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 Review complements the Government's International Development Policy and the Performance Framework, which set the long-term direction for Australia's development program.

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

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The Government has accepted all eight recommendations of the Review.

The Government will establish Australian Development Investments, capitalised up to $250 million, building on the Emerging Markets Impact Investment fund pilot program

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

DFAT will undertake regular periodic public reporting through a development finance portfolio update

DFAT will establish an International Development Finance Advisory Committee

DFAT will establish a Blended Finance and Investor Engagement Unit

The Government is expanding the use of blended finance to catalyse private sector financing in the Indo-Pacific region. 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 has established 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 has established a dedicated Blended Finance and Investor Engagement Unit to engage with philanthropic organisations and impact investors to draw in their leadership and financing to support international development.

DFAT has established 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 isrequired to have a gender equality objective. The Government has established a target that 80 per cent of new development finance investments effectively address gender equality in implementation. The Government has joined 2X Global, an initiative to support gender lens investing by sharing practices, pipeline opportunities, and co-investment opportunities at scale.

The Government has committed to greater transparency of Australia's development financing portfolio through a periodic public development finance portfolio update that includes reporting on development impact.

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• The Government will establish Australian Development Investments, capitalised up to $250 million, building on the Emerging Markets Impact Investment fund pilot program.
• 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.
• DFAT will undertake regular periodic public reporting through a development finance portfolio update
• DFAT will establish an International Development Finance Advisory Committee