FfD Forum Highlights Calls for Debt Standstill

The UN Economic and Social Council (ECOSOC) held its annual Forum on Financing for Development Follow-up (FfD Forum) to hear remarks from officials on financing sustainable development in the context of COVID-19. The outcome document of the 2020 Forum was negotiated among Member States through virtual means, and placed under consideration via silence procedure.

Opening the virtual FFD Forum on 23 April 2020, ECOSOC President Mona Juul drew immediate attention to the importance of debt relief. She welcomed:

the Group of 20 (G20) Finance Ministers’ Action Plan calling to suspend debt service payments for the world’s poorest countries,
a call by the heads of the International Monetary Fund (IMF) and the World Bank,
actions by the Paris Club; and
the call by Pakistan’s Prime Minister for a Global Initiative for Debt Relief, proposing a comprehensive solution to the debt issue and financing for sustainable development.

Also on debt, UN Secretary-General Antonio Guterres said the socio-economic consequences of COVID-19 are amplifying existing debt risks. He called for extending the G20’s proposed debt moratorium to all countries that request forbearance, including middle-income countries (MICs) that lose access to financial markets. He said more targeted debt relief also will be needed, and to address sovereign debt restructuring in a way that supports countries in achieving the SDGs.

UN General Assembly (UNGA) President Tijjani Muhammad-Bande also echoed the importance of debt relief, welcoming the initiatives from the G20, IMF, World Bank, and the Global Initiative for Debt Relief called for by Pakistan.

Ngozi Okonjo-Iweala, Board Chair for the Global Alliance for Vaccines and Immunization – GAVI, explained that for many vulnerable countries, COVID-19 began as an economic crisis as global demand fell for their export products, including oil and industrial metal. Income from tourism and remittances also fell. “Then the pandemic arrived and the health crisis set in,” she said, and the necessary measures to save lives compounded the economic crisis. She said that in developing countries, 70% of workers are in the informal sector, and for them, lockdowns mean no work, no money, and no food for their families. This “perfect storm” can amount to a food crisis and lead to unrest. She highlighted the proposal for a two-year “debt standstill” as a short-term response, followed by efforts to revamp health systems and make them more resilient.

Another theme of the officials’ remarks was illicit financial flows (IFFs). Juul stressed the need to combat and prevent IFFs, as all sources of finance must be mobilized to address the virus and its social and economic consequences. Muhammad-Bande added that IFFs must be fought so countries can prevent inequalities from deepening.

Speakers also highlighted gender-related impacts of the pandemic crisis. Juul said women both carry a disproportionate burden of unpaid care work, and are overrepresented among frontline health workers. Guterres said the pandemic has shown how economies are sustained by the invisible, unpaid labor of women, and “returning to our previous path is simply not an option.” He said women’s leadership is needed to help avoid catastrophic consequences of economic instability on women and girls.

In a keynote address, Narbada Gumbonzvanda, Board Chair, Action Aid International, outlined Action Aid’s call for a global people’s bailout of at least US$4.6 trillion. Pointing to inequality as “the mother of all pre-existing conditions,” she said we are on the brink of catastrophe because of “the yawning gaps we have tolerated in social and economic rights such as access to healthcare, clean water and rights to decent work.”

Gumbonzvanda reported that two thirds of low-income countries are spending more on debt service payments than on public health care. In Sub-Saharan Africa, only one in five people is covered by any kind of pension, social protection or safety net.

Jay Collins, Citigroup Vice Chairman for Banking, Capital Markets and Advisory, suggested using the COVID-19 crisis to strengthen resolve against climate change, and learn how to manage setbacks. He said the mobilization of trillions of US dollars in capital demonstrates that the world is capable of radical responses in the developed world, but in the developing world, the fight has just begun.

Collins acknowledged that COVID-19 has moved the SDG targets further from reach and made them even more ambitious. However, he identified “silver linings” in investors’ interest in social factors, reporting that: environmental, social, and governance (ESG) funds are outperforming non-ESG benchmarks; risk models for investment are being reconsidered, giving additional weight to climate value-at-risk and other concepts; and ESG scores for companies are already falling for poor COVID-response behavior.

In a statement on the occasion of the Forum, Liu Zhenmin, head of the UN Department of Economic and Social Affairs (DESA), said the impacts of the pandemic will be felt across all SDGs and the seven action areas of the Addis Ababa Action Agenda on FfD. He said recovery actions must be aligned with the 2030 Agenda and AAAA to ensure that we recover in a more sustainable and resilient way, and the AAAA in particular can act as a roadmap to a more resilient economy in the post-COVID world.

The virtual informal meeting of the Forum served as its fifth annual session, since the adoption of the Addis Ababa Action Agenda on FfD in 2015. The outcome document was negotiated among Member States through virtual means in a process led by the Permanent Representatives of Barbados and Latvia, and was placed under silence procedure until 27 April 2020.

Juul said the text, once adopted, will represent the first universal agreement on UN policies to finance immediate response to COVID-19 and longer-term recovery. [Meeting webcast] [UN News story] [Updates from ECOSOC President on outcome document]