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2 - An expanding deposit of resources?

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The momentum for innovative financing has reached a turning point and is quickly building. New ambitious initiatives could greatly increase resources for development:

The first mechanisms to be implemented are already producing spectacular results. But much more can be done to raise additional resources and this first round table helped shed light on several initiatives which are emerging or in initial stages that could reinforce and renew the innovative financing approach.

- Giandomenico Magliano, Director-General for Multilateral Economic and Financial Cooperation, Italy, first explained how De-Tax works, a project which aims to reduce VAT for participating companies who commit to earmarking a portion of their profits to development. Although the project is rooted in an Italian tradition establishing a link between tax issues and exemptions and development and solidarity actions, this initiative could be implemented in other countries.

- Philippe Chérèque, President and CEO, Amadeus, an online distribution system for purchasing and reserving airline tickets, and Bernard Salomé, Executive Director of the Millennium Foundation for Development, then presented the model and potential of the voluntary solidarity contribution project. Funded to date by UNITAID, the project is based on close collaboration between public initiative and the private tourism sector. Using a comprehensive agreement with the main components of the global distribution system (GDC), the aim of the Millennium Foundation is to set up an operational framework which enables people to make a contribution to financing development in the health sector when they purchase or book an airline ticket online. 2009 will be a pivotal year for this project which needs to further convince potential core participants. Its launch is scheduled for September 2009 at the United Nations.

- Michel Kazatchkine, Executive Director of the Global Fund to Fight AIDS, Tuberculosis and Malaria, ended by presenting two innovative financing mechanisms which have been set up in support and with the assistance of the Global Fund: Red and Debt2Health.

RED raises additional resources in the Global Fund’s fight against AIDS thanks to a partnership with the private sector. When consumers buy RED products of partner brands (American Express, Motorola, Gap, Apple, Microsoft, etc.) they know that a portion of the money they spend will go to programmes to fight AIDS. In total, RED has reportedly provided nearly US$120 billion to the Global Fund over two years.

The other initiative, Debt2Health, is a programme to direct debt repayment towards spending in the health sector. Under a three-party agreement with the Global Fund, creditors forgo repayment of a portion of debts owed to them provided that beneficiary countries invest a previously agreed amount in the health sector in reture via programmes which are approved by the Global Fund. A first agreement was signed between the Global Fund, Germany and Indonesia and has converted US$70 million in urgent investments in AIDS services. Similar discussions are currently being held with other creditors.

Workshop participants welcomed the new and promising opportunities that these mechanisms provide innovative financing. They saw in this second wave of innovative financing mechanisms for development an important new aspect in terms of more direct and more citizen-minded solidarity and significant investment of the private sector.

16 June 2009

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