new financial
contributions
January 2005
do we really need innovative financing
mechanisms ?
¾
the role of private capital flows and remittances (limited
in poorest countries)
¾
a priority : meet our commitments to increased ODA
(0.7% GDP)
¾
another priority : domestic resource mobilization and
fighting tax evasion
¾
is there a case for new mechanisms ?
some paradoxes
‰
no financing for primary education ; total needs : ~ 3 bds
$/year
‰
financing gap in the global health fund
‰
~ 1 bd $/year for 10 basic surgical acts over the world
‰
100 mUSD/year for “green fertilizers” for African farmers
the problem
the need for a stable and
predictable resource
¾
¾
¾
to finance recurring
expenditures (education
health)
to produce global public
goods (medical
research)
to reduce volatility in aid
flows
the system does not
deliver such a resource
¾
annual budget
constraints
¾
coordination problems
‰
negotiations on changing
priorities and burden
sharing
‰
high transactions costs
‰
free riding and under
financing
some examples
„
10% biomedical R&D goes to tropical diseases
(90% of global disease burden)
„
NHI spends 2.7 bn USD on cancer and
65mUSD on tuberculosis
„
budget CGIAR network (16 tropical agricultural
research centers) : $400m ; six biggest agro
biotech companies : 3bn$
global health fund (USD billion)
1,6
1,4
1,2
1
amount pledged
value of approvals
value of disbursements
0,8
0,6
0,4
0,2
0
2001-2002
2003
2004
„
do we need innovative financing
mechanisms?
„
what are the options ?
„
questions and unresolved issues
new financial contributions
voluntary contributions
• US philanthropy
• private foundations
• additionnal payments
on credit cards
« enhanced » and/or
coordinated voluntary
contributions
„ matching funds
„ tax incentives
International Finance
Facility (IFF)
« automatic » budget
contributions
international taxes,
charges and fees
international taxation
environmental taxation
and global common
goods :
carbon tax
‰ air and maritime
maritime transport
‰ a fee on the use of
global common
goods (straits)
‰
additions to existing
taxes (solidarity ?)
financial transaction taxes
very low rates (non
distortive)
‰ market-making
activities exempted
‰ questions on
incidence
‰
tax on arms purchases
(domestic and international)
no institutional innovation
¾
no « world tax
organization »
¾
only states have the
power to tax
no taxation without
representation
¾
¾
several possible
financial mechanisms
‰ through
national
budgets( EU)
a normal legal architecture
‰
an international treaty (or
political declaration)
‰ national legislation and
enforcement
‰ common allocation of
resources
‰ a precedent : IOPC
‰ bypassing
national
budgets (postal union)