# 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

## Opening Address by Russia’s Minister of Finance A.L. Kudrin at the International Conference on New Partnerships in Global Development Finance

Dear Co-Chairs,
Your Excellences,
Ladies and Gentlemen,
Colleagues,

I am honored to welcome you on behalf of the Russian Federation at the second international conference on development assistance partnership expansion, which is held in Moscow. Let me express my appreciation to all of you for participation in the conference and thank our colleagues from the World Bank and the Organization for Economic Cooperation and Development for their great contribution to the preparation of this event.

Today, increasing assistance to developing nations in order to combat poverty and provide for sustainable economic growth is among the most discussed issues of the largest international forums.

Mobilization of necessary financial resources is undoubtedly a key factor of success. There is a trend towards annual growth of aid provided by the entire donor community, which has been quite obvious over the last decade. Thus, annual official development assistance increased from $53 billion in 2009 to $121 billion in 2009. Of course, the bulk of aid is provided by traditional donors. However, the so called ‘emerging donors’ have been playing a much more substantial role over the last few years, gradually increasing their participation in official development assistance (ODA) finance, including South-South cooperation. It is an objective process related to the growth of the national economies of most emerging donors and their share in the global markets of goods and services.

Emerging donors have been playing an increasingly larger role in a more and more sophisticated architecture of international development aid. Experience generated by new donors as former aid recipients gives them unique comparative advantages in establishing partner relationships based on regional and cultural bonds. South-South cooperation can be used as an instrument to share information and experience and develop a partnership dialog. Provision of humanitarian and technical assistance may be noted as one of the most rapidly developing areas of collaboration. There is much interest in triangular cooperation based on experience and technical resources of traditional donors that may be used to implement international development aid projects.

It is evident that emerging and traditional donors shall be united by the common task of achieving the Millennium Development Goals (MDGs) and sustainable global growth. However, appearance of new development partners not only opens up access to new ideas and resources but also poses new challenges to the entire donor community.

Today, we are facing a situation when the global financial and economic crisis – the most severe crisis over the last decades – is threatening to undermine the first successes in the achievement of the Millennium Development Goals by 2015. Turmoil in the financial markets of developed countries and a drastic fall in their economic growth rates have deteriorated economic development prospects for the poorest countries. As shown by the World Bank’s recent studies, 94 out of 116 developing nations are already experiencing economic growth reduction (43 of them are classified as the poorest countries). The largest expenditure cutback is observed in health, education and agriculture. Under these circumstances, it is fundamentally important for the donor community to reaffirm its development aid commitments and maintain development assistance growth rates in compliance with the approved targets.

It should be noted that the majority of new donors maintain and sometimes increase the earlier agreed level of assistance in the context of the crisis while many other partners have frozen or cut back expenditures on these purposes.

Thus, Russia is not only meeting its earlier commitments in the midst of the global crisis but has also significantly increased expenditures on international development aid (InDA). According to preliminary estimates, federal budget funds allocated by Russia to developing countries in 2009 on a bilateral and multilateral basis, which are classified by the OECD Development Assistance Committee as Official Development Assistance, amounted to about $800 million vs. $220 million allocated a year earlier.

In the context of the crisis, Russia has initiated the establishment of a new mechanism to interact with and support poor countries within the Eurasian Economic Community (EurAsEC). Russia and other EurAsEC states have established a $10-billion Anti-Crisis Fund, with Russia contributing $7.5 billion. The Fund’s proceeds shall be partially used to support low per capita income countries on terms and conditions comparable with ODA criteria.

Russia endeavors to use a wide range of ODA provision mechanisms, including the multilateral ones. While expanding multilateral development assistance, Russia uses its benefits such as availability of well-established aid delivery mechanisms and additional coordination and harmonization opportunities provided by international organizations, as well as financial monitoring systems, and technical capacity/expertise and knowledge.

Russia “considers it critically important to preserve the recent steady upward trends in financing development”. In that context, we have been increasing the volume and diversifying the formats of interaction with various multilateral institutions, including the UN agencies. Such activity covers contributions to international organizations engaged in development program implementation, financing of global facilities and special international initiatives sponsored by G8 and G20, and support of innovative ODA financing instruments.

We have intensified our support of efforts made by the World Bank to provide assistance to poor countries. Pursuant to agreements reached at the G20 meeting, Russia decided to participate in and transfer $50 million to the World Bank’s Vulnerability Framework. Funds allocated under the program shall be used to back up welfare systems, support employment, help stabilize labor markets, and provide access to basic social services.

Next several years would be critical for the achievement of the Millennium Development Goals. Therefore, proceeding from the principle of shared responsibility for international development, we believe that in the current circumstances it is especially important for all donors to support and participate in the Sixteenth Replenishment of IDA funds planned for this year.

Today, all members of the existing development aid system should take into account new historical realities of the process. To achieve the Millennium Development Goals facing the global community we need partners’ unity based on both experience gained by donors and multilateral development organizations, and experience generated by the recipient countries; and we should also consolidate our efforts to eliminate global threats such as hunger, poverty, epidemics, environmental degradation, and a wellbeing gap between different regions of the world.

The 2006 Conference on Emerging Donors in the Global Development Community held during Russia’s G8 Presidency broadly outlined the general principles of strengthening the global aid system: sharing of knowledge, coordination of strategies and policies, and partner country ownership.

We would like this Conference on New Partnerships in Global Development Finance to outline practical steps with a view to promoting further cooperation, exchanging experience and sustaining the multilateral partnership dialogue which aims to achieve consensus on development aid efficiency, administration of assistance provided, and expansion of triangular cooperation. As to Russia, it intends to facilitate the process and take an active part in establishing new partnership relations that would make it possible to shape a new global aid system.

In conclusion, I would like to reaffirm Russia’s commitment to international development goals, and wish every success to the conference. I hope that the partnership dialogue initiated in 2006 will continue and give rise to new cooperation formats.

Thank you.