Financing Displacement Governance: From Fiscal Diagnosis to Sustainable Inclusion

Financing Displacement Governance: From Fiscal Diagnosis to Sustainable Inclusion is the fifth policy brief in the Governing Displacement series. It examines the financing requirements of sustainable inclusion across refugee-hosting, internal displacement, and climate and disaster-displacement settings. The brief argues that financing choices should follow from fiscal and institutional diagnosis. Displacement can affect public functions, institutional responsibilities, expenditure and fiscal risk in different ways, producing constraints that cannot be reduced to a generic funding gap. It identifies four recurring functions that finance may need to perform: releasing fiscal space, preserving fiscal space, enabling institutional adaptation, and sustaining displacement-related functions over time. The brief develops a functional approach for connecting displacement analysis to financing design, distinguishing the purpose of finance from the particular instruments through which it is provided. It also situates public finance within a wider financing architecture encompassing development, humanitarian, climate and disaster finance and, where appropriate, private capital. Fiscal integration, it argues, should not be equated with the domesticization of displacement-related costs. As the capstone to the first five Governing Displacement briefs, the paper proposes the development of a Displacement Financing Diagnostic to translate fiscal and institutional constraints into financing functions, modalities, terms, institutional destination, timing and results at country, sector or subnational level.