Post 2015: Global Action for an Inclusive and Sustainable Future

a means to reach development goals and enhance
international cooperation, a new framework could
encourage global agreement on international
mechanisms to raise climate finance.
7.5 Conclusion
any new global framework with a broader vision
of development and cooperation will require
more financial resources. It will be a challenge,
however, to raise the level of development finance
in the current political and economic context.
Discussions on development finance therefore
need to focus as much on how to make better and
more efficient use of existing resources as on ways
to increase their volume.
the review of opportunities offered by different
sources of development finance shows that no one
approach will be universally appropriate and each
type will apply better in some contexts than in
others (see table 7.1 for an overview). For example,
while special purpose bonds seem to be a means
to tap international capital markets for projects
that require significant frontloading, blending is
likely to work better where the provision of grants
helps projects to achieve sufficient financial return
to attract non-grant financing. Enhanced SSc
and domestic resource mobilisation are likely to
become more important sources of development
finance, although not enough to address global
challenges, such as climate change, which will
require more concerted strategies to finance and
provide GpGs.
While there are considerable efforts to increase
the potential of external development finance to
support developing countries’ ownership of their
development strategies, the volatility of external
financial flows, both public and private, risks
undermining the quality of decision-making and
governance of national policies more generally.
reforming the global financial system would help
to reduce such volatility, but this will take time.
Given that most private external flows to developing
countries are pro-cyclical, public flows could limit
the negative consequences of external shocks if they
were provided on a counter-cyclical basis (bigsten
and tengstam, 2012, Wolff, 2008) 91 .
It remains important to increase oDa and
improve its effectiveness. Yet the expansion of
oDa has lost some of its appeal due in part to the
failure to reach longstanding targets, the increase
in non-aid financial flows and the importance of
national and international policies to enhance the
contribution that finance makes to development.
the international community therefore needs to
look at other steps it can take. For instance, this
chapter has argued that if there were agreement on
curbing illicit financial flows, which far exceed the
value of oDa, this would also support development
by increasing governments’ scope to mobilise
domestic resources and improving governance and
reducing perverse incentives for ruling elites.
In sum, if the international community seeks to
mobilise adequate financial resources in a way that
contributes to development, it will be imperative
to move ‘beyond aid’. a broader approach
to development finance will require a global
partnership that encourages collective action on a
number of fronts including better regulation of the
international financial system and stronger political
commitment to pcD, because the impact of any
financial flow depends critically on the global as
well as the local policy environment.
91 the Eu’s vulnerability-FlEx (v-Flex) mechanism is a good example of one way this can be done. agreed in 2009 as a temporary €500 million
shock facility it provided emergency funding to support the most vulnerable acp countries to close fiscal financing gaps following the global
financial crisis and help them maintain priority spending, particularly in the social sectors.
poSt-2015: Global actIon For an IncluSIvE anD SuStaInablE FuturE
Any new global
framework with
a broader vision
will require
more financial
resources. It will
be a challenge,
however, to
raise the level
of development
finance in the
current political
and economic
context.
Discussions
therefore need
to focus as much
on how to make
better and more
efficient use of
existing resources
as on ways to
increase their
volume.
135