The International Finance Facility

In January 2003 HM Treasury and the Department for International Development (DFID) launched a proposal for an International Finance Facility (IFF). The IFF is designed to 'frontload' aid to help meet the internationally agreed Millennium Development Goals. Estimates suggest that development assistance must be doubled and focused on the poorest countries if the Millennium Development Goals are to be met-an increase of at least $50 billion a year. 1 At the UN's International Conference on Financing in Monterrey in 2002, donors pledged to provide an additional $16 billion a year from 2006. But this means a significant resource gap must be bridged if the Millennium Development Goals are to be reached. The Millennium Development Goals represent different indicators of the same basic poverty. Investments in different sectors must take place simultaneously to ensure sustainable progress. Education, health, access to water, roads and other infrastructure for growth must be tackled at the same time to ensure a lasting exit from poverty. Funding for debt relief should reinforce, not replace, funding to build a skilled work force and the infrastructure and capacity to trade. The IFF, as a stable financing vehicle, could provide the critical mass of additional and predictable funding needed to make lasting progress in all these areas. Donors are committed to reaching the target of 0.7 per cent ODA|GNI, but a number have fiscal constraints that will not allow them to increase aid levels in the short to medium term. The IFF should be seen as a complement to donors' long-term commitment to 0.7 per cent ODA|GNI: it would meet the immediate need for resources to meet the MDGs as donors move towards the 0.7 per cent ODA|GNI target. © Crown Copyright 2004. Reproduced with the permission of Her Majesty's Stationery Office. Published by John Wiley & Sons, Ltd.