1. Innovative Financing Mechanisms
Rob Ward
Development Financing team

2. 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.

3. 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

4. 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

5. 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

6. 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

7. 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