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Expert Group Meeting on SDG 1 and its interlinkages with other SDGs

Statement by Rebeca Grynspan, Secretary-General of UN Trade and Development (UNCTAD)

Expert Group Meeting on SDG 1 and its interlinkages with other SDGs

Geneva
07 mayo 2024

Welcome, everybody here to Geneva.

The truth is that it's very little, what I can tell you, being you, the experts. But maybe, let me just remind you that there are several things happening in the UN this year.

And there is a mandate in terms of recovery and the SDGs.

There are two key events that happened. Last year, we had the SDG summit, which came out with a strong political declaration in favor of the acceleration of the SDGs. And this year we have the ECOSOC, a high-level political forum which is tasked with providing and in-depth review of SDG1.

We have received a very strong political mandate to be here. And this is not just a political mandate. This is perhaps one of the most important mandates from the point of view of the multilateral system. Paragraph three of the SDG summit political declaration says, and I quote, “that eradicating poverty in all its forms and dimensions, including extreme poverty, is the greatest global challenge and an indispensable requirement for sustainable development”.

So failing SDG 1 would mean not only failing the 2030 agenda. And let me say again that for the 2030 agenda, I think that is too big to fail, if we can use that expression.

It is the only instrument that we have, the only universally agreed agenda that also calls for solidarity and cooperation at the global level. So failing SDG1 is not only failing the 2030 agenda, but also failing the expectations of the millions of people that are already very impatient because of the impacts that it has had in their lives and that has affected them disproportionately. As I have said in previous occasions, we confront a world with a triple deficit, the deficit of growth, the deficit of trust and the deficit of hope.

And they interact, actually, the three of them. As we know, growth is weak. And I think that is something that also comes out from your outlook and growth prospects.

This will be the worst performing growth, five years to come, together with 2025, that we have had since many decades ago.  We know that for the first time also, we have had reversals in the human development index.

And the trend for most of the countries in the developing countries, I think two-thirds, according to the World Bank’s data, are not very, very good.

I have started to say that we have three groups for those countries.
We have the rich, that even if Europe is not going very well, they have the resilience to come out. We have the emerging markets, most of them perform quite well, and these are the big economies.
And then we have the rest. And the rest is getting lost in the averages of global growth and perspectives of soft landing, because we are, generally very happy that the US will have a soft landing. We hope it will. It seems it will.

But there are many countries that are having a crash landing, and those don't count too much if you have, the rich and big representative in the average maximum, according to the World Bank. Also, this year's public debt servicing costs will grow by 10% for all developing countries and by nearly 40% for low income countries.

So this is a problem that is not going away. Capital flows are net negative for most developing countries, something that we say that is like a reverse blood transfusion.

The countries that are have capital scarcity are sending resources to the rich countries.

Maybe it's good to say that, or it's necessary to say that to fail the expectations of so many who live in poverty today, has in the current context, huge implications for multilateralism.

This is also true with respect to the Summit of the Future, and many of the proposals that are in the Summit of the Future, to go precisely in the direction to strengthen the multilateral system and the multilateral institutions, including the Bretton woods institutions, that are key to get out of the weak growth we have. And this growth, is underpinned by weak investment and weak credit and weak technology.

So what are the sources of growth or inclusive growth that the rest of the world has to really overcome? This is the challenge that we are facing.

The dynamic and inclusive drivers of growth are very weak, and so we need to look at how to get out of these initial circumstances. The other thing is that there are certain things that we learned, probably we learned them in Latin America long ago, but from the pandemic, we learned several things with respect to what happened to poverty.

During the pandemic, people in poverty rose by 70 million, and the first thing we learned very quickly is that you can remain poor even after, supposedly, leaving poverty. And this is the problem of how we measure poverty.

Poverty is multi-dimensional. We need to measure poverty, and its multi-dimension in a multi-dimensional way. But we continue to have a narrative where only to consider those above the poverty line is enough. And in a way, we are differentiating people that are the same. Yes, those that are a little bit above the poverty line and those that are below the poverty line. They have the same lives; they live mostly in the same places. They have the same challenges, but we consider some of them to have overcome the poverty trap. And that's not true.

And that's part of the problem of policy that we are facing. The second thing that we learned is that averages hide more than when you are in a very unequal world.

And so we could say that we have an excess of poverty in the world because of the excess of inequality and inequality has to be part of the discussion.

The third thing we also learned is that from the Summit of the Future, it has strongly urged what we were calling development, that the GDP has to be complemented with other matrix and measurements for us to take the right policy position.

If we want to really support good policy, we need to also have the good measurement for what we are calling poverty or development.

Now, the second date that maybe I want to stress is that towards 2030, according to the projections today, we still will have in 574 million people that will still live in extreme hope.

So we will fail the objective of SDG 1.

It's important to know where these millions are projected to live. What is our baseline scenario.

That is part of the questions we will discuss today and what are the trends to regain that projection. And we also have to talk about policies to combat poverty.

These discussions of inclusive growth has to be at the center of what we will discuss. I still hear a lot, you know, the discussion around poverty, more about specific interventions. And they are important.

In Latin America, when cash transfers started, they were an important tool, but they are not the only policy to combat poverty. It is important, but it won't allow you to do the job.

I have talked to policymakers and even heads of state on the issues of bridging, even though the discussion about inclusive growth in a more robust way is still elusive in terms of policies.

