Estimates of the finance needed to meet the Sustainable Development Goals and climate commitments imply that external official finance to developing countries would need to rise by about $500 billion a year. We ask what a transfer of this size would mean for recipient countries. Allocating the additional finance across low- and lower-middle-income countries according to poverty and climate vulnerability, we find that inflows for a typical low-income country would exceed 20 percent of GDP, well above current revenue and aid levels. Transfers on this scale are not a realistic prospect, and there are good reasons to doubt that they would be used well. Aid budgets fell sharply in 2025. Debt relief under the HIPC and MDRI initiatives created fiscal space of about 2 percent of GDP a year, a fraction of the inflows implied by the aggregate estimates, and even this smaller gain in poverty-reducing spending was not sustained. Public financial management assessments under the PEFA framework show that the countries that would receive the most finance tend to have the weakest systems, particularly in budget execution and procurement. We therefore ask how more limited external finance can be used to the greatest effect. We review the evidence on paying for results and on matching increases in domestic revenue and health spending, and we discuss measures that high-income countries can take at little budgetary cost, such as making it harder to hide wealth abroad, that would help developing countries raise their own resources.
