Advocacy International attended President Chirac’s high-level conference on Innovative Financing for development in Paris.
In 2003, the UK proposed an International Finance Facility as a new way of governments combining to raise finances for international development. This initiative foresaw the potential for borrowing on the international capital markets by issuing long-dated government-backed bonds. This would enable governments to raise large sums of money up-front for disbursement over the next ten to fifteen years in order to tackle such urgent problems as the AIDS epidemic and to help low-income countries achieve the Millenium Development Goals. The bonds would be repaid by governments over the next thirty years. This scheme would allow the so called “front-loading” of aid, whereby the money needed for development would be available today but the payments for that spending could be spread over the longer term.
As initially envisaged, the IFF would be able to direct as much as $50 billion a year to development programmes. As with other initiatives for innovative financing, one of the benefits of the IFF is that it would allow countries to plan interventions on health and education on the basis of long-term, predictable flows of finance. It is this long-term predictability in finance which has traditionally been lacking in aid flows to poorer countries.
To date, progress on implementing the IFF has been limited to a smaller scale pilot programme to generate funds for childhood immunisation – known as IFFIm. IFFIm has secured pledges from the UK, France, Spain, Sweden, Norway and Italy, and the first bonds are scheduled to be issued in April 2006. It is estimated that this programme alone will save five million lives by 2015.
The UK Government report on the IFF “The International Finance Facility” can be found at: http://www.hm-treasury.gov.uk/media/837/60/
