Global Policy Forum

Plenary Session of the Pilot Group on Innovative Financial Mechanisms

Leading Group on Solidarity Levies to Fund Development
July 6-7 2006

Chair´s Summary

The Meeting of the Pilot Group on Innovative Financing Mechanisms was held in Brasilia, July 6-7, 2006. The Opening Session was presided over by Ambassador Celso Amorim, Minister of External Relations, and was attended by Luiz Dulci, Minister-Chief of the President's Office's Secretariat, Jacques Lapouge, Director of the Economic and Financial Affairs Department of France's Ministry of Foreign Affairs, and Jorge Durí£o, President of the Brazilian NGOs Association (ABONG). Forty countries, in addition to international and nongovernmental organizations also participated in the meeting, as shown in the attached list.

The Meeting took place at a new stage of the Action against Hunger and Poverty launched by President Luiz Inácio Lula da Silva in September 2004. This new stage is characterized by the definition of specific actions aimed at raising funds and channeling them to the promotion of economic and social development.

The Plenary Meeting demonstrated the growing consensus about the role innovative mechanisms may play in raising the amount of resources available for developing countries, as a supplementation of the traditional sources of funds, so that they can achieve the Millennium Development Objectives by 2015. In less than two years we have managed to raise the international awareness of the hunger and poverty issue and to make significant progress. The issue is now part of the agenda of the major international organizations.

The ripening of the discussion and assessment of innovative financing mechanisms already makes possible the adoption of specific, concrete projects, as witness the Paris Conference in February and March of this year convened at President Jacques Chirac's initiative. On that occasion, the proposal for the establishment of a solidarity levy on airline tickets met with broad support.

This meeting worked through panels at which government, civil society, and private sector representatives furthered the debate about innovative financing mechanisms and the advantages of their implementation.

Studies were presented on the potential for raising funds from the levies on international financial transactions, particularly in view of the advances of globalization and the increased volume of transactions. On the other hand, urgent attention must be given to the issue of tax evasion, which erodes the tax base of several countries, thereby reducing the resources available for combating hunger and poverty. In this connection, several participants suggested that international institutions devoted to this issue should amplify their action on behalf of developing countries, and proposed that a specific conference on tax evasion should be held. The discussion of the issuing of special drawing rights for development projects was carried further.

The participants called attention also to the role the International Financing Mechanism could play in anticipating disbursements of resources needed for achieving the Millennium Development Objectives. It is thus promising that a pilot project for the financing of vaccination in developing countries will be launched in the short run.

With respect to emigrant remittances, it was thought that, although they are not a properly called innovative mechanism, they inject significant resources into the developing countries. Obstacles to be overcome in this regard include the excessive cost of transfers, the scarce geographical coverage, and the lack of a banking culture. It would also be necessary to enhance the impact of remittances on the development of the receiving countries while respecting the transfer's private character.

In addition, the participants thought that it is important to further encourage voluntary contributions through international and nongovernmental organizations, and the private sector. Civil society has an equally important role in monitoring the use of resources, so as to make project implementation more effective and transparent.

The Meeting confirmed the broad support to the proposal of a solidarity levy on airline tickets and provided the opportunity for an exchange of information on the modalities to be implemented. The pilot project on this matter is already being implemented in several countries. The participants reiterated the legitimacy of this contribution, which is based on a sector that does not suffer from a heavy tax burden. The Meeting made decisive progress also toward the establishment of the International Drug Purchase Facility. With resources from the solidarity levy, this Facility will play a major role in combating AIDS, malaria, and tuberculosis.

Also examined were issues pertaining to the structure of governance; there was also broad consensus on the need to ensure the participation of civil society in decision-making processes. In this connection, the meeting gave opportunity for consultations with representatives of civil society, who made suggestions on various aspects of the initiative. During the meeting a precise timetable was agreed for encounters up to the opening of the United Nations General Assembly, when the establishment of the Drug Purchase Facility will be made official at high level.

This encounter has also served to identify other innovative projects, thereby fulfilling an essential Pilot Group task. As indicated by the panels, some of these projects are already yielding fruit, such as the Social Stock Exchange and the Global Digital Solidarity Fund. Other projects, such as the humanitarian lottery, are also very promising.

The Guyana representative informed that that country, as Pro-Tempore President of the Rio Group, intend to hold a workshop on innovative financing mechanisms. The representative of Norway, which will assume the rotating chairmanship of the Group in September, announced the intention of organizing a technical workshop with international organizations, NGOs and the academy. The results of this workshop will serve as an input to the meeting of the Leading Group, to be held in Oslo early in 2007. The representatives of Spain and Chile put forward proposals of new pilot projects, relating, respectively, to remittances and child malnutrition. These proposals could be death with by the Group in the next months.

Encouraged by the progress made at this Meeting, the participants expressed the hope that, as new pilot projects are adopted, other countries will decide to join the Group and adhere to the innovative financing mechanisms, thereby reinforcing concrete actions and increasing the resources available for combating hunger and poverty.



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