# New Partnerships in Global Development Finance

## Moscow International Conference, February 17-18, 2010

## Ministry of Finance
of the Russian Federation

www.minfin.ru
With support of The World Bank
and the Organization for Economic
Cooperation and Development

## DAC Chair’s Welcome Address

To begin, I would like to express my gratitude to the Russian government, and in particular to Minister Alexei Kudrin, for hosting us at this wonderful venue. And Bob, I am delighted to be sharing this panel with you today.

I was last in Moscow in January 2009 and, in meetings with our partners in the Ministry of Finance and the World Bank office here in Moscow, we also discussed the first plans for this conference. We agreed that, after the 2006 Conference, it would be good to meet again to take the pulse of new partnerships in global development finance. I am very pleased to see that the idea of this conference has become a reality.

We are coming together today in the middle of a radical change to the global landscape. This has become evident in the context of the crisis. For the very first time, it is the emerging world that is leading the world out of its global downturn; emerging economies also helped reduce the shock of the crisis for low-income countries.

To me, the implications for international development co-operation are clear: the Development Assistance Committee, which brings together the biggest donors of the OECD, needs to work with new partners, and in new partnerships, to find solutions to complex development challenges. DAC members have a lot to learn from the expertise and experience of other providers of co-operation.

The DAC knows that it needs to open up. We simply cannot achieve our development goals without broader collaboration and partnerships.

In this respect, we were extremely pleased to welcome Korea as the newest DAC member on 1 January. Fifty years ago, Korea was one of the poorest countries in the world and received substantial amounts of development assistance. Now, Korea has become a success story and has its own growing development co-operation programme. Korea’s membership will enrich the diverse perspectives and approaches that are reflected in the DAC.

I hope that, after Korea, others countries will follow in strengthening their engagement with the DAC. Many countries have made long-standing and impressive contributions to development. The Committee looks forward to working with others who share the commitment to development. It hopes to work with them in the spirit of mutual learning, transparency and accountability.

Before we move on to Axel’s keynote presentation and our first panel discussion, let me mention three of the DAC’s most pressing priorities, most of which relate very closely to the topics we will be discussing today and tomorrow.

First: monitoring aid flows, and tracking whether DAC members are living up to the ambitious aid commitments they have made over the past years, notably in Monterrey and Gleneagles.

The aid figures for 2008 tell a positive story. Official Development Assistance reached its highest ever nominal amount: USD 120 billion. ODA continued growing despite the recession, while other financial flows to developing countries decreased sharply.

However, if we look to the future, we are very concerned. Aid budgets for 2010 suggest that donors will fall short of their promises by a large sum: US 21 billion. In total, they will give USD 107 billion in in aid. It is true that the crisis has not helped maintain aid increases. But the DAC estimates that USD 16-17 billion of the shortfall results not from the crisis, but simply from donors giving less than they had promised in 2005. Of course, this does not apply to all donors.

We have to recognise that fulfilling commitments that have been made repeatedly by heads of state is not an optional luxury. Development co-operation is an investment. It is not charity. Supporting poor countries and promoting sustainable development is not only a moral obligation. It is also in our own self-enlightened interest. Our future in a globalised world is only sustainable if it includes poor countries and offers them a true opportunity to develop and improve the lives of their populations.

A second priority for the decade stems from the realisation that maintaining aid flows will be of no use unless aid is effective in achieving development results. Aid has received a lot of criticism in recent years for not achieving results. We take this criticism seriously. Efforts at reforming the system have begun with the so-called aid-effectiveness agenda.

The 2005 Paris Declaration on Aid Effectiveness and 2008 Accra Agenda for Action have both been endorsed by more than 100 governments. They outline key principles and a roadmap for making aid more effective. Our success in putting these principles into practice will be measured when we meet at the Fourth High-Level Forum on Aid Effectiveness in Korea next year. Showing progress will be crucial for all of us. We must show our parliaments, our NGOs and our general public that development co-operation can set targets and achieve them.

A related problem is that of aid fragmentation – there are simply too many cooks in the kitchen, too many agencies burdening partner countries with their demands. Andrew Rogerson, our advisor on aid architecture, will surely share his thoughts on this challenge over the next couple of days.

We have many middle-income countries around the table today, I would like to invite them to engage strongly in these efforts at reforming the development finance system – your experiences and perspectives are invaluable. The next opportunity to engage will take place in Bogota, Colombia, on 24-26 March 2010, at a High-Level Event on South-South Co-operation and Capacity Development.

A third priority is that we should work together not only on aid effectiveness, but on development at large.

Other policy areas have tremendous impacts on development, such as trade, investment, security, migration, tax co-operation, and anti-corruption. Our policies need to become more coherent. Wherever and whenever possible, development institutions will need to interact with leaders in other policy areas. Together, policy makers from these areas can design a more coherent approach to development.

We must also consider a diversity of global challenges that relate closely to development: the delivery of global public goods such as climate stability, the control of infectious diseases, financial stability, an accessible and equitable world trade system, access to knowledge, and international peace and security.

All of these, I am sure, will come up frequently in our discussions throughout the next day and a half. So let us get started!