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ROUND TABLE 3 - The role of financial and technical development cooperation, including

innovative sources of development finance, in leveraging the mobilization

of domestic and international financial resources for development.

Chair’s Comments : (H.E. Mr. Morten Wetland, Norway)

While ODA has increased nominally, the MDG funding gap is currently estimated to be $300 billion annually. There must be a commitment to come through with pledges.

Norway & Luxembourg have both exceeded the 0.7% mark.

Best source of ODA is a sound economic & social policy, which includes a tax base which is wide enough and equitable, and that will help to redistribute wealth in an equitable manner

Illicit capital flows are currently six to ten times the amount of ODA coming in to countries; more needs to be done to close loopholes, and deal with fraud and other deviations.

Taxing natural resources for the common good; e.g., an extraction tax – yields good profits; it’s an immobile tax base; predictable & stable.

Norway has been successful with a petroleum tax using the Norm price system (not clear about this).

Extractive Industries Transparency Initiative – transactions between states and companies are disclosed. Norway is the only OECD country participating in this, along with 5 African countries

Indicated that 2006 was a good year for innovative finance : $2.00 tax on airline tickets has yielded $2billion for vaccine procurements. (French initiative); Int’l. Finance Facility forImmunization (IFFI) - $3.6 billion; Advanced Market Mechanisms (AMC) also good results

FTT – potential $30 - $40 billion annually; rate of 0.005%

FTT resistance : how will revenues be managed; is it do-able, if for unspecified purpose

Julien Meimon - Leading Group on Innovative Financing

Monterey addressed the limitations of both ODA – it fluctuates & is fragmented; and of market/private flows – evidenced in the recent financial crisis. Considering the MDGs and climate goals – need a source that will provide predictable & sustainable flows.

Three characteristics of innovative financing:

1) more stable & predictable than ODA

2) multilateral arrangements; variety of actors – e.g., Bill & Melinda Gates Foundation

Five categories of innovative financing “:

1) market mechanisms : auctioning resources – Germany & CO2

2) guarantee mechanisms : IFFI & AMC

3) tax on global activities – FTT

4) citizens’ contributions - individuals & firms; remittances

5) debt management : debt-to-health

FTT is most efficient. $4,000 billion is exchanged each day; a tax of 0.005% could yield more than $30 billion annually. MDG re: education needs $16 billion annually……. Both the IMF & OECD have agreed as to its feasibility; more than 40 countries are already doing this in their own budgets. Coordination is the issue. There is also an ethical dimension – the economic/financial sector is under-taxed, yet it gains the most. With the FTT, countries would benefit from the growth of this sector – not impede its continued growth.

Among the countries urging forward movement on this are France, the EU, Germany, Spain, Argentina, African Union, Ethiopia, So. Africa. NGOs worldwide have helped move this as well

Ekaterina Gratcheva – World Bank

There has been a shift from ODA to private sources. In 2010, ODA was $129 billion – but far short of what is needed.

Addressed sovereign risk management as a way of improving access to finance for development

Case of Malawi – Recurrent drought & its impact on maize production created ongoing food insecurity. Donor funds provided too little, too late. Malawi wanted to be pro-active and minimize its dependence on scarce resources. Recurrent drought was a disaster risk; poor maize production, a commodity risk. The World Bank Treasury helped Malawi transfer the risks to the market. ( see power point )

Renate Hahlen – European Commission

EU mobilizes one-half of global aid

EU has shown that MDGs are not simply inspirational, but time-bound targets; EU states have reached the 0.7% commitment. Despite the financial/economic crisis, EU increased its ODA; others must step-up-to-the-plate as well.

European Commission agenda for change; focus aid on poorest countries

European Commission supports FTT

Abdallah Al Dardari – UN-ESCWA

Spoke from a regional perspective – inter-Arab. Trying to understand underlying tensions that occasioned the “Arab Spring”.

Oil resources for investment in ODA. Investing in real economy, rather than in international financial markets, reaps greater benefits for both oil exporters and importers.

The liquidity surplus in Arab banks in middle income countries & in LDCs - $150 billion – just sitting there. Spoke of need for structural transformation of banking system – would have positive impact on poverty eradication and employment.

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