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New measures of national and official development finance?


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This presentation is by Ms. Julia Benn, Manager, Statistical Policy, Analysis and Engagement Unit
Development Co-operation Directorate, OECD. She presented it to the Expert Reference Group Meeting on external financing for global development, 3-4 October 2013.

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New measures of national and official development finance?

  1. 1. Julia Benn, Manager, Statistical Policy, Analysis and Engagement Unit Development Co-operation Directorate, OECD Expert Reference Group Meeting, 3-4 October 2013 New measures of national and official development finance?
  2. 2. What’s wrong with the current statistical system? Only one headline figure – net ODA – which: i. overestimates actual transfers of aid to developing countries but does not capture all relevant financing; ii. discourages the use of market-like financial instruments and the development of new innovative financial mechanisms; iii. focuses on « donor effort » but leads to unfair international comparisons.
  3. 3. How the current DAC system works? Provider country Multilateral development institution Provider effort = A + B Developing country Transfer of resources (USD) A B C 1 Two measurement points Recipient receipts = A + C2
  4. 4. Issue (i)  The measure of provider effort is a mixture of actual transfers (cash flow) of resources and expenditures in provider countries that do not give rise to cross-border flows.  Example 1: Country-programmable aid (CPA) for all DAC countries represented 55% of total bilateral ODA in 2011, with shares across donors varying from 21% to 91%.  Example 2: Partial data on actual receipts from IO special purpose programmes (over USD 10 bn per year).
  5. 5. Issue (ii)  Mechanisms that do not generate a flow are not covered • Example: Guarantees for development mobilised over USD 15 billion of private sector finance over 2009-11.  Difficulties in tracking innovative mechanisms • Example: Front-loading and results-based mechanisms generate public liabilities that are reportable with several years’ time lag i.e. when the liabilities fall due.
  6. 6. Amounts mobilised through guarantees for development Period: 2009-11 USD 11.5 billion Short-term (TFPs)Long-term USD 18.7 billion Net exposure USD 15.3 billion USD 22.5 billion
  7. 7. Leveraging Amount mobilised Public sector effort = Amount mobilised Public sector effort Leverage ratio Amount mobilised Amount mobilised One measure cannot provide meaningful data on both the provider effort and recipient receipts.
  8. 8. Provider country commitments Tracking IFD: Example of IFFIm B C D A Provider effort Recipient receipt E
  9. 9. Existing IDF mechanisms: $ 1.9 billion per year; 4% additional to ODA ODA - $ 135 billion in 2011 Proposed IDF mechanisms: potentially $ 636 billion per year; 100% additional to ODA Source: DAC statistics, UN report 2011. Existing and proposed innovative financing mechanisms
  10. 10. Issue (ii) cont’d  The current reporting system tends to give more credit to investments that fail. • Example: A successful equity investment results in negative ODA.  Consequently, development finance institutions’ operations are not accurately recorded.
  11. 11. Alternative statistical treatment of DFIs’ activities Provider country Multilateral development institution Developing country B C National DFI E A Collect E from DFIs D
  12. 12. Issue (iii)  Providers outside the DAC playing a stronger and more visible role in development co-operation: need to valorise south-south co-operation (e.g. present data at PPP conversion rates)  But even for DAC members, need to develop an instrument-neutral measure of donor effort (e.g. provider budgetary effort, counting grant element – instead of face value – of loans)
  13. 13. For discussion: what data are really needed? Official development effort? Provider budgetary effort? Recipient perspective Total provider economic engagement? Total official support for development? Provider perspective Development co-operation Concessional development finance Country-programmable aid Recipient benefit Official development finance Market-based resources with developmental impact
  14. 14. Thank you