DIIS Policy Brief
Recurrent cost boom threathens Millenium Development Goals
What the UN Secretary-General, Ban Ki-moon, keeps quiet about
At the September 2010 UN summit on the Millennium Development Goals the Secretary-General stressed that tremendous progress in school enrolment, disease control and access to clean water had been achieved. This policy brief addresses a question that he did not talk about. How shall the achievements in relation to the goals be sustained beyond January 1, 2016?
The overall gains since 2000 in reaching the goals are impressive, albeit uneven. Several poor countries have made substantial progress compared to the situation ten years ago, but some countries in Africa and elsewhere will not reach them fully – especially not the goal of halving poverty by 2015. At the recent UN summit on the Millenium Development Goals, however, Ban Ki-moon asserted that though ambitious, the goals are doable by 2015 if urgent steps are taken on aid, trade and debt relief. That is the encouraging side of the story.
Other aspects of the story attract much less attention. The future recurrent cost obligations a country faces grow much bigger the closer it comes to reaching the goals. In addition, the more success a poor country has in mobilizing aid to reach the goals, the more aid-dependent it becomes.
It is therefore urgent to address the long-term financing of the costs of the MDGs. Otherwise, present achievements can be undermined by a potential recurrent cost boom in many poor donor-dependent countries.
In this policy brief we recommend five specific actions:
- Focus on and support to productive sectors, without which the future tax base will be insufficient to sustain the real MDG gains already made
- Further strengthen efforts to improve domestic revenue mobilization (tax reform, improved tax administration)
- Combat illicit financial flows from poor countries – most of which aims to avoid local taxation
- Place the recurrent cost implications of budget and project aid support centrally in donor-recipient policy negotiations, and base them on better analyses
- Reduce the donor-dependency effects of the aid financing of recurrent costs by establishing more balanced and explicit rules for donor withdrawal of aid.
The overall gains since 2000 in reaching the goals are impressive, albeit uneven. Several poor countries have made substantial progress compared to the situation ten years ago, but some countries in Africa and elsewhere will not reach them fully – especially not the goal of halving poverty by 2015. At the recent UN summit on the Millenium Development Goals, however, Ban Ki-moon asserted that though ambitious, the goals are doable by 2015 if urgent steps are taken on aid, trade and debt relief. That is the encouraging side of the story.
Other aspects of the story attract much less attention. The future recurrent cost obligations a country faces grow much bigger the closer it comes to reaching the goals. In addition, the more success a poor country has in mobilizing aid to reach the goals, the more aid-dependent it becomes.
It is therefore urgent to address the long-term financing of the costs of the MDGs. Otherwise, present achievements can be undermined by a potential recurrent cost boom in many poor donor-dependent countries.
In this policy brief we recommend five specific actions:
- Focus on and support to productive sectors, without which the future tax base will be insufficient to sustain the real MDG gains already made
- Further strengthen efforts to improve domestic revenue mobilization (tax reform, improved tax administration)
- Combat illicit financial flows from poor countries – most of which aims to avoid local taxation
- Place the recurrent cost implications of budget and project aid support centrally in donor-recipient policy negotiations, and base them on better analyses
- Reduce the donor-dependency effects of the aid financing of recurrent costs by establishing more balanced and explicit rules for donor withdrawal of aid.
DIIS Experts
Sustainable development and governance
Emeritus Researcher
+45 3269 8714
Recurrent cost boom threathens millennium development goals