Leading Group on Innovative Financing for Development

"Innovative financing : it is now time for action"

Emilie — 2010-09-07T16:47:30Z

by Bernard Kouchner for France, Katsuya Okada for Japan, Charles Michel for Belgium (september 1st, 2010)

Are you aware of the realities of today's world ? A billion people don't have access to drinking water ; a billion people suffer from hunger ; nearly one million people die each year of malaria, 1.3 million of tuberculosis and 2 million of AIDS ; and poverty keeps some 72 million children out of school and prevents them from realizing their potential.

To tackle such global issues, the UN set out the Millennium Development Goals (MDGs), which the international community should achieve by the year 2015. A wide range of financial resources that are sustainable, predictable and additional to the traditional Official Development Aid (ODA), need to be mobilized to meet global development needs, including the MDGs. Given the inexorable urgency, we must act.

We are determined to find an effective way to finance development that would accompany-and not replace-public aid. In a world marked by substantial gaps in development and standards of living, we must promote innovative approaches and instruments.

Current measures of innovative financing include, among others, taxes on airline tickets to finance access to essential medicines through UNITAID, a fund hosted by WHO, and bonds secured by government pledges to finance immunization (GAVI). Such measures have made it possible to mobilize resources to fight against the three major infectious diseases (HIV/AIDS, Tuberculosis and Malaria) and to scale up immunization programs. They have produced remarkable results. Moreover, efforts to encourage voluntary contributions such as donations by citizens, consumers and companies have been made.

The Doha Conference in November 2008 called on the world to expand the scope of innovative development financing. New instruments that are based on global activities are becoming available to us ; broad-based financing that could, through miniscule contributions repeated many times over, change the dimensions of hope, if properly coordinated.

With a view toward the UN Summit on the Millennium Development Goals this September, we will endeavor to make more countries understand the importance of innovative development financing, whose success has already generated more than $3 billion since 2006.

France has promoted innovative development financing from the start. Together with Spain, Brazil, Chile and others, it launched the Leading Group on Innovative Financing for Development in 2006, and 60 member states have already joined the Group. Japan assumed the Presidency of the Leading Group in June, and will hold the 8th plenary meeting in December. Under its presidency of the European Union, Belgium decided to put this issue on the development agenda. Discussion on innovative development financing must now be further extended to the global political arena through the efforts of the Leading Group including Japan, Belgium and France.

As a concrete step towards achieving this aim, we established a Taskforce on International Financial Transactions for Development in October 2009 with a single objective : to come up with a shared analysis of what is feasible ; and to make concrete, realistic proposals.

We approached the top specialists : legal scholars, economists, researchers and even bankers, to analyze the different options. They proposed several different mechanisms for levies on financial transactions, including on foreign exchange movements (currency transaction development tax).

Their work is now available in a solid, well-documented report. This report assesses technical issues in a comprehensive manner, and provides estimates on tax revenues. The report mentions that a levy of five cents for every $1,000 exchanged could bring in more than $30 billion per year. It supplements and updates other analyses carried out regularly over the years by the UN, the European Commission, and the Landau Report. It also provides us with common ground to discuss innovative financing, and has started to play a significant role in prompting greater international discussion.

The report and other sources mention that with financial flows up sevenfold since the beginning of the decade, the financial sector is one of the main beneficiaries of global economic growth, and the volume of foreign exchange transactions worldwide is about $3.6 trillion daily, so the volume of all transactions (stocks, bonds, derivatives) is even higher ($210 billion daily for bonds and $800 billion for stocks).

What should be done with the revenues mobilized by innovative financing and how ?

By 2015, the target year of the MDGs, we must provide safe water for a billion people ; enough food for a billion people ; appropriate treatment for major pandemics ; education for children.

In order to achieve these goals we should not be inward-looking. We need to have sympathy, as fellow human beings, with people who are struggling throughout the world and extend our support to developing countries.

We cannot just rely on the traditional ODA. The real challenge today is designing an innovative mechanism based on strict governance and allocation criteria. It is time to act, and to do it in an exemplary fashion.

Innovative financing: it is now time for action

Julien — 2010-09-01T21:34:00Z

By Katsuya Okada for Japan, Charles Michel for Belgium, Bernard Kouchner for France

"Do you know the realities of today's world? A billion people don't have access to drinking water; a billion people suffer from hunger; nearly one million people die each year of malaria, 1.3 million of tuberculosis and 2 million of AIDS; and poverty keeps some 72 million children out of school and prevents them from realizing their potential.

To tackle such global issues, the UN set out the Millennium Development Goals (MDGs), which the international community should achieve by the year 2015. A wide range of financial resources that are sustainable, predictable and additional to the traditional Official Development Aid (ODA), need to be mobilized to meet the global development needs including the MDGs. Given the relentless urgency, we must act.

We are determined to find an effective way to finance development that would be alongside—and not in place of—public aid. In a world marked by substantial gaps in development and standards of living, we must promote innovative approaches and instruments.

