UNCTAD16 ministerial roundtable: Implementing the Sevilla Commitment on financing for development and establishing a borrowers' platform

Excellencies, distinguished ministers, ladies and gentlemen, and to the wonderful panelists,

Four months ago in Sevilla, countries agreed on a set of targets to make global finance work for development. Now comes the harder part: turning words into action.

Before our panelists speak, let me make two points: first, about why debt has become a development emergency; second, about how implementing Sevilla can change this reality.

I start with the emergency, with numbers that you all know but let me repeat them again. Today, 3.4 billion people live in countries that spend more servicing debt than on either health or education.

That number was 3.3 billion last year. 3.3 and 3.4 might sound the same, but no, this means 100 million more people living in countries that spend more on servicing debt than on health and education. This is what we call a “development crisis mode”.

And if you want more evidence – 42 countries now pay more than 20% of export earnings just to service debt. In a document that we produced some time ago, we said that for the recovery of Germany after the Second World War, the max number that was allowed for Germany to pay for debt was 5% of export earnings. But now, we have 42 countries that are paying 20%.

Picture what this means. A hospital in Zambia postponed equipment purchases to make debt payments. Schools in Bangladesh closed early because of budget constraints.

Infrastructure projects stall while interests compound. Countries face the impossible choice, as we say, to default on their debt or default on their development. And because it's so difficult to restructure your debt, you prefer to continue paying.

Meanwhile, the financing gap keeps widening. Developing countries need $4.3 trillion more per year than the current received last year. And last year they received only $1.2 trillion.

This brings me to what we can do. The Seville commitment provides the roadmap. Now we need to walk it. This requires two shifts.

First, reforming the international financial architecture for it to work.

This means faster liquidity support when crisis emerge. It means more countercyclical development finance that flows in difficult times, not just in favorable ones, and a scale up of the MDBs’ financing to crowd in private investment, because the truth is that private investment feels that it's too risky to go to the places they don't know, so they don't go to the places that need it most.

And a number that struck me some months ago from our World Investment Report is that only 2% of all the investment in renewable energy is going to Africa, only 2%.

So we need the multilateral development banks to crowd in private investment, so the perception of risk is less and the scale of the financing goes up. And it means stronger representation for developing countries in the institutions that shape these decisions.

Second, establishing new platforms for cooperation on debt, which is the missing pillar of our international financial architecture. FFD4 proposed first a borrowers platform. And let me say here that we have in this panel actors, very important actors for that to happen, that were very key for that to happen.

And Paolo Gentiloni was part of the committee made by the Secretary, put together by the Secretary-General for the debt problem for the FFD4 Forum. And we have the Holy See that has been so active with the issue of debt in the Jubilee effort. Thank you. And obviously all the rest have been working on this for a long time. Yes, like we have, unfortunately, some of us, several decades.

The Borrowers Platform, which will be a forum exclusively for borrowers, focus on giving them a more effective voice, building capacity, exchanging knowledge and experiences, improving debt management, discussing innovative ideas.

UNCTAD is proposed to serve as its secretariat, supported by other institutions of the UN too.

Seville mandated two other processes, the Working Group on Principles for Lending and Borrowing and the Intergovernmental process in the UN Framework for Debt.

And finally in the Seville Action Plan. The Seville Forum on Debt was offered by Spain as a space to bring together borrowers and creditor countries, international financial institutions, academia, civil society and other stakeholders to address issues of common interest, including the principles of sovereign borrowing and lending. UNCTAD and DESA will support this process, so to maintain complementarity and synergies.

But it is important to clarify that these aren't competing structures, they are complementary. One gives borrowers the collective space to strengthen their capacity and voice. The other creates dialogue between all parties to address systemic challenges. And the UN process on debt will have its own modalities to carry on the process led by DESA and supported by the rest of the system.

This doesn't compete with the common framework of the G20 or with the roundtable that has been put together by the IMF. They are not substitutes. They are complementary processes that can benefit from each other.

Excellencies,

The 3.4 billion people deserve better outcomes. They are not asking for charity. They want a level playing field where finance enables development rather than constraining it. Seville charted a path forward.

This roundtable can help translate that vision into concrete progress. And so I leave you here and I look forward to your leadership.

And I thank you.