Through its Ministry of Finance, Luxembourg has contributed to the FIAS programme since 1994. Its current commitment in terms of core-funding stands at EUR 300,000 for the period 2001-2003. In addition, it has offered ad hoc financing for operations in the transition countries of Central and Eastern Europe.

Luxembourg’s official development assistance has been increasing substantially over the last years, rising from 0.35% of GNP in 1995 to 0.82% in 2001. The Government’s intention is to pass the threshold of 1% of GNP by 2004/05. While most of the funds are channelled through the Ministry of Foreign Affairs, a significant role also falls upon the Ministry of Finance as the line ministry for international financial institutions (IFIs) and multilateral development banks (MDBs).

In addition to participating in the capital base of these institutions, the Ministry of Finance contributes to the periodic resource replenishments of concessional facilities like the International Development Association (IDA), the International Fund for Agricultural Development (IFAD), or the Global Environment Facility (GEF). It is also the main supplier of Luxembourg technical assistance funds in the framework of loans or equity participations extended by MDBs.

The development assistance provided by the Ministry of Finance aims at being complementary to the activities undertaken by the Ministry of Foreign Affairs. Five focal areas stand out in this regard, two of which (activities 2 and 3) are particularly relevant for the work of FIAS :

1) debt reduction to permit developing countries to devote more resources to social expenditures;
2) improvement of the investment climate to prevent capital flight, stimulate national savings and attract foreign direct investment (FDI) ;
3) development of local banking systems in support of the real economy, in particular with regard to services available to small and medium-sized enterprises (SMEs);
4) exploration of additional resource flows to be tapped through the mechanisms foreseen by the Kyoto protocol on climate change (« carbon finance »);
5) use of international agricultural research not only to achieve future food security, but also to preserve biodiversity through the establishment of gene banks and a greater reliance on non-chemical pesticides.

FIAS’ work is of particular importance to the development goals supported by the Ministry of Finance in view of the central role it attributes to the advancement of the private sector, which in developed and developing countries alike is now recognized as the main engine of growth and wealth generation.

For more information about the development activities supported by the Luxembourg Ministry of Finance, please refer to our website: www.etat.lu/FI/  (“Rapport d’activité 2001”)