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Making international public finance more effective


Progress towards financing the Sustainable Development Goals has been uneven across countries and sectors. For example, financing gaps persist, resulting in the need for more effective prioritisation and sequencing of donor interventions; some financing instruments are not as effective as they should be; and fragmentation and limited cooperation among development actors could weaken the potential reach of their interventions. The Covid-19 pandemic and the response to this health, social and economic crisis have exacerbated these challenges.

In the recovery phase, budgets for international cooperation could be the first items cut as a result of competing government priorities. Concurrently, those partner countries dealing with the emergency and planning their recovery are very likely to increase their demand for external assistance as other financing options – government revenues and borrowing from international capital markets – might dry up. Falling supply and growing demand for external assistance will raise a series of challenges to ensure those reduced resources become more effective and to identify creative and overlooked solutions to expand the resource envelope.

The objective of our work is to offer the analytical evidence and provide recommendations to help revert such trends and address these challenges. We inform policy decisions of bilateral and multilateral agencies when it comes to the allocation of their scarce financial and human resources. We especially do so by bringing in and analysing the perspective and the demands from partner country governments.

Key aims:

  • Providing recommendations on how development agencies could increase the effectiveness and efficiency of their (smaller) budgets, by rethinking the allocation, prioritisation and sequencing of their interventions as well as by redefining the division of labour across development actors to maximise their respective ‘comparative advantage’.
  • Analysing why bilateral development agencies should work with the multilateral development finance system and recommend how they should partner to improve the effectiveness of their budgets and operations.
  • Identifying interventions that could help stretch the resource envelope for international cooperation in more creative and efficient ways.
  • Supporting the design of instruments and approaches for international cooperation that could be adapted to country circumstances to maximise their reach, especially when new partnerships between countries are forged as aid flows fall or programmes are phased out.

See some of our work in this area below.