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News on innovative financing to fund development

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France is very pleased to hand over the Leading Group’s presidency to Chile, as announced at the Paris Conference on 28 and 29 May. Chile is a founding country in the Leading Group and plays an active role in our work. It will champion and take forward the cause of innovative financing rallying more international support for development.

Since the Paris Conference last May, more groundwork has been laid in innovative financing.
- More countries have introduced innovative financing mechanisms: Jordan for example adopted an air-ticket levy in spring 2009 bringing the number of countries implementing the mechanism to thirteen. Others, like Denmark, have targeted specific activities, taking action on tax avoidance issues. New initiatives are taking shape, like voluntary contributions on airline tickets. And a number of countries have shown interest in the Leading Group’s activities and are expected to join us very soon.

- International bodies such as the UN, the European Union, the G8 and the G20 have shown growing interest in stable, predictable mechanisms providing additional support to official assistance, as can be seen in the increasing number of events devoted to innovative financing and references made to it in final declarations.

- More background papers on innovative financing have been published, and we can particularly commend the considerable work done by the United Nations Secretary-General and by the World Bank. Their two reports, although each studying different aspects, present a common interest in raising the profile of innovative financing and action in this area by our Group.

- More broadly, innovative financing is considered to be indispensable in international debate on development assistance and the means to achieve the Millennium Development Goals. The many public remarks by the leaders of several Leading group member countries, international organizations and NGOs testify to this. Regarding various topics including financial transactions, climate challenges and health for example, innovative financing has emerged as part of the solution to address the crisis, generate new resources in favour of development and more effectively distribute the benefits of globalization.

This growing use of innovative financing directly corresponds to the international community’s commitment in Doha aiming at a “scaling up”. It is the result of our action in various forms - major conferences, more restricted meetings, sideline events, diplomatic mobilisation, work by various taskforces within the Leading Group, communication - and synergy sought with other groupings such as the I8 initiative and the taskforce exclusively focused on health issues that met together with our Leading Group in Paris last May.

There has been major progress in the avenues that the Leading Group mapped out at its last plenary meeting: Concrete developments have been made with regard to almost all the 12 recommendations, including the introduction in more countries of a tax benefiting UNITAID, the creation of voluntary contributions for development, the reduction of the cost of migrant remittances, the fight against tax avoidance, financial innovation and of course the idea of a contribution on international financial transactions for development.

As for this last point, consistent with Recommendation 5 of the Paris Declaration, a taskforce was set up in the Leading Group to study the technical and legal feasibility of this type of contribution. Bringing together fifteen or so countries, it already met in Paris on 15 September 2009. It will meet on 22 October at ministerial level to launch its work officially and will be presided by Bernard Kouchner. It will submit a report to the Leading Group in the second half of 2010 and will report on its work at the next plenary meeting.

The next plenary meeting is scheduled to take place on 28 and 29 January in Santiago, Chile, under the Chilean Presidency of the Leading Group. It will provide the opportunity to share what we have accomplished and to make further progress.

22 December 2009

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