Financing sustainable human development Jesse Griffiths Eurodad 7 October 2013

Structure A.What do the numbers tell us? B.What should be done? C.How to get there

A: What do the numbers tell us?

Numbers tell us: 1.Domestic resource mobilisation crucial 2.Stemming outflows requires systemic reform 3.Public / private? 1.Urgent need for public finance for LICs and global public goods 2.Private finance – be aware of limitations 4.Mechanisms needed to prevent and deal with debt and finance crises

Numbers tell us: 1.Domestic resource mobilisation crucial 2.Stemming outflows requires systemic reform 3.Public / private? 1.Urgent need for public finance for LICs and global public goods 2.Private finance – be aware of limitations 4.Mechanisms needed to prevent and deal with debt and finance crises

Tax revenue (%GDP)

Domestic investment (%GDP)

Numbers tell us: 1.Domestic resource mobilisation crucial 2.Stemming outflows requires systemic reform 3.Public / private? 1.Urgent need for public finance for LICs and global public goods 2.Private finance – be aware of limitations 4.Mechanisms needed to prevent and deal with debt and finance crises

What do the numbers tell us?

Stemming outflows Illicit financial flows = two thirds tax evasion by corporations – $160bn lost in tax annually by developing countries

Numbers tell us: 1.Domestic resource mobilisation crucial 2.Stemming outflows requires systemic reform 3.Public / private? 1.Urgent need for public finance for LICs and global public goods 2.Private finance – aware of limitations 4.Mechanisms needed to prevent and deal with debt and finance crises

Public/ private? Public need Sub-Saharan Africa = taxes per capita <$500 per person even in lower middle-income countries 37 countries, aid = >10%GDP Many crucial services require public funds to pay for them e.g health, education, sanitation Private flows have macro problems Volatility & predictability Pro-cyclicality e.g 2008 $25bn portfolio equity flowed out of LICs Blending / leveraging – issues of transparency, accountability + development impact

Numbers tell us: 1.Domestic resource mobilisation crucial 2.Stemming outflows requires systemic reform 3.Public / private? 1.Urgent need for public finance for LICs and global public goods 2.Private finance – aware of limitations 4.Mechanisms needed to prevent and deal with debt and finance crises

Dealing with crises Reserves accumulation = insurance as vulnerable to global financial system, no faith in IMF – $7.7 trillion held by developing country governments (2012) – Most in US treasuries – developing countries lending to US on a massive scale Debt crises = with us until proper solution found – Debt Workout Mechanism

B: What should be done? European civil society scorecard for European action – CONCORD – Eurodad – CAN Europe Main point: hold EU governments to account

Scorecard - summary Put the EU house in order – prevent tax dodging (country by country, beneficial ownership, automatic info exchange) Respect policy space (e.g. promote reponsible lending standards) Increase + improve public financing (e.g. ODA + innovative financing) Preventing crises (e.g. debt work out)

C: How to get there Needs focus on financing! – 2015 process (very little in high level panel report, though recognition of importance of illicit flows) – UN committee of experts on sustainable development financing (intransparent) – Need to put high level attention on issue – major follow up to UN FfD conferences (Monterrey 2003, Doha 2008)