This publication is intended to serve as a practical tool to enable understanding of how innovative finance for development (IFD) can help overcome the immense challenges facing developing countries, including the Commonwealth’s poorest, smallest, and most vulnerable member countries. There is currently a large shortfall in development financing. While there are no generally accepted estimates of sustainable development financing needs, it is largely agreed that even if the international community meets its existing official development assistance (ODA) commitments, financing needs significantly exceed the finance available. Thus there is an urgent need to tap into new sources of finance and to find ways of delivering traditional sources of finance more effectively. It is critical, therefore, for IFD to be a central feature of the post-2015 financing for development discussions, including the forthcoming third International Conference on Financing for Development in July 2015.
International dialogue on IFD should focus on: seeking agreement that sources of innovative finance should be used primarily for development and climate change; restating the need for an agreement on a core set of principles that should underpin IFD; discussing and agreeing to pursue specific public sources of IFD by identifying a menu of priority IFD options for international focus; and establishing a mechanism to monitor progress in scaling up aggregate IFD and its implementation, which would include agreement on a definition of IFD.
