The document outlines various financing mechanisms for sustainable development, emphasizing the need for public, private, domestic, and international resources to implement the new global development agenda. It discusses the pivotal changes occurring since 2015, including the transition from the Millennium Development Goals to the Sustainable Development Goals and highlights the roles of multilateral development banks and the importance of innovative financing solutions. The document is structured as a series of questions and answers aimed at providing a comprehensive overview of the financing challenges and opportunities facing policymakers and development professionals.

1. FINANCING FOR DEVELOPMENT:
BILLIONS TO TRILLIONS TO ACTION
QUESTIONS AND ANSWERS
AUTHOR:
Cătălina Popa
Romania

2. 2
OBJECTIVE
This artifact aims to show shortly the main aspects about the
types of finance – public, private, domestic, and international –
available for sustainable development financing strategy, trends
in development finance and the need for innovative solutions to
generate the resources required to implement the new global
development agenda.
This material is intended for policy maker, student, civil
society representative, development professional, or citizen
interested in financing for Sustainable Development Goals.
This paper contains questions and answers about: financing
for development issue, the role of public sector financing in
development, private finance for development, the financing
role of the multilateral development banks.

3. 3
CONTENT
I. INTRODUCTION TO FINANCING FOR DEVELOPMENT
II. THE ROLE OF PUBLIC SECTOR FINANCING IN DEVELOPMENT
III. PRIVATE FINANCE FOR DEVELOPMENT
IV. THE FINANCING ROLE OF THE MULTILATERAL DEVELOPMENT
BANKS
V. CONCLUSION

4. I. INTRODUCTION TO FINANCING FOR DEVELOPMENT
QUESTION 1:
Why is 2015 a pivotal year for development?
ANSWER 1:
The international community will adopt new
development goals that will replace the MDGs, a
framework to finance them, and reach a global
agreement on climate, which together will shape
development for the coming decades.

5. I. INTRODUCTION TO FINANCING FOR DEVELOPMENT
QUESTION 2:
Which new global development agenda is replacing
the MDGs, as of 2016?
ANSWER 2:
The Sustainable Development Goals.
QUESTION 3:
In what ways are the new goals different from the
MDGs?
ANSWER 3:
Bottom up process, encompass social, economic and
environmental objectives, and target both
developing and developed countries.

6. I. INTRODUCTION TO FINANCING FOR DEVELOPMENT
QUESTION 4:
What is the nature of the Financing for Development
challenge that development partners are trying to
address globally?
ANSWER 4:
There are resources available globally to finance
development, but they are not being mobilized and
channeled for development.
QUESTION 5:
What does the “Billions” and “Trillions” referred to in the
“From Billions to Trillions” discussion note refer to?
ANSWER 5:
Using billions in Official Development Assistance (ODA) to
unlock and mobilize trillions of dollars needed from all
sources of finance.

7. I. INTRODUCTION TO FINANCING FOR DEVELOPMENT
QUESTION 6:
What is the largest pool of resources available to
developing countries?
ANSWER 6:
Domestic Resource Mobilization.
QUESTION 7:
Where does most of the roughly US$135 billion in
annual Official Development Assistance (ODA) go?
ANSWER 7:
To Least Developed Countries (LDCs).

8. I. INTRODUCTION TO FINANCING FOR DEVELOPMENT
QUESTION 8:
How do Multilateral Development Banks (MDBs) and
the IMF support countries in achieving their goals?
ANSWER 8:
By providing financial support, technical assistance
and policy advice.
QUESTION 9:
What is the most critical source of funding available
to least developed, fragile and conflict affected
countries?
ANSWER 9:
Official Development Assistance (ODA).

9. I. INTRODUCTION TO FINANCING FOR DEVELOPMENT
QUESTION 10:
What lies at the heart of financing for development?
ANSWER 10:
A country's ability to mobilize all resources and
spend them effectively.

10. II. THE ROLE OF PUBLIC SECTOR FINANCING IN
DEVELOPMENT
QUESTION 1:
Why should developing countries strengthen
domestic resource mobilization and public
expenditures?
ANSWER 1:
To generate and deploy resources for promoting
economic development, reducing poverty, and
improving equity.
To enhance country ownership and public
accountability of public policies.