The economic framework, the opportunity, the diversification of the economy, this whole issue of inclusive jobs, not only on the supply side, but on the demand side.

This is also true for women and equality. Yes, that we talk a lot about the supply side.

Where are they going to work or how they are going to make their living after we work on the supply side is a discussion or a conversation that maybe we have in a very small group and not as widely in the community that deals with these issues.

The other thing that probably we will discuss and there is a panel about this is about climate and poverty, the climate agenda. This is a difficult discussion, especially because there is nothing intrinsic to the climate change agenda and the poverty agenda. That necessarily puts it as a trade-off. It's not intrinsic, but it's true that the trade-offs are imposed because of this perception.

And if we think about the trap in many of the countries or the food, there are negative flows from the south to the north. So, when the policymakers come to us and they say, well, I have to make these decisions, I have to assign the resources, and I have no fiscal space.

Also know that, obviously, if we don't tackle climate change, the ones that will suffer the most are the poor and the vulnerable, and the ones that are in the places where there is no adaptation. When there's no adaptation, they will only feel the consequences of climate change.

So, how are we going to go from the trade-offs to the win-wins? Yes, it's a real question.

It's not a conceptual question. It's a question of policy choices at the country level.

And here is why. The Summit of the Future, which aims to strengthen the international financial architecture and what we should do in the financial architecture reform agenda to be able to overcome the issue that we have no foreign investment going to the rest of the world.

In developing countries there is a scarcity of resources and we need this combination of obviously the efforts for domestic resource mobilization, but we need the international financial institutions to really come out strong. And what we are saying is that today we need a bigger World bank and a bigger IMF and a bigger multilateral development bank network, because we need them to overcome what is happening.

And I have to say that a lot is happening, with the agenda. And I would like to stress that today.

Coming from the spring meetings where we were together, I saw a lot of things really happening in terms of the World Bank. I think that the effort that is being made, not only in terms of the CAF review that was happening, was set up by the G20, and that was, I think, very important in terms of using your resources better.

And there is a commitment in the roadmap that was designed, but this new fund of mixed capital or hybrid capital, where when we were there, around 11 billion. There have been many things discussed that are not only the replenishment of IDA, which is also a very important thing that is going to happen but also the hybrid capital that will be able to include middle-income countries.

And if I understand correctly, according to the way it is designed, it won't mean higher interest rates for the countries that will have access to these funds.

That I think is good news, together with also the evolution roadmap. And I understand Indermit, I suppose you will talk about it, but there is also this commitment to have a climate change fund.

So you have the roadmap, you have the hybrid capital, and also a whole a new look at the guaranteed scheme of the World Bank and you have the climate change fund. So, you know, it starts to look as something that can be of this scale in a way that was in our SDG stimulus and on the G20 review and also in the Summit of the Future.

Right now the disbursement of the whole MDB system is around 100 billion per year and the target that we put in the SDG stimulus and in the G20 CAF Review was 500 billion per year. That is five-folds.

Obviously only the improvement of the balance sheet doesn't make that happen.

You know, you need other instruments for the scale that have been proposed. So we are starting to see innovations that maybe could scale up the capital that will be available.

Now the question that I really have for myself is if we will have this necessary speed for that to happen, as fast as we need to get to really comply with the SDGs, where we only have 15% on target.

Also, there is this other thing that is happening that it has been a lot of discussion on for making the special drawing right, the SDR available to the development banks. This has been a proposal from the African Development Bank and the Inter-American Development Bank. And finally it seems it will happen, they will be able to get this also to scale up their funding.

The international financial architecture is key for what will happen at the national level, for what will happen with the SDGs. That's probably the difference between the SDGs and the future from the UN perspective.

The SDGs, finally, is an international agenda that has to be implemented at the national level, whereas the Summit of the Future tries to address the systemic problems that the global economy has for that to happen. And we hope that the level of ambition that has been established for the reforms in the IFA, in the international financial architecture, and the rest of the things on the Summit of the Future, we could get to the future with the ambition that is necessary to face the challenges of most of the developing countries. Most of the developing countries may be part of why we see slow advances on the data side. It's true that no more countries have defaulted.

But we think probably because the process is so difficult and has proven to be so slow, most of the countries don't run together. So what we say is that there is obviously there is no debt crisis in the market.

But there is a debt crisis in development. You know, countries are faced with impossible options and 3.3 billion people live in countries that spend more in servicing their debt than on education or health.

So, if we think about SDGs, if you think about the synergies between the differences, you cannot invest in education and health because you do whatever you have to do or squeeze whatever you have to squeeze to pay the debt with these high interest rates. So obviously, you know, you have no room to make development happen.

So we talk about the development crisis, not necessarily about a debt crisis. It's a debt crisis for the people.

It's not a debt crisis for the market because the big countries are not facing a debt crisis, but the small countries are.

More discussions have to be, it has to happen on how to get out of this development crisis.

We just published a very small document in which we discussed the shift in ODA. I think it's good to also discuss other sources of financing with respect to ODA. But one of the shifts that we see in ODA is that we have gone from grants to loans. More and more ODA is also in loan terms and not in grant terms. Most of the grants are coming through multilateral, not bilateral.

That is also something that is not necessarily helpful. I am sure the discussion will be wonderful and that we will hear from you a lot of things that we should take on for what is going to happen in the multilateral, in the multilateral dialogue and discussion and hopefully in the decisions that will be taken at the political level to get out of where we are.

Thank you.