Presentation of the Financing for Sustainable Development Report 2023: Financing Sustainable Transformations
26 June 2023
Excellencies,
Dear Navid Hanif, Assistant Secretary-General for Economic Development in the Department of Economic and Social Affairs,
Distinguished delegates,
Dear colleagues and friends,
I welcome you to the presentation of the 2023 edition of the Financing for Sustainable Development Report. It comes at a time when our aspirations, embodied in the Sustainable Development Goals, are at risk.
At mid-point of the 2030 deadline, only 12% of the SDGs are on track.
The warning signs are there. We are moving backward and not forward on many SDGs:
- Poverty has increased, not decreased. We are back at 2017 levels.
- Hunger is increasing for the first time in decades.
- Gender equality is nearly 300 years away.
We need immediate action to transform our reality. This is why the topic of the report – Financing sustainable transformations – is so timely.
The report rightly calls for efforts on three mains fronts. Let me highlight some points on each.
First, on development cooperation and SDG investment.
The multiple crises have left the world in a more fragile state. Many developing countries struggle to cope with increasing debt levels, increasing food and fertilizers prices, while also dealing with climate change.
According to the IMF, 36 countries are in debt distress or at very high risk of it. Adding to these the 16 countries that face excessively expensive access to bond markets, there are 52 countries in debt trouble. This is about 40% of all developing countries, who are at the same time not able to access debt relief and concessional financing.
The high debt burden implies that many countries spend more on servicing their debt than on serving their people. According to research to be soon published, the Global Crisis Response Group and the UN Regional Economic Commissions estimate that 3.3 billion people live in countries that spend more on debt servicing than on health or education.
This is almost half of all humanity.
The debt burden also means that these countries are severely constrained in investing in climate mitigation and adaptation.
Financing conditions are further deteriorated by the weak outlook for global foreign direct investment. The crises have affected investor uncertainty, especially in developing countries. Also, in developing countries, investment for climate change is at risk of a temporary slow-down owing to the energy crisis, and the recovery of investment in SDG related sectors remains fragile.
These challenges cannot be solved in isolation. They require solidarity and cooperation. But money matters, they need funding!
That is why the UN Secretary-General called for an SDG Stimulus plan of which UNCTAD, DESA and UNDP are part.
This brings me to the second point: Strengthening the international financial architecture.
The recent crises have given a push towards reforming the international financial architecture in several fora, such as at the G20, the G7, the Paris Summit last week, and of course in our partner organisations the World Bank and the IMF, among others. In the UN this is being addressed in Our Common Agenda discussions.
From our perspective, the reform of the international financial architecture should include:
- A provision for a multilateral debt workout mechanism. The G20 Common Framework should be enhanced with more predictability and reduced action delays, provision of debt service suspension during negotiations, extension of eligibility to middle-income countries, and concrete tools to incentivize private creditors to participate in official debt restructurings.
- Lending from Multilateral Development Banks (MDBs) and Regional Development Banks should be massively scaled up. The UN SDG Stimulus is calling for a ten-fold increase of lending from multilateral development banks to reach 1 trillion by 2030. We literally need to move “from billions to trillions.”
For this, we need to recycle Special Drawing Rights through MDBs, a different approach to the value of callable capital, and a system-wide approach to MDBs. - Moreover, developing countries’ access to the Global Financial Safety Net as international liquidity must be improved. It should be a global public good. The Safety Net is deeply unequal as low-income countries and most middle-income countries are excluded from almost all its instruments except IMF lending.
- Also, Debt Sustainability Analysis needs to adapt as sovereign debt is increasingly compounded by climate vulnerabilities. UNCTAD is contributing to the integration of climate risks and costs in Debt Sustainability Analysis through its Sustainable Development Finance Assessment framework to break the vicious cycle of debt and climate vulnerabilities.
While scaling up SDG financing is fundamental, it must be matched and supported by national policies for sustainable transformations.
This is the third focus area: Sustainable industrial transformations.
Industrialization remains a sine qua non for development. And today, any successful industrialization must consider climate change and the pace of technological advances.
Countries must accelerate the energy transition with government policies that support the development and adoption of low-carbon and environmentally friendly technologies.
Trade policy also plays an important role. Trade remains a critical means to access environmental goods and services and technology. This calls for adapting multilateral trade rules to the economic reality of today.
Sustainable industrial transformation depends on an enabling domestic environment for firms to enhance absorptive capacities and an enabling policy environment. Science, technology and innovation are key.
But emerging technologies also bring along new risks and policy challenges. Digitalization has brought many benefits but has also been associated with deepening gaps. Therefore, institutions, policy and regulatory frameworks must keep pace with the rapidly evolving technological landscape.
Dear friends,
The report we present to you today was led by DESA but is a collective effort of the United Nations System and key partners such as the World Bank, the IMF and the WTO. It reminds us of what is at stake and proposes a way forward. This is why DESA and UNCTAD considered useful to bring the discussion on this report to Geneva.
It is another example of successful collaborations between our two institutions, and we look forward to combining our joint expertise on other fronts, such as the work on the SDG Stimulus plan or the costing of the SDGs.
The 2030 Agenda remains our best roadmap towards a world that is healthy and prosperous for current and future generations.
Thank you for your attention.
