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This policy brief will discuss the prominent sources of financing in LDCs, looking at trends prior to the pandemic, challenges exacerbated by the pandemic and opportunities for reforms and corrective measures to enhance the mobilization of financial resources for this group of countries.

Significant efforts are needed by LDCs to address the financing gaps in pursuit of sustainable recovery from the COVID-19 pandemic. While the traditional sources of financing will continue to be a dominant source of financing, it is important that LDCs adopt more robust policies and reforms to scale up and use it more efficiently, specifically through strengthening tax administration and expenditure management systems, promoting FDIs and capital markets and aligning investments in SDG-related areas. For the medium- and long-term, LDCs should address the challenges gaps in policies, regulatory frameworks and institutional capacities that are necessary to tap into additional, innovative financing instruments. Proactive engagement with the private sector and other stakeholders in all phases is integral to ensure full mobilization of resources from all actors, sharing of responsibility, and thus complementarity and synergy from diverse sources. Multilateralism and cooperation at regional and global levels are a critical force to push forward collective agenda on international finance and assist LDCs in capacity-building, technical assistance to pursue policy implementation and reforms.