Other official flows generally refer to international public finance that does not qualify as concessional lending. It thus includes non-concessional loans, which are particularly important for countries that have graduated to middle income status, but still have difficulties accessing affordable financing from private markets. It also includes instruments that can leverage private finance, such as blended finance. In this regard, there has been an increasing focus on using public funds to leverage additional public and private resources to meet the large financing needs associated with sustainable development.
The Addis Ababa Action Agenda specifically:
- Recognizes the important use of international public finance, including ODA, to catalyse additional resource mobilization from other sources, public and private … [including through] unlocking additional finance through blended or pooled financing and risk mitigation
- Commits to open, inclusive and transparent discussions on the … proposed measure of “total official support for sustainable development;” reaffirms that the measure will not dilute commitments already made
Blended finance has grown rapidly. Between 2012 and 2018, total private finance mobilized by bilateral and multilateral development finance providers grew an average of 21 per cent annually, to reach $48.4 billion, with Development Financial Institutions reporting that $1.1 billion in concessional finance mobilized about $6 billion. Of the total mobilized, 55.5 per cent targeted the energy and banking sectors, while only 5.6 per cent went to projects in social sectors.
Yet, blended finance has largely bypassed least developed countries (LDCs). Approximately $9.3 billion—or 6 per cent of the $157 billion private finance mobilized between 2012 and 2017—went to LDCs. Blended finance deals in LDCs also tend to mobilize less private finance. The average private finance mobilized in LDCs is $6.1 million per deal, compared to $27 million in lower-middle-income countries and $61 million in upper-middle-income countries.
Read the latest analysis on blended finance by the Task Force here.
Initiated by the OECD, total official support for sustainable development (TOSSD) is a statistical framework for measuring official external resources and private finance mobilized by official interventions, in support of sustainable development and the Sustainable Development Goals (SDGs).
In June 2019, the OECD-established Task Force to develop TOSSD finalized the first version of the TOSSD methodology. A TOSSD data survey was also carried out, to which 43 countries and organizations responded, identifying new activities that were not previously reported in OECD statistics. The Inter-agency and Expert Group on SDG Indicators agreed that it would be beneficial to include an additional indicator in the SDGs global indicator framework to measure development support in the broadest sense that goes beyond ODA. However, the Expert Group was not fully in agreement with the TOSSD methodology and agreed to the establishment of a working group to further consider the methodology and submit a recommendation to the United Nations Statistics Commission in 2022.