The Conversation on Domestic Resource Mobilization:
Additional Resources:
Key Messages:
- As LICs and LMICs are grappling with exorbitant debt burdens, donor countries are reducing their ODA budgets. The world cannot afford to cut off a lifeline that keeps developing economies afloat and the basic needs of their citizens met.
- Donor countries can promote resilience, expertise, and policy coherence in domestic resource mobilization efforts by allocating more ODA for technical capacity building.
- Allocating more of existing financing to DRM reform will strengthen transparency and accountability in fiscal systems and mobilizing investment where it is most needed.
- To effectively finance sustainable development, we must strengthen subnational finance and address barriers to accessing low-cost, long-term financing.
- Levies on polluting, under-taxed sectors of the economy such as fossil fuels, aviation and shipping provide a vital source of financing for domestic resource mobilization in developing countries. Finance from levies have the potential to help close concessional financing gaps without worsening existing debt burdens.
- To mobilize domestic resources, there must be a commitment to create an enabling investment environment: (1) Address illicit financial outflows and taxing rights. (2) Support a UN Framework Convention on International Tax Cooperation. (3) Promote transparency. (4) Increase capacity-building efforts and technical support in line with national priorities. (5) Channel investment toward gender-responsive initiatives.
- ODA is a worthwhile investment. Sustained, strategic investment in economic stability, social protection, and self-sufficiency within LICs and LMICs will cost donor countries less in the long term than inaction.