Assessment and diagnostics

An assessment of what different types of financing are available at the country level and how they’re being spent allows policymakers to identify opportunities and challenges in mobilising and aligning investment towards identified sustainable development priorities. Assessment of the financing landscape should identify and quantify the different types of financing available – public and private, domestic and international – and strengthen understanding of the contribution such financing can make to sustainable development. The financing landscape assessment can help governments tailor and prioritise policy reforms and actions to make the most of the expanding international financing landscape.

For a detailed overview of financing trends now and in the future, a growing number of countries are using the Development Finance Assessment (DFA) tool developed by the United Nations Development Programme (UNDP). 

A wide range of risks – both financial and non-financial – can affect a country’s ability to finance sustainable development outcomes. In a global context where shocks are increasingly frequent, financing policies must be risk-informed to be sustainable. 

Assessing risk involves (i) identifying the country’s biggest risk factors, and (ii) ensuring that financing decisions and reforms are informed by an understanding of the potential future costs associated with these risks.

Adopting a risk-informed perspective to financing national development can enable policymakers to increase the time horizon of financing plans and can encourage forward-looking development planning. Risk assessments can also be used to make a case for investment in disaster risk reduction and resilience building within national budgets. 

Countries face a range of constraints – including capacity constraints, institutional weaknesses, market failures and policy gaps – that impede financing for sustainable development. Identifying these constraints is a critical step towards developing policy actions or reforms that address existing bottlenecks.

However, in developing countries, constraints are often complex and far-reaching, making it difficult to tackle all constraining factors at once. In light of this challenge, the INFF approach focuses on those constraints that are binding – the constraints that, if lifted, would have the biggest impact on improving the availability and management of financial resources. Narrowing the scope of the policy and institutional assessment helps countries prioritise and sequence constraints to determine which financing policies should be addressed first when developing the financing strategy.