"Fulfilment of the Official Development Assistance (ODA) commitments is imperative but still not sufficient to tackle the development emergency", so additional innovative sources of development funding are needed, say Development Committee MEPs in a report drafted by Enrique Guerrero Salom (S&D, ES) on the impact of financial and economic crisis on developing countries.

Need for a levy on international transactions

MEPs are firmly convinced that taxing banking transactions "would be a fair contribution  from the financial sector to global social justice". At the same time, they call for an international levy on financial transactions to make the tax system more equitable and to generate additional resources for development funding, including meeting climate change adaptation and mitigation costs of developing countries.

Financing climate change measures in developing countries

MEPs call upon EU Member States and the European Commission to agree, within the European Union Emission Trading System framework, "to devote at least 25% of the revenues generated from the auctioning of carbon emission allowances to support developing countries in coping with climate change."

Combating tax havens and illicit capital flows

MEPs warn that "the negative impact of tax havens may be an insurmountable hindrance to economic development in poor countries", because it undermines national tax systems and increases the cost of taxation.

Illicit capital flows from developing countries are estimated at US$ 641-941 billion, i.e. roughly ten times global development assistance, says the Development Committee.

MEPs therefore call for "a new binding, global financial agreement which forces transnational corporations, including their various subsidiaries, to automatically disclose the profits made and the taxes paid on a country-by-country basis, so as to ensure transparency about sales, profits and taxes."

Risk of further indebtedness

Developing countries will be obliged to borrow more in order to tackle a crisis caused by developed countries, thus increasing their indebtedness to international financial institutions, say MEPs, who call on national governments to reform the world's financial architecture as soon as possible.

Temporary moratorium on debt repayments

Developing countries face a huge financial gap (estimated at between US$ 350 billion and US$ 635 billion in 2009), which imperils spending in vital areas like education, health and social protection.

MEPs therefore advocate "a temporary moratorium on debt repayments, including capital and interest, and a debt cancellation for least-developed countries, to enable developing countries to implement counter-cyclical fiscal policies to mitigate the severe effects of the crisis."

Reducing remittance costs

One very direct consequence of the crisis for developing countries is the drop in remittances, the money sent home by migrants working abroad. Remittances fell by an estimated 7% in 2009 compared to 2008, which in turn had a considerable impact on the GDP of low-income countries.

To help remedy this, MEPs "ask Member States and recipient countries to facilitate the delivery of remittances and to work towards the reduction of their costs" and welcome the G8 commitment made in L'Aquila "to reduce the cost of remittance transfers from 10 % to 5 % in 5 years."