Monterrey Consensus
Financing for Development
The 2002 Monterrey Consensus 
is the partnership between developed and developing countries to find ways of financing development that will meet the Millennium Development Goals.
EU Commitments
The EU, which provides over half of all official development assistance (ODA) worldwide, made a number of commitments to achieve this consensus.
- It agreed to increase its official development assistance to achieve 0.39% of gross national income (GNI) by 2006 (as a step towards the 0.7% target set by the UN). This collective pledge was based on individual promises by some member countries to donate at least 0.33% and others to maintain their already high(er) aid levels.
- Other commitments concerned innovative sources of financing, more predictable and stable aid mechanisms, debt relief, aid effectiveness, untying aid, aid for trade, reform of international financing institutions and global public goods.
In 2005 the EU made additional commitments to collectively reach official development assistance of 0.7% of GNI by 2015, and of 0.56% of GNI as an intermediate target by 2010, underpinned by an individual target of 0.17% for the 12 newest member countries (0.33% for 2015) and 0.51% for the others (0.7% for 2015), with those countries that have already reached their targets keeping higher aid levels. The new commitments include helping mitigate external shocks that cause poverty, and making aid more predictable. In its joint position 
for the Doha Follow-up International Conference on Financing for Development the EU has further broadened its commitments, which now also cover areas like good governance in the tax area, customs cooperation, fight against corruption and illegal financial flows, the development impact of remittances and the financing of new, especially environmental challenges, namely climate change. Moreover, the EU agreed to provide at least 0.15% ODA/ GNI to the Least Developing Countries.
The Doha conference while preserving the commitments of the Monterrey Consensus, aimed to evaluate progress and find ways to face new challenges and emerging issues, as reflected in the Doha Declaration 2008 that was adopted by consensus. The conference also decided the organisation of the UN Conference on the World Financial and Economic Crisis and Its Impact on Development (June 24-26, 2009), for which the EU adopted a framework for a joint position.
EU Performance: Doing More, Better, Faster
Since 2003, the Commission has been tracking Europe's performance on these commitments in an annual Monterrey Report. Europe is for the most part meeting its commitments: aid levels increased by more than 30% from 2004 to 2005, and the target of 0.39% GNI in 2006 was exceeded with a record ?47.7 billion in official development assistance (0.41% GNI). After a decline in 2007 (€45.7 bn; 0.37% of GNI) EU aid increased again to €49.5 bn in 2008 (0.40%), but aid volumes of 2009 show that financial crisis has slowed aid flows, although the EU remained the most generous global donor mobilising more than half of global aid: The EU 27 Member States and EU institutions spent €49 billion as official development assistance, corresponding to 0.42% of the combined GNI or €96 per European citizen. [The EU countries that are members of the OECD DAC have together mobilised €48 billion (0.44% of GNI)]. The EU is behind schedule to deliver on its collective intermediate target of 0.56% ODA/ GNI by 2010. The Commission therefore proposes that all EU Member States establish annual action plans for reaching individual ODA targets by 2015 and to strengthen the EU accountability mechanism by creating, in conjunction with the annual Commission monitoring report an EU-internal 'ODA Peer Review' and to report the results to the European Council.
Reaching promised aid levels (collective and individual) will be a major challenge and require determined action of EU Member States in order to meet the Millennium Development Goals. Three out of the 5 largest donors worldwide in absolute terms are EU members ? France, Germany and the United Kingdom. The Commission also welcomes the fact that four of the five countries exceeding the UN target of 0.7% of GNI being devoted to development aid - Denmark, Luxembourg, the Netherlands, Norway and Sweden - are EU members, and that Belgium is set to join this group in 2010.
Based on existing commitments, OECD forecasts suggest that the EU will contribute 76% of the global increase in official development aid from 2008 to 2010. The EU will also provide more than 75% of the G8 pledge for Africa (2004-10).
Europe also supports innovative sources of finance for development, including:
- air ticket taxes,
- the international drug purchase facility (UNITAID),
- advanced market commitments (AMCs),
- the international finance facility for immunisation (IFFImm).
What are the existing innovative sources of funding for development?
Depending on the definition, about a third of all EU Member States raised funds via innovative mechanisms in 2009, but they are piloting most of the existing mechanisms.
- Air ticket levy: France was one of the first countries (in July 2006) to introduce an air ticket levy with a sliding scale based on destination and class. Most of the proceeds are earmarked for development finance, notably an International Drug Purchase Facility (UNITAID) aimed at combating the major pandemic diseases affecting the developing world. The French air ticket levy collected EUR 165 million in 2007, EUR 173 million in 2008 and EUR 162 million in 2009. Following this example, which was subsequently promoted by the Leading Group on Innovative Financing for Development , several other countries around the world introduced similar air ticket levies, including Chile, the Ivory Coast, the Republic of Korea, Madagascar, Mauritius and Niger, which allocate all or a share of the revenues to UNITAID. Furthermore, Luxembourg and Spain collect voluntary contributions from air passengers. Cyprus (EUR 0.4 million), Luxembourg (EUR 0.5 million) and the UK (£25 million) are supporting UNITAID from their general budgets.
- International Financing Facility (IFF): The general concept of the IFF was first put forward by the UK Government in 2003. It is designed to frontload aid by issuing bonds in international capital markets, backed by binding long-term commitments from donors to provide regular payments to the facility. The first concrete implementation of the IFF concept is the International Finance Facility for Immunisation (IFFIm) begun in November 2006. The IFFIm' total anticipated disbursement of USD 4 billion is expected to protect more than 500 million children through immunisation in more than 71 developing countries. So far, IFFIm bonds have raised more than USD 2 billion for immunisation programmes run by a charity called the GAVI Alliance. IFFIm's financial base consists of legally binding grants from its sovereign sponsors, which are France, Italy, Norway, Spain, Sweden, theUnited Kingdom and South Africa.
- Advance Market Commitment (AMC): The idea of an AMC was strongly promoted by the governments of Italy and the UK from the end of 2005. The idea is that donors guarantee a set envelope of funding to purchase at a given price a new product that meets specified requirements, thus creating the potential for a viable future market. In June 2009, the governments of Italy, the UK, Canada, the Russian Federation, Norway and the Bill & Melinda Gates Foundation launched the pilot AMC against pneumococcal disease with a collective USD 1.5 billion commitment. The supporters of this pilot AMC estimate that the introduction of a pneumococcal vaccine through the AMC could save approximately 900,000 lives by 2015 and over 7 million lives by 2030. In October 2009, four suppliers made offers to supply vaccines under the Pneumococcal Advance Market Commitment.
- Debt-for-development swaps: for instance Germany introduced the conversion of debt into grants for health financing in the "Debt2Health initiative". It reduces partner countries' debt as the corresponding amounts are invested in additional financial resources for health systems through the Global Fund. In this way, Germany disbursed EUR 40 million in 2008 and EUR 10 million in 2009. Similarly, the government of Australia is implementing an arrangement worth some EUR 50 million with the Indonesian Government.
- Tax discounts: Many Member States provide tax exemptions or write-offs for private funding of development, for example through civil society organisation, foundations or charities. Such tax reductions exist in Austria, Belgium, Denmark, Germany, Greece, Ireland, Italy, the Netherlands, Portugal, Spain and the UK.
- Belgium has earmarked nearly EUR 90 million of lottery proceeds for development-related purposes
Beyond these existing mechanisms, the Commission will also call Member States to support proposals for innovative financing mechanisms with significant revenue generation potential with a view to ensuring predictable financing for sustainable development.