Designing allocation rules according to the nature of the flows and their goals - FFD4 session

The purpose of this side event is to assess the rationale of donors' allocation of concessional resources and raises the related issue of the additionality of concessional resources dedicated to global public goods compared with those for the development of poor and vulnerable countries. 

The discussion will rely on an analysis of the latest trends in donor supports for poor and vulnerable countries. It will welcome the views of representatives from these countries to find out what trade-offs they are facing and whether international funding is in line with their priorities, so that, beyond the Seville conference, they will not ultimately be left behind the 2030 agenda.

The panel will bring together representatives from several poor and vulnerable countries, as well as donors, and researchers specialized in the financing of those countries.

Achieving sustainable development requires addressing three major and interrelated goals:

• Human development,
• Economic growth,
• The promotion and preservation of global public goods.

Financing these goals calls for the mobilization of diverse resources – public and private, concessional and non-concessional – often through dedicated funding windows  specific to each one. But beyond mobilization, it's essential to determine who should benefit from these flows in order to ensure their effectiveness. 

The answer to this second question, which is too often overlooked, differs according to the goals pursued and the types of the related flows. 

Promoting public health and education, supporting a country's economic growth, mitigating global climate change are all fundamental goals, but these goals correspond to specific normative frameworks (distinct envelopes, different beneficiaries' needs, financing methods and instruments adapted to each objective, differentiated responsibilities, etc.), even if at the operational level their convergence may be desirable. 

In order to look for an optimal use of concessional resources, which are scarce by nature, it is therefore important to agree on rules for geographical allocation specific to each objective.

Key issue

In the absence of clear rules, there is a risk of distortion in the overall allocation concessional of finance flows between countries: the optimal allocation of global public goods finance is likely to differ from that of a development assistance targeted to poor and vulnerable countries. 

A single system for allocating all kinds of funds run the risk of crowding out concessional financing granted to the most vulnerable and poor countries, which may be less concerned by climate mitigation than by presently developing their economies.