New Report on Finance for Development

On Monday the 4th of May, the new European Report on Development (ERD) was launched in Brussels. The report ‘Combining finance and policies to implement a transformative post-2015 development agenda’ calls for a completely new approach to finance for development. This includes more policy coherence and appropriate policies, to make finance for development work.

The main message of the report is that finance alone will not be sufficient to promote and achieve the post-2015 development agenda, as can be read in the executive summary. Appropriate and coherent policies are fundamental, and will ensure that finance is used effectively to achieve results. Good policies will also help to mobilise finance, but an appropriate system of monitoring and accountability needs to cover as many flows of finance as possible.

How will this be achieved? The ERD proposes a different way of thinking about finance and policies.

The first element is that all types of financial resources should be considered: both private and public, domestic and international. Secondly, policy and finance should be considered together. Thus, it is necessary to adopt appropriate and coherent domestic and international policies for effective mobilisation and use of finance. The report also stresses that a lack of policy coherence will lead to wasted finance. It is important to ensure that policies in different sectors do not undermine policies that aim to eradicate poverty and work towards sustainable development. Some examples of appropriate policies are effective tax revenue mobilisation, attracting Foreign Direct Investment for development objectives or regulatory reforms. Furthermore, six key areas for sustainable development are selected, named ‘enablers’ for development. These are local governance, infrastructure, human capital, biodiversity, green energy technology and trade. These areas need to be improved and financed accordingly. Finally, a conclusive global partnership is called for; financing for development should be seen as an on-going process that involves multiple actors.

The keynote speaker of the launch of the ERD was Mr. Neven Mimica, Commissioner for International Cooperation and Development. He reacted to the contents of the report. First, he complemented the timing of the report, with the upcoming International Conference on Financing for Development in Addis Ababa in July and the summit on the post-2015 agenda in New York in September. He said that the report shows that finance alone does not reach the intended objectives, unless it is accompanied by complementary policies. The findings also are in line with three major guidelines which drive the Commission’s action to implement the development agenda: if is not sustainable, it is not development, if it is not resilient, it is not development and if it is without women, it is not development, as Mimica said. He also emphasized that the Commission is committed to play its full part in all aspects of the post-2015 agenda, including means of implementation.

On the 18TH of May, the European Parliament voted on the ‘Financing for Development’ report Silva Pereira Pedro wrote for the Development committee (see here).

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