United Nations Department of Economic and Social Affairs Sustainable Development

United Kingdom

UK Intervention on International Financing Facility
During Interactive Sanitation Session 12th April 2005
We align ourselves with the previous statements by the EU on the provision of
water and sanitation services. It is clear there is a need for increased finance
for the sector and more effective use of aid. The UK would like to highlight the
International Financing Facility as a mechanism through which this policy
option (paragraphs 37-41 of the Chair?s text) could be delivered and would
call on others to support this initiative.
Based on the long term commitments to increase aid that donors made at
Monterrey in 2002, the IFF will leverage additional money in the short term by
issuing bonds in the international capital markets.
The IFF is the only feasible mechanism to immediately generate the
necessary increase in development finance to meet the MDGs. The additional
finance raised by the IFF would be entirely based on front loading existing aid
commitments, not new resources.
By frontloading aid, the IFF will be able to deploy a critical mass of aid when it
will have the most impact. The economic and social returns of frontloading
can be very high; money spent now will tackle the root cause of current
difficulties and so dramatically reduce the build up of hugely expensive
problems in the future.
There is a strong case for frontloading aid for water and sanitation due to the
capital intensity of projects.
Significant front loaded resources will enable comprehensive investments to
be made both within and across sectors, which will be complementary and
self reinforcing and increase overall returns.
The IFF could secure a step change in aid effectiveness. Firstly by locking in
commitments from a wide range of donors, it would provide recipient countries
with predictable stable and co-ordinated aid flows. Secondly it could ensure
that these aid flows are used effectively through donor agreement to high
level principles, such as investing in poverty reduction, untying aid and
providing aid in predictable multi year programmes. Thirdly the IFF would
improve the transparency of development assistance allocation, since the
facility?s responsibilities to bondholders would mean that information on the
spread of countries receiving IFF funds would be freely available.
For these reasons Chairman we would encourage other delegations to pledge
their support for the International Financing Facility.