Innovative Financing Mechanisms Rob Ward Development Financing team

Aid commitments In 2002, Monterrey set out the challenge in raising aid to the levels required to meet MDGs by 2015 In 2005, firm commitments to meet this funding gap: 100% multilateral debt relief to match 100% bilateral debt relief EU committed to double aid from 2004 levels by 2010 Building on commitments of others, G8 committed to provide an additional $50 billion by 2010 compared to 2004 2006 and onwards, focus on providing these levels of financing and delivering health and education outcomes.

Innovative financing mechanisms Innovative financing mechanisms were first proposed 2-3 years ago in recognition of challenge in increasing aid to level needed to meet MDGs Key initiatives: Air ticket solidarity levies International Finance Facility (IFF) and pilot IFF for Immunisation (IFFIm) International Drug Purchase Facility (IDPF) Advanced Market Commitments (AMCs) Real momentum – significant support, participation and now in implementation phase

Air Ticket Solidarity Levy Levies on air tickets – globalisation should ensure benefits accrue to developing countries as well Aim to provide stable and predictable resources to support health and other sectors Support for levies: 12 countries to introduce an air solidarity levy: Brazil, Chile, Congo, Cyprus, Cote d’Ivoire, France, Jordan, Luxembourg, Madagascar, Mauritius, Nicaragua and Norway UK will hypothecate existing Air Passenger Duty to IFF/IFFIm Leading Group to consider further implementation UK and France agreed revenue would finance IFF and have established a working group to report by Annual Meetings

International Finance Facility Borrow from international capital markets to increase development assistance now– repayments from levies and existing resources With a focus on health and education, among other sectors, could provide up to $50 billion a year France, Italy, Norway, Spain, Sweden and UK contributing to $4 billion pilot IFF for Immunisation – others expected to announce very shortly Focus on preventable diseases – Hep B, Hib, measles, tetanus, polio – save 10 million lives Central to demonstrating benefit of frontloading and feasibility of mechanism

International Drug Purchase Facility French proposal as beneficiary from levy revenues or from IFF – UK agreement to co-sponsor Objectives: to expand available resources and to ensure sustainable levels for tackling three pandemics to make demand secure and solvent over the long term to pursue a pro-active policy to reduce prices and diversify available products, thereby promoting greater efficiency in the market to ensure the quality of drugs and diagnostic kits Aim to finalise IDPF by UNGA High-Level Meeting on HIV/AIDS on 1 June or by UNGA in September

Advanced Market Commitments Lack of resources in developing countries mean incentives for developing vaccines against three pandemics and other diseases are missing Developed countries commit to finance a given number of doses of a new vaccine at a set price to a certain amount, subject to efficacy and demand Spurs private investment in vaccines and ensures long-term affordable prices for developing countries G7 Finance Ministries have launched process with World Bank and GAVI to take forward the design of a pilot AMC. Recommendations will be considered by G7 Finance Ministers in April