UNCTAD’s Technical and Statistical report on Financing development finds that developing countries continue to face a severe financing gap despite receiving nearly $1.5 trillion in external financial flows in 2024, split almost evenly between equity and debt. Combined domestic and external financing still falls $4.3 trillion short of the annual investment needed to achieve the Sustainable Development Goals (SDGs).
External finance now plays a much smaller role in funding capital formation in developing countries than in developed economies and has become increasingly volatile, particularly portfolio and other debt-driven flows. At the same time, a large share of new inflows quickly returns to investors through interest, profit and royalty payments, reflecting the high risk premium faced by developing countries.
The report highlights the growing cost of external borrowing as a major constraint on development. Between 2014 and 2024, external debt servicing costs rose almost three times faster than equity costs, while government interest payments more than doubled, outpacing revenue growth and shrinking fiscal space in nearly three-quarters of developing countries.
UNCTAD estimates that if 94 developing countries could borrow at the same rates as developed economies, they would save around $500 billion annually—resources that could be redirected to schools, infrastructure and clean energy.
The report concludes that reducing borrowing costs and volatility will require both domestic reforms and stronger multilateral action to improve access to affordable, stable external finance.
Objective
The objective of the event is to bring together policymakers, debt managers, international financial institutions and other stakeholders to discuss the report's key findings on external financial flows to developing countries - particularly those in Africa - and to explore national and multilateral policy options for lowering the cost of external debt, expanding access to affordable long-term finance, and closing the SDG financing gap.
Target participants
The event will bring together representatives of ministries of finance, central banks, capital market authorities, multilateral and regional development banks, credit rating agencies, private and institutional investors, academia and civil society, and other stakeholders with an interest in development finance and sovereign debt.
