugee costs, study place costs etc.)  TOO NARROW: Fails to capture all relevant financing, discourages use of market-like instruments & innovative new finance mechanisms (e.g. guarantees for development, front-loading meachanisms etc.)  WRONG FOCUS: Focus on „donor effort/resource inputs“ but not ensuring fair donor comparison. Focus should shift from input measurement to results/impact measurement

8 What reform ideas are around? (1) International level Wide range from radical to modest suggestions for reform  At radical end: Move from ODA (current “0.7% measure”) to total net country effort  At modest end: Keep basic ODA concept and 0.7% indicator, make some minor adjustments to statistical recording rules  Range of “in-between” proposals with different orientation: (1) “Purifying ODA” from components leading to overestimation (differing opinions on maintenance or re- definition of 0.7% ODA target) Different proposals for exclusion of elements (2) Expanding ODA definition (e.g. include full refugee costs, imputed students costs to include secondary level)

9 What reform ideas are around? (2) DAC level Reform discussion in DAC fora on 3 main questions (how to reform the 3 key dimensions of the current ODA definition):  O (Official), i.e. resources provided by official sector: Include elements (e.g. tax exemption) excluded so far?  D (Development), i.e. resources provided for development purposes: (1) Motivation/purpose: Change definition from “development- motivation” to “development relevance” or other basis (e.g. impact)? (2) Eligible recipients (developing countries): Revise list of countries eligible to receive ODA – e.g. to exclude Middle Income Countries?  A (Assistance ), i.e. resources provided at concessional terms: Contentious interpretation of existing definition of concessionality & HLM mandate to elaborate an improved (quantitative) definition by 2015 (Current definition: ODA needs to “be concessional in character and bear a grant element of at least 25% calculated at a fixed discount rate of 10%”) Concessionality definition affects not only loans but also equity, reimbursable grants, other new financing mechanisms

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