Journal of International Development

J. Int. Dev. 16, 863–864 (2004)

Published online in Wiley InterScience (www.interscience.wiley.com). DOI: 10.1002/jid.1135

POLICY ARENA

THE INTERNATIONAL FINANCEFACILITY: CAN IT DELIVER?

Edited by PAUL MOSLEY

SYMPOSIUM ON THE INTERNATIONALFINANCE FACILITY: INTRODUCTION

PAUL MOSLEY*

University of Sheffield, Sheffield, UK

There is a new climate of optimism and creativity within the international finance scene at

present, especially in relation to the poorer developing countries. The economies of donor

countries and especially their financial markets have recovered since their post 9/11

trough. There is increasing evidence that ‘aid works’, often even in policy-unfavourable

environments. But beyond all this there has been a recent determination not to plough on

into the 21st century with the same old aid modalities but to make a fresh start with new

policy instruments; a fresh start which on all the evidence will be needed if the Millennium

Development Goals, or anything like them, is to happen.

This Policy Arena introduces and discusses one of the most ambitious of these new

policy instruments, the UK Treasury’s International Finance Facility (IFF) formally

launched in March 2004. The IFF proposal is essentially a bringing-forward, through

bond issues, of aid commitments already made, in the new spirit of optimism, by donors at

the Monterrey conference of 2002, but its scope is large: nothing less than a doubling, for

the next few years, of aid volumes currently running at about $50 million a year, with the

explicit aim of getting back on track to meet the Millennium Goals and halve global

poverty by 2015. What is also notable is not only the size of the initiative, but where it

comes from: it is a finance ministry, not a spending ministry, which is not only breaking

out of its traditional function of ‘saying no’ but leading the impetus towards a coordinated

aid surge. Those familiar with the Treasury document on Tackling Poverty: a global New

Deal of February 2002 will be aware that it also represents an attempt towards

coordination of redistributive policies at home and abroad.

Copyright # 2004 John Wiley & Sons, Ltd.

*Correspondence to: P. Mosley, University of Sheffield, 9 Mappin Street, Sheffield S1 4DT, UK.

The Policy Arena presents the Treasury’s proposal side by side with two commentaries,

focused respectively on the two big questions which surround the IFF: can it be put into

practice? And if so, will it work? The paper by Moore and Hulme welcomes the attempt to

secure increased funding, but expresses concerns about the top-heavy conditionality and

governance structure of the facility and argues that ‘more work on developing innovative

mechanisms to deliver social protection and basic services to poorly-governed or conflict-

ridden areas is required’. My own piece, by contrast, expresses the view that, if anything,

more rather than less pro-poor conditionality is required, but that there is evidence that

new conditionality is beginning to achieve pro-poor impact in areas of Africa and

elsewhere that have long been almost impervious to donor effort. But it does worry, not

for the first time, about absorptive capacity: it may be easy enough to spend the money, but

making quick disbursement the priority may not be to the advantage of the chronically

poor, and it is better to pre-empt than to walk headfirst into renewed problems of ‘aid

fatigue’.

But in the midst of all this, let us enjoy the moment. Many of us cannot remember such

hope, euphoria even, about what aid is able to achieve for a very long time. The Editors

would welcome correspondence and contributions aimed at making the moment last a

little longer.

864 P. Mosley

Copyright # 2004 John Wiley & Sons, Ltd. J. Int. Dev. 16, 863–864 (2004)