11. II. THE ROLE OF PUBLIC SECTOR FINANCING IN
DEVELOPMENT
QUESTION 2:
Which tax to GDP ratio best defines a lower income
country?
ANSWER 2:
15-25%
QUESTION 3:
A strategy to strengthen DRM would include which
issues?
ANSWER 3:
Stronger administration, simpler revenue systems,
and collective action to address international tax
issues and illicit financial flows.

12. II. THE ROLE OF PUBLIC SECTOR FINANCING IN
DEVELOPMENT
QUESTION 4:
What is the aim of the Tax Administration Diagnostic
Assessment Tool (TADAT) initiative?
ANSWER 4:
Asses the tax structure of a country.
QUESTION 5:
How do Multilateral and Bilateral donors help countries
improve DRM?
ANSWER 5:
By providing technical assistance and capacity-building in
the areas of tax administration and policy reform.
By bringing global experience and support to bear on
addressing illicit flows and the international aspects of
taxation, and on improving the measurement of DRM
gaps and results.

13. II. THE ROLE OF PUBLIC SECTOR FINANCING IN
DEVELOPMENT
QUESTION 6:
What does the “Base Erosion and Profit Shifting”
(BEPS) Action Plan address?
ANSWER 6:
Tax avoidance activities of international corporations.
QUESTION 7:
Which are three critical tasks for an effective tax
administration?
ANSWER 7:
Facilitate compliance, enforcing tax compliance and
improving governance.

14. II. THE ROLE OF PUBLIC SECTOR FINANCING IN
DEVELOPMENT
QUESTION 8:
Why is curbing Illicit Financial Flows important?
ANSWER 8:
Helps improve good governance.
QUESTION 9:
Who provides ODA?
ANSWER 9:
Member countries of the Organization for Economic
Co-operation and Development (OECD) -
Development Assistance Committee (DAC).

15. II. THE ROLE OF PUBLIC SECTOR FINANCING IN
DEVELOPMENT
QUESTION 10:
What percentage of their Gross National Income
have member countries of the Organization for
Economic Co-operation and Development (OECD) -
Development Assistance Committee (DAC) pledged
to commit for development assistance?
ANSWER 10:
0.7%

16. III. PRIVATE FINANCE FOR DEVELOPMENT
QUESTION 1:
What is the main difference between the private
and public sector in terms of how their investment
decisions are driven?
ANSWER 1:
Private sector is driven by risk/return considerations.

17. III. PRIVATE FINANCE FOR DEVELOPMENT
QUESTION 2:
Which is the largest source of external private
finance for developing countries?
ANSWER 2:
Foreign Direct Investment.
QUESTION 3:
What is commercial finance?
ANSWER 3:
Commercial finance is a source of public finance with
the same risk/return objectives as the private sector.

18. III. PRIVATE FINANCE FOR DEVELOPMENT
QUESTION 4:
How does private philanthropy add value to
development finance?
ANSWER 4:
By taking on riskier or not profitable aspects of a
development project in which to unlock other
sources of finance.
QUESTION 5:
What is the infrastructure finance paradox?
ANSWER 5:
Although the need for infrastructure investments is
huge and private investors with record amounts of
savings need long-term investments, not enough
investments are directed towards infrastructure.

19. III. PRIVATE FINANCE FOR DEVELOPMENT
QUESTION 6:
What are institutional investors looking for while
investing in developing countries?
ANSWER 6:
High returns and diversification.
QUESTION 7:
What is blended finance?
ANSWER 7:
Blended finance is combining the public sector’s
social return objectives and private sector’s financial
return objectives through risk mitigation by the
public sector in a manner that induces the private
sector to participate.

20. III. PRIVATE FINANCE FOR DEVELOPMENT
QUESTION 8:
Which of the below sectors dominates domestic
private finance?
ANSWER 8:
Banking.
QUESTION 9:
What is an important area that the international
community is working to address with regard to
remittances?
ANSWER 9:
Bringing the global average cost of transactions for
remittances from 9% currently down to 5%.

