In January 2003, the UK Treasury put forward a proposal to
harness the cash-raising power of the capital markets to make
up the shortfall in government-sponsored international aid. The
UK government is hoping to use its current leadership of the G8
group of industrialized nations as a platform from which to
galvanize support for and implement the project.
The so-called International Finance Facility (IFF) would
raise additional finance by using long term commitments by
donor countries to leverage frontloaded capital, raised through
issuing bonds in the international capital markets.
One recurrent criticism of the proposal is that recipient
countries will not be able to effectively absorb the increased
amount of aid that would be supplied in the short term.
However, the UK Treasury cites figures produced by the World
Bank that suggest that countries in Asia and sub-Saharan Africa
could absorb a 60-100% increase in aid flows in the short