The Multi-Donor Trust Fund (MDTF)
The Multi-Donor Trust Fund is an instrument designed to facilitate effective coordination between programs and projects needing funding and the funds available. The MDTF makes it possible to assemble funds from more than one donor for programs whose scale exceeds the capacities of a single donor. This is ultimately a mechanism that should, in principle, make it easier to co-ordinate external aid and ensure sound management of the funds made available for rebuilding Haiti.
Haiti has requested that a Multi-Donor Trust Fund be established for reconstruction funds with its administration to be entrusted to the World Bank. A partnership of the Inter-American Development Bank, the United Nations, and the World Bank should make it possible to achieve the objectives mentioned in the previous paragraph, but there must be a performance obligation, for example:
- Make it possible to mobilize more funds and make the funds available more quickly
- Increase the fluidity of financial flows
- Expedite procedures for supplying and mobilizing operators to carry out the programs
- Provide the contributing partners with guarantees of probity and diligence in the use of the financial resources
- Reduce aid transaction costs
The organization tasked with managing the MDTF is responsible for achieving these results, and is accountable to both Haiti and donors.
Use of this funding mechanism needs to be rationalized. Trust funds already exist and others are in the process of being set up. The management of these sources of funding must be coordinated in order to avoid duplication and the associated expenses. Management costs for such funds are relatively high and need to be justified by improved performance. This aspect must demonstrate the same transparency as all the others.
Even though the Haiti Government wants this, it is not reasonable to expect that all the funds available, including those passing through the hands of the multi-lateral agencies and non-government-organizations (NGOs) are in fact going to be managed via this fund. Therefore, it is imperative to define the effective scope of this fund and the methods by which money is paid into and out of the fund.
According to the fund’s prospectus, the aim of this mechanism is to facilitate the Haiti Government’s leadership of the program and project approval and execution structure. It must also allow for a governance structure that includes the various levels of the government, civil society, private sector, and NGOs.
Technically, the fund for managing Haiti’s reconstruction has already been set up. It will be necessary to harmonize the respective mandates of the MDTF and the Interim Commission for the Reconstruction of Haiti (HICR) and define the exact expectations regarding the role played by the fiscal agent responsible for receiving and disbursing the funds.
The details of how these two bodies will function together are to be outlined in an agreement to be reached as quickly as possible, jointly with an agreement on the operating methods and procedures that will be applied. Furthermore, in order to take account of very short term disbursement requirements, it will be necessary to have a fast payment mechanism in place.