21. III. PRIVATE FINANCE FOR DEVELOPMENT
QUESTION 10:
Which of the below is an innovative development
finance instrument related to remittances?
ANSWER 10:
Diaspora bonds.

22. IV. THE FINANCING ROLE OF THE MULTILATERAL
DEVELOPMENT BANKS
QUESTION 1:
What does “financing for development” mean?
ANSWER 1:
Providing funds for development activities.
Managing the spending and use of funds for
development activities.

23. IV. THE FINANCING ROLE OF THE MULTILATERAL
DEVELOPMENT BANKS
QUESTION 2:
Who are the shareholders of Multilateral
Development Banks?
ANSWER 2:
Member countries.
QUESTION 3:
Which financial instruments do MDBs offer their
clients?
ANSWER 3:
Investment and project loans.
Equity investments.
Risk guarantees.

24. IV. THE FINANCING ROLE OF THE MULTILATERAL
DEVELOPMENT BANKS
QUESTION 4:
In addition to providing direct financial assistance, what
other role do the MDBs and IMF play that is important to
the financing for development agenda?
ANSWER 4:
Using their financial assistance to mobilize and crowd in
both public and private resources of funds for
development.
QUESTION 5:
What is the significance of the “multiplier effect” of MDB
financing?
ANSWER 5:
It is estimated that for every one US dollar invested
directly by MDBs in private sector operations, about two
to five US dollars are mobilized in additional private
investment.

25. IV. THE FINANCING ROLE OF THE MULTILATERAL
DEVELOPMENT BANKS
QUESTION 6:
What are the International Monetary Fund’s principal
activities?
ANSWER 6:
Promoting global economic and financial stability and
focusing on macroeconomic and financial issues, working
with member countries to support their development
efforts.
QUESTION 7:
What is the purpose of the proposed Pandemic
Emergency Financing Facility?
ANSWER 7:
To provide financial resources supporting a more agile
and effective system for responding to future global
health emergencies, to prevent their becoming
pandemics.

26. IV. THE FINANCING ROLE OF THE MULTILATERAL
DEVELOPMENT BANKS
QUESTION 8:
According to the President of the European Bank for
Reconstruction and Development, the “big task” of
getting long-term capital into equity investments in
poor countries involves what action?
ANSWER 8:
Attracting newer sources of finance in developing
countries, such as sovereign wealth and pension
funds.
QUESTION 9:
What is the Adaptation Fund?
ANSWER 9:
A fund created by the international community to
fund climate adaptation projects and programs.

27. IV. THE FINANCING ROLE OF THE MULTILATERAL
DEVELOPMENT BANKS
QUESTION 10:
Which activities do MDBs engage in to promote local
capital markets?
ANSWER 10:
Directly providing local currency finance, including
through issuance of local currency bonds or through
swap markets.
Providing technical and policy advice on institutions
and regulations.
Providing credit enhancement, structured finance
and hedging options to increase the attractiveness of
bond offerings.

28. V. CONCLUSION
How will all the needed development finance be
mobilized? Each country will be responsible for its own
development – mobilizing the necessary resources – while
the international community is responsible for providing
the enabling support. Within this context, a variety of
creative and innovative approaches will be necessary.
 A “paradigm shift” in the use of available financing will
be needed to finance the SDGs. The world will need
intelligent development finance that goes well beyond
filling financing gaps and that can be used strategically to
unlock, leverage, and catalyze private flows and domestic
resources.

29. V. CONCLUSION
Effective and sustainable financing for development
requires attempting to make optimal use of available
resources from all sources. That requires drawing in and
increasing available public resources as well as private
sector finance and investment, surpassing the current
capacities of governments and international donors that
have been the traditional anchors of development finance.
Increasing the resource envelope also will require new
approaches to draw upon the pools of remittances,
sovereign wealth, and pension funds that have not until
now been viewed as traditional sources of development
finance.
Bibliography:
https://class.coursera.org/fin4devmooc-001/wiki/Welcome

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FINANCING FOR DEVELOPMENT IS WHAT HAPPENED
BETWEEN QUESTION AND ANSWER...