Doha Financing for Development Conference - Predictability of Aid

Side event - The Accra Agenda for Action

29 november, 13:00-15:00

The first session focused on the Predictability of Aid

• The importance of the OECD Aid Pledge to ensure that donors continue to meet their commitments to provide increased and more predictable aid.

• The need for a stronger partnership between the UNDP, UN, IMF and the OECD to foster understanding about how to help scale up aid and what needs to be done to operationalise aid predictability on the ground. Whilst achievements need to be recognised (notably on strengthening national development plans), now is the time to move from the elaboration of studies to implementation.

• There is no excuse – neither technical nor political – for failing to scale up (commitments are dwarfed by the $3 trillion pledged so far to mitigate the financial crisis). Work is underway to focus attention on the financing gaps in countries’ Medium Term Expenditure Frameworks and PRSPs, so as to encourage donors to scale up to fill in those gaps.

• The IMF has modelled the impact of raising ODA to Africa to $85 per capita and argues that scaling up will not significantly undermine macro-economic stability. Although raising the real exchange rate and generating inflation would be challenges,  these problems could be managed over the medium term by adapting aid modalities to recipient needs.

• Australia indicated their commitment to scale up regardless of the financial crisis. Australia’s aid is appropriated on an annual basis, although forward estimates provide an indication of aid flows four years ahead and are therefore predictable .

• Communicating the importance of predictable aid to donor constituencies was highlighted by both Australia and the IMF.

• The discussant from the European Commission, outlined the negative correlation between predictability and conditionality. In countries with strong institutions and transparent policy-making processes, scaled up aid should be based on results and not ex-ante conditionality.

• Interventions from the floor focused on the need for governments to also meet their commitments in the development and implementation of medium-term expenditure frameworks.

• Trevor Manuel noted that capital markets require strict observance of leaders’ commitments in contract agreements and of donor behaviour in relation to their commitments.

• An NGO noted that real sanctions and incentives should be introduced for failure to live up to aid promises (for example Italy should not be allowed to chair the G8). A representative from Zambia similarly called for sanctions against those donors that fail to meet their promises.

• Eckhard Deutscher noted that aid commitments and incentives would be raised during the Senior Level Meeting at the OECD, where donors would be asked what and when they will be delivering on their aid commitments.