Presentation at the Sixth Meeting of the Contact group on the Post 2015 Agenda New York, USA March 2013

1. Financing a Post-2015
Development Framework
SIXTH MEETING OF THE CONTACT GROUP ON THE POST-2015 AGENDA
New York, 11 March 2013
Mahmoud Mohieldin, World Bank
President’s Special Envoy

2. Financing and the MDGs
• The original MDGs were articulated independently
of a financing framework (Monterrey 2002)
• In a context of fiscal consolidation, discussion of
post-2015 goals must be integrated with
c0nsideration of supporting financing
• No quantity of financing, whether grant,
concessional, or non-concessional, can achieve the
development goals without supporting policies and a
credible commitment to combating poverty.
2

3. A two-pronged approach to supporting a
post-2015 development framework
Increase impact of available resources
Leverage additional resources
Good policies and credible institutions enhance the
impact of available resources and leverage additional
resources from both domestic and foreign sources
Good policies and credible institutions to:
3

4. Not a costing exercise
Why would it be so difficult to “cost” the post-2015
development goals?
4
What cost?
Efficiency gains
Interdependence & double counting
Multiple determinants

5. Issues to consider
• A framework for financing the post-2015 agenda…
▫ Better policies and institutions to enhance the
impact of available resources
▫ Global public goods to support the achievement
of development goals
▫ Strengthening domestic resource mobilization
▫ The evolving role for ODA
▫ Leveraging private finance
▫ Emerging and innovative sources of finance
5

6. 6

7. Source: MDG Gap Taskforce Report, 2012
0.00 0.20 0.40 0.60 0.80 1.00 1.20
United States
Germany
United Kingdom
France
Japan
Netherlands
Sweden
Canada
Australia
Norway
DAC Members' Official Development Assistance as a
percentage of GNI, 2000-2011
2000-2001
2007
2009
2011
UN Target:
0.7% of GNI
7

8. Growing role of emerging donors, led by China
0
500
1000
1500
2000
2500
3000
3500
4000
4500
2003 2004 2005 2006 2007 2008 2009
Estimated aid from BRICS, 2003-2009 (USD million)
China India Russia Brazil South Africa
Source: World Bank CFP Working Paper No. 8, Finance for Development
8

9. Net private flows to LICs
2.5
6.2
7.7
14.7
15.3
13.7
17.9
-5
0
5
10
15
20
2000 2005 2006 2007 2008 2009 2010
Foreign direct investment Portfolio investment Long-term debt
Source: Finance for Development - Trends and Opportunities in a Changing Landscape, CFP, 2011
9

10. Net private flows to MICs
171.3
492.9
646.6
940.2
788.2
565.9
772.1
-200
0
200
400
600
800
1000
2000 2005 2006 2007 2008 2009 2010
Foreign direct investment Portfolio investment Long-term debt
Source: Finance for Development - Trends and Opportunities in a Changing Landscape, CFP, 2011
10

11. 39
34 32 31 27
34 32 31
17
43
44
42
54
46 29
44 45
63
18 22 26
15
27
38
23 24 20
3.6 0.6 0.8 1.6 1 0.6 0.4 0.3 3.8
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
United
States
United
Kingdom
France Japan Germany India Brazil Mexico China
Long-term investment breakdown by sector
Households
Corporations
Govermnment
Developed markets Emerging markets
Composition of
total long-term
investment, most
recent data (2010
or 2011)
Source: Long-Term
Finance and Economic
Growth, G30 Working
Group, 2013
11

12. 5-10% 5-10%
0-4%
70-80%
60-70%
25-30%
20-25%
5-10%
30-33%
15-20%
5-10%
0-5%
60-65%
75-85%
25-30%
25-30%
20-30%
30-40%
45-50%
10-15%
70-75%
30-33%
1.6 1.8 3.5 1.4 2.1 0.8 11.2
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Residential real
estate
Commercial real
estate
Equipment and
software
Infrastructure Education Research and
development
2011 LT
investment for
sample countries
Financing by type
Internal financing from households
and corporations
Government
Equity
Loans
Bonds
Estimates for a typical global project
based on data from sample countries
including Brazil, China, France,
Germany, India, Japan, Mexico, the
United Kingdom, and the United States,
representing over 60% of world GDP in
2010
Financing by type
Source: Long-Term Finance and Economic
Growth, G30 Working Group, 2013
12

13. 13

14. Good policies and institutions are the basis for growth
Real income per capita is closely correlated with institutional quality
Source: World Economic Outlook, IMF, April 2003
14

15. Fossil fuel subsidies vs. targeted support
to the poor
Source: World Energy Outlook, IEA, 2011
Subsidies are an extremely inefficient means of assisting the poor: only 8% of
the $409 billion spent on fossil-fuel subsidies in 2010 went to the poorest
20% of the population.
15

16. Progress in Implementing the Paris Declaration
Making ODA work harder
Source: MDG Gap Taskforce Report, 2012
16

17. Domestic resource mobilization is critical
10
11
12
13
14
15
16
17
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Tax revenue as a percentage of GDP, by income level
High income Low income Middle incomeSource: World Bank WDI
17

18. 0
10
20
30
40
50
60
70
80
90
100
Account at a formal
financial institution
Account at a formal
financial institution,
female
Account at a formal
financial institution,
income, bottom 40%
Saved at a financial
institution in the past
year
Loan from a financial
institution in the past
year
Debit card Credit card
Financial Inclusion by Country Income Group, 2012
Low income Lower middle income Upper middle income High income
Improving access to financing key to shared prosperity
Source: World Bank WDI
18

19. 4%
29%
25%
13%
22%
41%
6%
14%
23%
8%
21%
24%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
1 to 5 years 5 to 10 years 10+ years
Percent of international syndications to the private sector in developing
countries where an IFI participated, by income level and maturity, 2007-
2010
Lower Lower middle Upper middle BRICT
Leveraging private resources: the role of IFIs
Source: International Finance Institutions and Development through the Private Sector, IFC, 2011
19

20. Expanding sources of finance
• Local Currency Bond Markets
• Institutional investors
• Mobilizing diasporas
• Pooled financing arrangements, such as:
▫ Advance Market Commitments
▫ International Finance Facility for Immunization
(IFFIm)
• Innovative taxes, such as:
▫ Carbon taxes
▫ Financial transaction taxes
20