Financing the Millennium Development Goals and Beyond: The Challenge in 2005

1. Financing the Millennium Development Goals and Beyond: The Challenge in 2005 Arabella Fraser, Policy Adviser, Oxfam GB Research Team

2. The price of failure • 45 million more children under five will die between 2005 and 2015 • 247 million more people in sub-Saharan Africa living on less than $1 a day in 2015 • 97 million more children still out of school in 2015 • 53 million more people without proper sanitation facilities

3. Structure • The case for aid • Increasing aid to meet the MDGs and beyond • Making aid work better for poverty reduction

4. 1. The case for aid • Econometric studies, case study evidence • Economic marginalisation of the poorest economies • Evidence for productive use of aid in many low-income countries

5. Fig. 1 Aid levels up, but generosity downNet ODA, $ million and as a percentage of GNI, 1960-2004, OECD countries, 2003 prices

6. Fig. 2 Progress on meeting the 0.7% targetNet ODA as % of GNI, OECD donors, 2004 preliminary data

7. Fig. 3 Projected donor shortfalls in aidVolumes of ODA under different scenarios, based on 2001-2005 average growth rates

8. Fig. 4 Developed country expenditure priorities

9. A Debt Relief Deal • HIPC too limited to meet the MDGs • Importance of additional finance • Current proposals inadequate: UK ‘debt holiday’ and US ‘bold plan’

10. Fig. 5 ‘Effective’ aid volumesNet ODA by purpose, 2002

11. Making aid work better for poverty reduction • The DAC process • Aid allocation criteria • Conditionality: undercutting ownership

12. Fig. 6 Bound in red tapeResponses to the question ‘How much of your ministry’s time is spent in reporting to the donor?’

13. Fig. 7 Expect delays in aid deliveryResponses to the question `Generally speaking, how late do the donor’s aid disbursements arrive?’

14. The DAC process • Monitorable, ambitious, relevant targets • Robust accountability mechanisms • Integration into the MDGs process

15. Real aid allocationsAverage income per capita (PPP, 2003 estimates) of the top three recipients of gross aid (ODA and Official Aid (OA)) in absolute terms, 2002

16. Aid conditions: undercutting ownership • Ongoing administrative burden of conditions • Undermining domestic accountability mechanisms and ‘ownership’ of policy reform • Need greater independent impact assessment

17. Conclusions and recommendations: • Cancellation of multilateral debt for countries that require it to meet MDGs; resources available from additional contributions and use IMF gold reserves • Immediate $50 billion and binding timetables to meet 0.7 by 2010 • Full implementation of Rome and Paris commitments; strong targets and monitoring mechanisms • Focus on poorest countries and communities • Restriction in use of conditions to financial accountability and poverty reduction; respect national processes and independent impact assessment

18. Financing the Millennium Development Goals and Beyond: The Challenge in 2005 Arabella Fraser, Policy Adviser, Oxfam GB Research Team