Debt and Deficit Financing 15 more difficult. For example, trade liberalization is often a policy requirement, but this requires reduction of taxes on import. Effectiveness in Use of ODA to Support ESCR Effective use of ODA to support ESCR depends not only on recipient governments, but also on donor governments. Much ODA is distributed more in accordance with the political interests of donor countries than the ESCR needs of recipient countries. Moreover, donor governments and institutions attach policy conditions to ODA in the belief that this will lead to more effective use of ODA, but these have often been counterproductive. BetterAid has called for a radical change in the international development cooperation and global governance system, based on a new approach focused on development effectiveness rather than aid effectiveness. They argue for the following key pillars of a just development cooperation ‘architecture’: • A new international legal framework will enforce a harmonization of respective policies, efforts and approaches in promoting international development cooperation; • The UN’s relevant charter bodies (including subsidiary organs), treaty bodies and various specialized agencies will be the legitimate key actors in the system. This will ensure the enforcement of a rights-based approach to development, highlighting women’s rights, gender equality, labor standards and the decent work agenda; • The OECD DAC will refine its mandate to focus on its original functions— mainly monitoring aid flows; • The IMF and World Bank will review their mandates and objectives to be based on a genuine commitment to social justice and increased international cooperation. Their programs and policies will be monitored and reviewed by an inclusive and democratic body under UN auspices.21 Debt and Deficit Financing V. When government spending exceeds total government revenue there is a budget deficit and governments must borrow to make up the difference. Governments borrow by taking loans from other governments, commercial banks, and international financial institutions like the IMF and World Bank; and by issuing bonds to investors. Bonds stipulate the conditions under which the government must pay back the money it borrows. That is, the bond specifies the size of the payments to the bondholders and the length of time over which the bond must be repaid. These conditions of repayment are fixed for each bond. Short-term bonds are paid back