‘It is easy to be pessimistic about multilateralism nowadays. Recent international gatherings– including the 2023 Sustainable Development Goals Summit, the 2024 Summit of the Future, and multiple United Nations Climate Change Conferences– have yielded only unfulfilled promises. …can the Conference on Financing for Development (FfD4) at the end of this month go any better?’ – An excerpt from a Project Syndicate (PS) published article ‘Can the conference on financing for development success?’ by internationally renowned economist Jayati Ghosh
In 2015 most of the countries signed up to Sustainable Development Goals (SDGs), aiming to achieve targets set for 2030. The rising cost of capital, a serious inflationary spiral, the covid-19 pandemic, a fast-unfolding climate change crisis, and a weak multilateral spirit have all contributed to the slow pace of progress in this regard. Not only that, a significant number of developing countries have increasingly seen rising debt distress.
An April 2 PS published article ‘This UN debt initiative is different’ indicated in this regard ‘With just five years left until the 2030 deadline for achieving the Sustainable Development Goals (SDGs), developing countries– impeded by a persistent $4 trillion annual financing gap– are on track to meet less than one-fifth of the SDG targets.’
It is in this context that the ‘Fourth International Conference on Financing for Development (FfD4)’, to be held in Seville, Spain from June 30 to July 3, provides an important opportunity to use this platform for much-needed improved response to an otherwise weak performance with regard to SDGs, in creating an improved level of climate finance, and in moving towards a comprehensive policy with regard to not just debt servicing but in reaching both goals of improved debt servicing, while not compromising on SDGs.
In fact, the United Nations launched a ‘Group of experts’ in December 2024, which will come up with a comprehensive report covering both aspects of debt servicing, and sustainability related goals, will in turn inform the upcoming FfD4 conference about its findings. A news item titled ‘Group of experts – to promote policy solutions to resolve debt crisis’ from United Nations Secretary-General, dated 6 December 2024 pointed out in this regard ‘Today, the United Nations Secretary-General António Guterres is appointing a group of prominent experts to promote actionable policy solutions and galvanize political and public support required to resolve the debt crisis. This work will inform the Fourth International Conference on Financing for Development (FfD4), an intergovernmental process facilitated by the United Nations, which will take place from 30 June to 3 July 2025, in Sevilla, Spain. The developing world is currently facing an unprecedented debt crisis, with dozens of countries struggling under the weight of debt service that threatens economic stability, social progress, and sustainable development. And yet, to date, the global response has fallen short.’
In addition to availability of greater multilateral finance, better debt restructuring framework, and much greater debt forgiveness; better domestic resource mobilization, and higher level of exports require counter-cyclical policies– instead of the current overboard austerity-based, pro-cyclical policy stance in a number of countries in general, and also on account of International Monetary Fund’s (IMF’s) programme related conditionalities
In their April 2 article ‘This UN debt initiative is different’ published by PS (same article referred to above as well), the members of this group highlighted the focus of this work, and how it is different from previous efforts in this regard as follows: ‘Although previous UN working groups have tackled sovereign debt issues, several factors set this initiative apart. The first is timing: successive economic shocks have forced developing countries to borrow, typically at high interest rates, severely restricting their fiscal space. …Second, while previous initiatives focused on developing countries’ ability to repay and service their debts, the Expert Group aims to ensure that any proposed solutions support sustainable development. Third, the Expert Group aims to identify and promote solutions that can gain political and public support at the global, regional, and national levels.’
It is hoped that the findings of this group are highly worthwhile, given the very difficult debt situation in a number of developing countries. Highlighting this situation, a May 13 PS published article ‘The looming global debt disaster’ pointed out ‘Total global debt is now nearly 25% higher than it was on the eve of the COVID-19 pandemic, when it already was at an all-time high. …Moreover, this particular surge has been punctuated by the fastest increase in interest rates in four decades. Borrowing costs doubled for half of all developing economies, with net interest costs as a share of government revenues rising from less than 9% in 2007 to about 20% in 2024. That alone constitutes a crisis. Although the world has so far managed to dodge a “systemic” financial meltdown of the 2008-09 variety, too many developing economies are now in a doom loop. To service their debts, many are cutting the investments in education, health care, and infrastructure that they need to assure future growth.’
In addition to availability of greater multilateral finance, better debt restructuring framework, and much greater debt forgiveness; better domestic resource mobilization, and higher level of exports require counter-cyclical policies– instead of the current overboard austerity-based, pro-cyclical policy stance in a number of countries in general, and also on account of International Monetary Fund’s (IMF’s) programme related conditionalities.
In the same article ‘Can the conference on financing for development success?’ Jayati Ghosh pointed out in this regard ‘It is time to embrace an entirely new model of “global public investment,” with all countries contributing to the provision of shared public goods according to their means. This will require, for starters, fundamental reform of the IMF and the World Bank. Both institutions need to adopt a more countercyclical approach to lending. Moreover, they must stop linking loans to oppressive conditionalities that favor the interests of global capital over the well-being of people and the planet.’
