The document discusses modernizing how development finance is measured post-2015. It outlines that the OECD DAC statistical system aims to promote transparency and accountability while incentivizing increased and smarter development resources. It summarizes the outcomes of the 2014 OECD DAC High Level Meeting which included modernizing ODA measurement to better reflect concessionality of loans, targeting ODA to countries most in need, and creating a new measure called TOSSD to capture all official finance supporting sustainable development.

1. OECD CONTRIBUTION TO MEASURING
DEVELOPMENT FINANCE POST 2015:
Modernising ODA and measuring
Total Official Support for Sustainable Development
Ms. Julia BENN
Manager, Statistical Policy, Analysis and Engagement Unit
Statistics and Development Finance Division
OECD Development Co-operation Directorate

2. Outline
Why modernise the measurement of development
finance?1
Modernisation package: outcomes of the OECD DAC
2014 High Level Meeting2

3. OECD DAC Development Finance Statistics
The DAC statistical system aims to promote:
• Consistent and rigorous international standards for
measuring and monitoring development finance, and
• Transparency and accountability of development
finance,
• While providing incentives for increasing the volume
of ODA and other resources for development and
enhancing their “smart” allocation and catalytic use.
Maximise resources available for
development
Ultimate goal

4. Why modernise the measurement of
development finance?
The statistical system needs to better reflect:
• A broader and more diverse set of providers of
development co-operation.
• A broader set of financial instruments.
• A broader concept of sustainable development.
• Increased diversity among recipient countries.

5. DAC donor agencies
(concessional &
concessional bilateral
finance)
Private
philanthropy
(foundations
& NGOs)
Non-DAC sovereign
providers
(e.g. BRICS & MINT
countries, other
South-South co-
operation
providers)
Multilateral agencies
incl.
regional & Arab
organisations
(concessional & non-
concessional finance,
& investments)
DFIs
(non-
concessional
loans &
Investments)
Export credit
institutions
Private
actors/investors
(FDI & other private
flows at market
terms)
Sustainable development as the main objective Other objectives
The architecture of sources and instruments of
development finance has become more complex

6. Historical decision to modernise the OECD DAC
framework: Outcomes of the 2014 DAC HLM
Modernise the ODA measure
Improve targeting of resources to countries
most in need (LICs, LDCs, LLDCs, SIDS, conflict
afflicted and fragile states)
Mobilise more private finance for development
Develop a statistical measure tailored to the
SDG framework: Total Official Support for
Sustainable Development (TOSSD)

7. HLM outcomes: Modernising ODA
CONCESSIONALITY and REPORTING ON LOANS IN ODA
• New measurement system where only the grant equivalent
of loans is counted in ODA. Combined with lower and
differentiated discount rates and adjusted thresholds (by
income group):
• Allows more realistic comparison of loans and grants.
• Provides a clear, quantifiable measure of concessionality.
• Encourages the use of grants and highly concessional
loans.
• Safeguards established to ensure ODA debt sustainability.

8. HLM outcomes: Modernising ODA (cont.)
BEFORE:
FULL FACE VALUE
AFTER:
ONLY THE GRANT EQUIVALENT OF A LOAN
Grant Element
Thresholds
• 25% • 45% for LDCs and other LICs
• 15% for LMICs
• 10% for UMICs
Discount Rates • 10%
• Used for
assessing the
concessionality
of a loan
• 5% base (current IMF discount rate) + adjustment factors of
o 4% for LDCs and other LICs
o 2% for LMICs
o 1% for UMICs
• Used for both assessing the concessionality of a loan (does it
meet the threshold?) and for calculating its ODA grant equivalent
or the concessional portion of the loan.
Measurement
System
• Positive ODA
when disbursed,
negative ODA
when repaid
• Grant equivalent of loan disbursements (grant element
multiplied by amount disbursed).
• Repayment of past loans is not subtracted from ODA but will
continue to be collected and published.

9. HLM outcomes: Better targeting of ODA
Reverse declining trends of ODA to LDCs and
improve targeting to countries most in need (LDCs, LICs,
SIDS, LLDCs and fragile states)
• Enhance monitoring of members’
performance – individually through
DAC peer reviews and collectively at
Senior Level Meetings
(compendium of measures).
• Strengthen the empirical and
analytical basis for better decision-
making about smart ODA
allocations.

10. HLM outcomes: Valorising the use of private-
sector instruments
Valorise and incentivise official sector use of
instruments with a leveraging effect by:
• Capturing the budgetary effort associated with using
market-like instruments (e.g. equity, risk mitigation
instruments) in ODA.
• Setting an international standard to measure the
mobilisation effect of official interventions and
collecting data on amounts mobilised in DAC statistics.

11. HLM outcomes: Create a new measure of Total
Official Support for Sustainable Development
(TOSSD)
A new comprehensive statistical measure that captures the
diversity of resource flows in support of sustainable development.
• Complements – and does not replace – ODA.
• Includes concessional and non-concessional financing and captures all
financial instruments.
• Covers activities that promote sustainable development, including
contributions to GPG when deemed relevant for development.
• Captures official schemes for mobilising private investments for
development.
• Relevant for any provider of development finance.
Ultimate features will be determined once the post-2015 agenda
has been agreed, in consultation with stakeholders beyond the
DAC.

12. Grants
ODA loans
ODA cash-flows
Grants
Grant
equivalent of
ODA loans
ODA new headline measure
(grant equivalent)
Grants
OOF loan
ODA loans
OtheractivitiesqualifyingasTOSSD
Private finance mobilised
Total Official Support for
Sustainable Development (TOSSD)
& private finance mobilised
 The riskier the borrowing country, the higher the
grant equivalent recorded.
 The higher the level of concessionality of the loan,
the higher the grant equivalent recorded.
Current system Modernised system, from
2015 onwards
Broader framework under
development

13. Concessional loan
Example: Solar panel (blended finance)
Asian Development
Bank
Private investor
Guarantee
World Bank
(IDA)
Non-concessional
loan
Already captured in the current system
To be captured in the new system

14. Thank you!
For more information please visit our website at:
http://www.oecd.org/dac/financing-
development.htm