The Monterrey Consensus and Doha Declaration note that domestic capital markets (including equity, bond and insurance markets) can play a key role in mobilizing capital to finance development. The Addis Agenda builds on these, and also stresses the importance of a regulatory framework aimed at incentivizing longer-term investment and aligning markets with sustainable development, along with appropriate capital market institutions and architecture.
Capital markets remain underdeveloped across much of the developing world, even in countries which have increased domestic issuance. This is reflected in the short maturities of much of the domestic borrowing. For instance, outside of Asia, the proportion of domestic debt with maturities of over 5 years, while rising, remains fairly low.
Financial sector strategies provide a mechanism for Governments to reflect on how to further develop the financial sector and come up with implementation plans and policies adapted to the local context.