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2023’s resolutions for development finance

Foreword

2022 ended up on a consensus that the global financial architecture is no longer “fit for purpose”. In other words, the financial ecosystem created post-war to support international development - at the centre of which are the IMF and the World Bank who were joined later by other international public financial institutions - wasn’t designed to address the multiplicity of challenges the world is facing today, foremost among which climate change. Time is running, and the good news is that 2023 is set up to be a busy year with key events setting the milestones for a reform of the international financial architecture, including a Paris Summit in June. The year will close at COP 28, where we will officially take stock of current achievements.

As we prepare to face hard evidence that too little is being done too slowly, let’s use the positive spirit of January to outline what we would like to see in the next chapter. Deep and concrete changes are what we hope to look back on this time next year and, as explained by Alice Pauthier in her blogpost, two areas of work appear particularly critical for a successful reform. First, the new international financial system should be driven at country level, by the thorough identification of financing needs for sustainable development. Second, the focus of attention should not only be on the volumes of development finance: we should allow more consideration to its real impact on the transition of economies.

At I4CE, we have been and will be dedicating our efforts to contributing to these priorities: on the financial end, by supporting the debate on how to maximise the impact of public development banks; and on the economic end, by developing methodologies and tools to help countries assess their financing needs and pilot the transition. You’ll find out some more about these activities going through our newsletter. 

 
#I4CExpertViewPoint
2023, the year of development finance reform
2023 will be busy with many events organised to address different parts of the global financial architecture reform, including a Paris Summit in June. Alice Pauthier from I4CE tells you more about this agenda and identifies two conditions for a successful reform process. First, it has to be led by countries’ financing needs… yet we are still lacking a granular analysis of countries’ investment needs for a sustainable development. Second, it has to be guided by the objective of maximising the impact of public finance. What we should measure is the impact of public finance on the transition and not only volumes.
#I4CE_Report
A dashboard for finance Ministers 
To mobilize domestic and international financial actors for climate, countries around the world must clarify their national financing strategies. To support Finance Ministries in doing so, I4CE and the 2050 Pathways Platform have developed a dashboard template. It contains economic indicators to assess, act on, and monitor the economic implications and opportunities ensuing from climate long-term strategies (LTS). Meant as a flexible tool, adaptable to varied national contexts, the dashboard is a basis for finance Ministries to develop LTS financing strategies. This dashboard is now available on our website and comes with an associated user guide.
#FromThePast
Long-term strategy use for Paris-aligned investments
To ensure that international public finance is channelled to where it is needed the most, it is important that all countries adopt Long-Term Strategies (LTS) as required by the Paris Agreement.  This I4CE report explores the possible roles of both the LTS development process and the resulting LTS document in providing insights for Development Finance Instituitons. The findings are relevant for a broader range of financial institutions.
Rethinking development banking in the Decade of Delivery
How to address the principal limitations in Development Financial Institutions’ capacity to foster transformational impact in developing countries? How shareholder governments can best support them? We invite you to watch the replay of this side-event we held at COP 27, starting with a presentation of latest recommendations of the OECD and of the Expert Panel tasked with the Independent Review of Multilateral Development Banks for the G20.
Supporting the alignment of financial intermediaries’ strategies and operations
To maximise their impact on the transition of developing countries, Developement Finance Institutions support the alignment of their financial intermediaries in these countries. Watch the replay of this COP side-event we organized to know more about the capacity building mechanisms developed by DFIs and how they engage with national governments, central banks and regulators for the alignment of local financial markets. A guide will be published in March 2023. 
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