increasing aid is not part of the debt campaigns objectives the JDC web Group
has included information on aid because it addresses the same poverty reduction
the UN conferrence on Finance for development the EU and USA announced extra
$12bn aid see UN FFD
Brown has launched an International Finance Fund initiative -below
look at the data on aid for poor countries (and compare to debt data) see Debt
| For the text of the press release -IFF
It seems that
Gordon Brown has recognised the intransigence of certain members of the G8 on
further debt reduction. And if he
can’t go over the hill he will just go round it!
So last year he championed increased aid worth $12bn through the UN
Finance for Development Conference. As reported in JDC Web Group briefs and web
site $12bn (assuming it materialises) is actually worth a lot more than the HIPC
program has delivered so far in terms of annual budgets.
But even this increase in aid, from around $50bn worldwide to $62bn (only
about 25% of which goes to poor countries) is not enough to meet the World Bank
(and Jubilee Plus) estimates that $100bn of aid is needed to achieve the MDGs.
scenario for Gordon’s latest initiative.
It’s quite simple in principle even if it’s dynamite politically.
The fund would borrow money on the international market in the short term
(to 2015) to be paid back in the long term from committed aid from the richest
countries. It would not be on the balance sheet for the poor countries.
This would not be poor country debt, it would be rich country debt, so secure,
low interest etc.
It may not be
debt reduction, but it is far better than nothing at all (which is the prospect
for HIPC), could actually deliver far more short term investment than debt
cancellation and would not simply be a future burden on poor countries.
BUT, nothing comes without risk. From
say 2015 when the aid funds are being used to pay back the bonds, there would be
less aid flowing to the remaining poor countries.
In effect, if the initiative doesn’t yield growth, poverty reduction
and the other MDG goals –perhaps because of conflicts, corruption or politics,
not to mention liberalisation and commodity prices, then there will be far less
aid funding to try again.
it’s a gamble, invest 30 years worth of aid up front and hope and pray that it
works. This time!
Let’s hope its works!
For much more
information on the fund see the press release below - there is a link to a full
document at the end.
23 January 2003
Doubling Aid to Halve Poverty
A proposal for an International Finance Facility which could
double the amount of development aid provided by the richest
countries to the poorest was published today by Chancellor Gordon
Brown and International Development Secretary Clare Short.
The Facility is designed to provide additional financing to
help meet the internationally agreed Millennium Development Goals
so that by 2015 every child is in education, infant mortality is
reduced by two thirds and maternal mortality by three quarters,
and poverty is halved.
The founding principle of the new International Finance
Facility (IFF) is long-term, but conditional, funding guaranteed
to the poorest countries by the richest countries. On the basis of
these long-term donor commitments, the Facility would leverage in
additional money from the international capital markets. It would
seek to raise the amount of development aid from just over $50
billion a year today, to $100 billion per year in the years to
The Facility will ensure not only additional money, but also
value for money. It will do this by providing, for the first time,
a predictable and stable flow of aid, allowing developing
countries to plan long-term investment effectively and
It would thus build on existing agreements, between developed
and developing countries, with each country:
|pursuing anti-corruption, pro-stability policies and
agreeing the necessary transparency in economic and corporate
policies to achieve this;
|committing to the Doha development agenda – a sequenced
opening up of markets to global trade;
|improving the environment for investment and private
sector-led growth; and
|as part of country-owned poverty reduction strategies,
agreeing clear and costed plans for building education, health
and economic capacity.|
Chancellor Gordon Brown said:
“The IFF will provide developing countries that reform with
the means to invest in schools and healthcare, roads and legal
systems, helping to create the environment businesses need as well
as create the conditions that will enable countries to participate
in, and benefit from, global trade. And as families in those
countries are lifted out of poverty, new and dynamic markets will
Clare Short said:
"The Facility could double the aid currently available,
which would provide sufficient investment to enable every country
committed to reform to make progress towards the Millennium
Development Goals. This would help create a more just and safer
back to top
Notes for Editors
The details of the UK proposal are set out in “International
Finance Facility” published today and available from HMT and
DFID website and public enquiry units.
The proposal is for an International Finance Facility to bridge
the gap between the resources that have already been pledged and
what is needed to meet the Millennium Development Goals by 2015.
The Millennium Development Goals (MDGs) were agreed at the UN
Millennium Assembly in 2000 by individual countries, the UN, IMF,
the World Bank and OECD. They are to:
|eradicate extreme poverty and hunger by halving, between
1990 and 2015, the proportion of people whose income is less
than one dollar a day and the proportion of people who suffer
|achieve universal primary education, by ensuring that, by
2015, children everywhere, boys and girls alike, will be able
to complete a full course of primary schooling;
|promote gender equality and empower women by eliminating
gender disparity in primary and secondary education,
preferably by 2005, and to all levels of education no later
|reduce by two thirds, between 1990 and 2015, the under-five
|improve maternal health by reducing by three quarters,
between 1990 and 2015, the maternal mortality ratio;
|combat HIV/AIDS, malaria and other diseases; and
|ensure environmental sustainability, including by halving by
2015 the proportion of people without sustainable access to
safe drinking water (sanitation) and by 2020 to have achieved
a significant improvement in the lives of at least 100 million
The World Bank and the United Nations estimate that an
additional $50 billion in aid from the international community
will be needed each year if the Millennium Development Goals (MDGs)
are to be achieved by 2015.
The IFF would build on long-term donor commitments to raise the
additional money needed to meet the MDGs, comprising a series of
pledges for a flow of annual payments to the IFF. On the
basis of these commitments, the IFF would leverage up immediate
resources for aid by issuing bonds in the international capital
markets. Additional aid could then be disbursed to developing
countries in the form of grants, debt relief and, possibly, highly
back to top
Aid flows would provide predictability by funding 4 – 5 year
disbursement programmes to poor countries through existing
bilateral and multilateral mechanisms.
There would be necessary safeguards for donors comprising:
|one or two high-level financing conditions as a basis for
the pledges by donors to the Facility; and
|more detailed conditionality, based on clear development
criteria, that governs the disbursement programmes funded by
The IFF would provide a predictable and stable flow of aid to
be deployed as a co-ordinated programme of investment to meet the
The IFF proposal offers a number of advantages:
|it is focussed on the financing necessary to help achieve
the internationally agreed Millennium Development Goals;
|it is founded on developed countries’ long-term
commitments to those countries that are striving towards
achieving the goals;
|it bridges the gap by leveraging these long-term
commitments, enabling the 0.7 per cent target to be met sooner
and allowing a substantial increase in aid when it will have
the most impact on achieving the targets by 2015;
|it will also allow a critical mass of aid to be linked up as
a co-ordinated programme of sustained investment across
health, education and other anti-poverty programmes;
|by crystallising long-term commitments from donors it can
provide a predictable and stable flow of aid over the medium
term to countries that remain committed to achieving the
goals, thereby helping provide a catalyst for increased
|its structure encourages donor pooling and co-ordination,
improving the effectiveness of aid. By bringing together donor
flows and diversifying risk it is able to secure value for
|it is based on a tried and tested principle for raising
is available on this website and the DFID
Media enquiries should be addressed to HM Treasury press office
on 020 7270 5238 or public enquiries to Public Enquiry
Unit on 020 7270 4558.
back to top
Notices index January to June 2003
Web Group - last updated 26 Januar 2003