Actual measures for innovative financing include among others taxes on airline tickets to finance access to essential medicines through UNITAID, a fund hosted by WHO, and bonds secured by government pledges to finance for immunization (GAVI). Such measures have mobilized resources to fight against the three major infectious diseases (HIV/AIDS, Tuberculosis and Malaria) and to scale up immunization programs. They have produced remarkable results. Moreover, efforts to encourage voluntary contributions such as donations by citizens, consumers and companies have been made.

The Doha Conference in November 2008 called on the world to change the dimensions of innovative development financing. New instruments that are based on global activities are becoming available to us; broad-based financing that could, through miniscule contributions repeated numerous times, change the dimensions of hope, if properly coordinated.

Toward the UN Summit on the Millennium Development Goals this September, we will endeavor to have more countries understand the interest of innovative development financing, whose success has already generated more than $3 billion since 2006.

France has promoted innovative development financing, from the start. With Spain, Brazil, Chile and others, it launched the Leading Group on Innovative Financing for Development in 2006, and 60 member states have already joined the Group. Japan has assumed the Presidency of the Leading Group since this June, and will hold the 8th plenary meeting in December. Under its presidency of the European Union, Belgium decided to put the issue on the development agenda. Discussion on innovative development financing must now be further extended to the global political arena through the efforts of the Leading Group including Japan, Belgium and France.

As a concrete step toward this aim, we established a Taskforce on International Financial Transaction for Development in October 2009 with a single objective: to come up with a shared analysis of what is feasible; and to make concrete, realistic proposals.

We approached the top specialists: legal scholars, economists, researchers and even bankers, to analyze the different options. They proposed several different mechanisms for levies on financial transactions, including on foreign exchange movements (currency transaction development tax).

Their work is now available in a solid, well documented report. This report assesses technical issues in a comprehensive manner, and provides estimates on tax revenues. The report mention that a levy of five cents for each $ 1,000 exchanged could bring in more than $30 billion per year. It supplements and updates other analyses carried out regularly over the years by the UN, the European Commission, and Landau Report. It also offers us common ground to discuss innovative financing, and has started to play a significant role in evoking greater international discussion.

With financial flows up sevenfold since the beginning of the decade, the financial sector is one of the main beneficiaries of global economic growth, and the volume of foreign exchange transactions worldwide is about $3.6 trillion daily, so the volume of all transactions (stocks, bonds, derivatives) is even higher ($210 billion daily for bonds and $800 billion for stocks).

What should be done with the revenues mobilized by innovative financing and how?

Toward 2015 the target year of the MDGs, we must provide safe water for a billion people; enough food for a billion people; appropriate treatment for major pandemics; education for children.

For approaching these goals we should not be inward-looking. We need to have sympathy, as a fellow human being, with people who are struggling throughout the world and extend support for developing countries.

We cannot just only rely on the traditional ODA. The real challenge today is designing an innovative mechanism based on strict governance and allocation criteria. It is time to act, and to do it in an exemplary fashion".

Report to the Task force : Globalizing Solidarity : The Case for Financial Levies

Julien — 2010-07-16T08:18:03Z

Report of the Committee of Experts to the Taskforce on International Financial Transactions for Development


Globalizing Solidarity : The Case for Financial Levies: Report of the Committee of Experts to the Taskforce on International Financial Transactions for Development

Disclaimer : The conclusions of the experts' report represent the opinions of the authors only and do not necessarily reflect those of the member states of the Taskforce

Taskforce meeting, 25 June 2010, Paris

Julien — 2010-07-05T15:13:22Z

The twelve member States of the Taskforce met again on 25 June in Paris, following the submission of the expert report that they had requested in October 2009. This report, which has not yet been made public, offers a menu of innovative financing options for development, focussed on international financial transactions. B. Kouchner came to welcome the participants, recalling France's firm commitment on this issue. The States shall meet again during the summer to assess the various proposals. They have decided to disseminate this report only to members of the Leading Group for the time being, under the authority of the Japanese Presidency.

Informal event organized at the UN on June 3rd 2010

Olai Voionmaa — 2010-06-25T09:47:54Z

An informal event on innovative sources of development finance was convened on June 3rd at the United Nations to discuss different existing mechanisms and ongoing initiatives, and to present innovative financing for "guidance" purposes and show the concrete success achieved over the past four years.

At the initiative of the United Nations Secretariat and thanks to the active involvement of several Leading Group member countries, the meeting was followed by most national delegations at the United Nations. Stimulating exchanges took place during the meeting, in particular with the United States and the G-77. Bringing together panelists from various bodies, namely the Secretariat of the Leading Group on Innovative Financing for Development, representatives of governments, the private sector, operators and international organizations, this event helped promote the different current initiatives and challenge certain received ideas on innovative sources of development finance.

The meeting proceedings will be communicated to the high-level panel which is preparing the Summit on the Millennium Development Goals to be held in New York from 20 to 22 September 2010.

