Australia's Development Program
Development Finance Review
The Government commissioned DFAT to review how new forms of finance can address increasingly complex development challenges facing the Pacific and Southeast Asia to support Australia's foreign policy, trade, security, and development objectives.
The Development Finance Review examined existing sovereign and non-sovereign mechanisms used by the Government. It also examined our rapidly expanding blended finance capability where government financing instruments such as grants and loans are used in combination with, and to leverage, private sector and philanthropic investment in development.
The Review benefited from extensive consultation with key stakeholders including partner governments, multilateral development banks, bilateral donors, non‑government organisations, the private sector, and philanthropic and civil society organisations.
Why review Australia's development finance tools?
Development needs in the Indo-Pacific region are large and growing. Traditional grant-based financing will not be enough to meet the development needs of our region. Supporting partner countries requires a combination of different types of financing as countries develop and challenges evolve.
The Review ensures Australia's development financing supports countries in the Indo-Pacific region build and maintain climate resilient infrastructure, improve gender equality, and supports small and medium enterprises.
Key Government actions from the Development Finance Review
The Government has accepted all eight recommendations of the Review.
The Government will expand the use of blended finance to catalyse private sector financing, particularly in Southeast Asia. Expanded blended finance will deliver development impact and address climate challenges at a scale beyond what can be achieved through Official Development Assistance alone.
The Government will establish Australian Development Investments (ADI). ADI builds on the Emerging Market Impact Investment Fund pilot program, which has demonstrated the power of crowding in private capital for development impact. The Government lifted the finance cap for ADI (previously EMIIF) in the 2023‑24 Budget up to $250 million to catalyse private impact investment into the Indo-Pacific.
DFAT will establish a dedicated Blended Finance and Investor Engagement Unit including to engage with philanthropic organisations and impact investors to draw in their leadership and financing to support international development.
DFAT will establish an International Development Finance Advisory Committee comprised of government and finance sector experts to provide high level finance and policy guidance to Government as it increases the scale and diversity of its development finance capabilities.
The Government will continue to deliver highly concessional finance to support Pacific Island countries with affordable, productive, and climate resilient infrastructure. This will be done without exacerbating economic and fiscal fragility, including by ensuring our lending does not lead to unsustainable debt burdens.
All development finance will be required to have a gender equality objective. The Government will establish a target that 80 per cent of new development finance investments effectively address gender equality in implementation. The Government will join 2X Global, an initiative to support gender lens investing by sharing practices, pipeline opportunities, and co-investment opportunities at scale.
The Government will commit to greater transparency of Australia's development financing portfolio through a periodic public development finance portfolio update that includes reporting on development impact.
Development Finance Review documents
At the Government's request, DFAT led a review into new forms of development finance to support Australia's development, foreign policy, trade and security objective.
An independent feasibility study into the use of non-grant financing (the 'Eyer’s Review’) was commissioned by DFAT in 2019.
- Feasibility Study on the Use of Non-Grant Financing [PDF 2.7 MB]
- Feasibility Study on the Use of Non-Grant Financing [DOCX 766 KB]