In the early days of the COVID-19 pandemic, the United Nations (UN) estimated that developing countries needed an extra US$ 2.5 trillion in external finance to cope with the consequences of the crisis. This vast sum is needed because additional spending needs – for example on health services and social protection – coincide with a simultaneous collapse of all traditional sources of development finance: tax revenue, export earnings, migrant remittances, foreign direct investment and, to a lesser extent, also official development assistance (ODA). In order to discuss how these finances could be mobilized, the governments of Canada, Jamaica and the UN Secretary-General launched the policy dialogue on "Financing for Development in the Era of COVID-19 and Beyond" at the UN in May 2020. By September, the process had delivered a 129-page menu of options that contains about 200 policy proposals. Our paper picks some of the most promising and most innovative proposals that have the highest potential to raise the resources needed to reach the target, and explains and assesses them. We also look at the political feasibility of each of the proposals.
Author: Bodo Ellmers
Published by Brot für die Welt, Global Policy & MISEREOR
Bonn, December 2020