Second meeting of the international Taskforce on Education and Innovative Financing, 17 June 2010

Olai Voionmaa — 2010-06-25T09:44:02Z

During the second session of the international Taskforce on Education and Innovative Financing (EifD), which was held under the authority of the Japanese Presidency of the Leading Group at UNESCO in Paris on 17 June, attention focused on the various concrete proposals that might help mobilize supplementary resources, in addition to Official Development Assistance for the education sector. Among different possibilities, five avenues were explored:

a sports tax (soccer levy) that could be based on transfers of footballers/soccer players in various major championships in Europe and other regions where football is the dominant sport, or on live television broadcasts of major football events such as the FIFA World Cup;

voluntary contribution mechanisms relating to migrants' remittances;

sectoral debt cancellation. Bilateral and multilateral debt cancellation constitutes significant financial reserves that may be tied to the targeting of certain sectors, including social sectors.

mobilization of domestic resources. The education sector is characterized by a substantial household investment accounting on average for 1% of GDP devoted to that sector and principally finances private tutoring courses and teaching material. In addition, resources placed in pension funds could be mobilized for education;

public-private partnerships (PPPs). These partnerships, which have developed for some twenty years, can be adapted to the education sector

It was also decided that the third and last meeting of the Taskforce would be held in Paris on 13 July, at the French Ministry of Foreign and European Affairs (MAEE).

COUNCIL OF THE EUROPEAN UNION

Julien — 2010-06-25T09:42:06Z

COUNCIL CONCLUSIONS ON THE MILLENNIUM DEVELOPMENT GOALS FOR THE UNITED NATIONS HIGH-LEVEL PLENARY MEETING IN NEW YORK AND BEYOND

Supporting the achievement of the Millennium Development Goals by 2015

(…)

31. Innovative financing sources and mechanisms complement other resources. The EU seriously considers proposals for innovative financing mechanisms with significant revenue generation potential, with a view to ensuring predictable financing for sustainable development, especially towards the poorest and most vulnerable countries. The EU calls on all parties to significantly step up efforts in this regard, welcomes the ongoing work by the Leading Group on innovative Financing for Development, and takes note of the ongoing work of the Task Force on International Financial Transactions for Development and of the Task Force on Innovative financing for Education.

First meeting of the international Taskforce on Education and Innovative Financing, 11 May 2010

Olai Voionmaa — 2010-06-25T09:42:04Z

The international Taskforce on Education and Innovative Financing (EifD) met for the first time on 11 May in Paris at the invitation of the French Ministry of Foreign and European Affairs (MAEE) which is in charge of the Taskforce's Permanent Secretariat, under the authority of the Leading Group's Japanese Presidency.

The meeting brought together some twenty countries and organizations, namely: Brazil, Chile, Ethiopia, France, Germany, Japan, Norway, Senegal, South Korea, Spain, the United Kingdom, the European Commission, USAID, UNESCO, UNICEF, the Fast Track Initiative (FTI), the Open Society Institute (OSI), Save the Children and the Solidarité Laïque Association.

An initial panel of relevant mechanisms for education-specific financing was presented at the meeting which also helped identify challenges relating to achieving the Education for All (EFA) goals.

The Taskforce also decided that the second meeting would be held at the UNESCO headquarters in Paris on 17 June. The aim of the meeting will be to present more precisely a set of innovative financing possibilities and, insofar as possible, to interconnect these possibilities with education sector priorities.

Seminar on international financial transactions in Brazil, 10-11 June 2010

Olai Voionmaa — 2010-06-21T09:35:43Z

The Institute for Applied Economic Research (Ipea), a federal public foundation linked to the Strategic Affairs Secretariat of the Presidency of the Federative Republic of Brazil, organised a seminar on taxes on international financial transactions in Brasilia on 10 and 11 June 2010.

The seminar was opened by Mr Marcio Pochmann, President of the Ipea and member of the Leading Group Committee of Experts, and was an opportunity to discuss various ongoing initiatives and assemble government representatives, NGOs and international institutions.

A presentation was given on the progress made by the experts responsible for examining the technical and legal feasibility of the various taxes on international financial transactions.

The participants did not fail to point out that taxes on international financial transactions had already been introduced in several countries, including Brazil.

Furthermore, the seminar also provided an opportunity to introduce the book written by Giorgio Schutte, Marcos Antônio Cintra and André Rego Viana on the taxation of international financial flows: Globalização para todos: Taxação solidária sobre os fluxos financeiros internacionais (Globalisation for all: Solidarity Tax on International Financial Flows).

Conclusions of the EU Council, June 17th 2010

Olai Voionmaa — 2010-06-17T08:21:00Z

§20 :

“The European Union remains determined to support the achievement of the MDGs globally by 2015. This is possible if all partners demonstrate firm political commitment, implement necessary policy changes and take concrete action. The European Union calls on the High Level Plenary Meeting to agree on concrete actions aimed at: increasing ownership by developing countries; focusing efforts; improving the impact of policies; mobilising more and predictable financing for development, including innovative sources of financing; and making more effective use of development resources. The European Council reaffirms its commitment to achieve development aid targets by 2015 as set out in its June 2005 conclusions. The European Council agrees to return to this annually on the basis of a report by the Council. »

http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/115346.pdf