InextricableLinkInnovative Financing During Economic Downturn. The Millennium Development Goals (MDGs) represent the 'biggest promise' ever made to the world's most vulnerable people. The years 2002-2008 saw incredible global economic growth and the scaling up of health programs across the developing world, resulting in a dramatically improved health situation for the poorest populations.

But the global economic and financial crisis has sparked export declines and reduced trade and investment. And now donor countries under the guise of austerity are reducing, stalling or flat-lining global health investments. Most urgently, we risk losing lives today - not to mention the lost gains from a decade of successful scale up.

Given these challenges, we must find ways to improve aid effectiveness by (a) increasing the amount of funding available, and/or (b) stretching the value that funding delivers, in order to meet the funding gap. The critical question becomes how to transform the pace of change from the last decade into faster progress with more limited financing.

Innovative financing is that financial instruments in the private sector are re-cast to suit development objectives. The World Bank distinguishes between innovative finance mechanisms that generate additional funds, make funds more efficient, and link funds to results. It is commonly agreed that in addition to raising funds for development, effective innovative financing should be complementary to official development assistance, stable and linked to the idea of global public good.

New Financing. Clearly we need additional and complementary funds to bridge the resource gap in global health. New Public Revenue Streams, as defined by The Leading Group for Innovative Financing, bring forward the availability of finance or generate additional funds for international development through charges raised by revenue generating authorities. UNITAID in its first three years raised over a billion dollars, funded projects in 94 poor countries while creating new markets for better drugs. International Finance Facility for Immunizations (IFFIm) by issuing bonds in the capital markets has raised $5.9 billion with bond issuances at $2.6 billion.

Leverage. Mechanisms that make public funds available for development earlier by taking on liability, or reducing debt burden. Advanced Market Commitments minimize the risk for suppliers so they can engage in R&D, Marketing and Sales activities have put up $1.5 billion for pneumococcal vaccines. The IDA Buy-Down, referring to a third party donor paying for a specific IDA credit on behalf of the government; Pakistan and Nigeria received almost $150 million from donors to buy-down more than $300 million in IDA credits. Debt2Health makes funds available to the Global Fund projects through reducing a country's debt burden. More recently countries are using a receivable approach to financing their development via the asset-backed securitization of future-flow receivables, e.g. Diaspora bonds, or GDP-indexed bonds.

Public-Private Incentives. Perhaps the most untapped breed of innovative financing are hybrid initiatives that present a clear and shared stake by both official and private sector actors—not only blending, but co-joining public and private investments to forward development objectives. Volume guarantees can help minimize uncertainties suppliers have about scaling up; for instance, Affordable Medicines Facility- malaria (AMFm) a global subsidy managed by the Global Fund, is designed to expand access to artemisinin-based combination malaria therapies (ACTs). Pledge Guarantee for Health (PGH) an innovative financing tool that uses bank guarantees to underwrite donor commitments , securing low cost commercial credit for recipients of aid on the basis of pending aid commitments; as the private sector has done for centuries, using bridge financing to accelerate commodity delivery while reducing supply chain inefficiency and supplier risk.

Aid effectiveness. Progress to meet the MDGs are impeded in part due to aid ineffectiveness. As much as $0.28 of value is destroyed for every $1 of ODA due to volatile donor funding flows adversely impacting patients and health systems. Organizations could re-design processes or leverage mechanisms to help minimize the amount of waste due to stock outs, premium risk pricing and emergency and shipping costs. Returning savings back to programs achieves the same goal as raising new capital, but does so quicker and more efficiently than setting up new instruments.

The Millennium Development Goals are still attainable. According to the MDG Report of 2010, the overall poverty rate is expected to fall to 15% by 2015, translating to over 920 million people leaving poverty. Regardless of whether it is just, the economy and global health are inextricably linked: money funds health; health creates money. The challenge now is to work even harder, to innovate, maximizing the value of every dollar and resource to deliver on the biggest promise.