High-level Dialogue Reveals Broad Consensus on Need for FfD Reform

The UN General Assembly (UNGA) convened its second High-level Dialogue on Financing for Development (FfD) since the adoption of the Addis Ababa Action Agenda (AAAA) in 2015. The High-level Dialogue sought to galvanize collective action to energize growth and tackle challenges in the global economy. It encouraged public and private investment to align with the 2030 Agenda for Sustainable Development and promoted innovative initiatives that target gaps in FfD.

The High-level Dialogue on FfD is mandated in the AAAA, which calls for it to convene every four years, back-to-back with the High-level Political Forum on Sustainable Development (HLPF) held under the UNGA auspices, also known as the SDG Summit. The AAAA provides a roadmap for financing the SDGs.

This year’s Dialogue took place at a critical moment. Only around 15% of SDG targets are on track, most developing countries suffer from severe debt problems, and a “great finance divide” has emerged between developed and developing countries. According to UN Secretary-General António Guterres, developing countries’ borrowing costs are up to eight times higher than those of their developed country counterparts. As a result, one in three countries is facing high risk of a fiscal crisis, and over 40% of people experiencing extreme poverty are in countries “with severe debt challenges.”

Addressing participants during the high-level event, Guterres estimated the SDG financing gap at USD 3.9 trillion a year. He called for reform of the global financial architecture, to provide a systemic solution to the systemic problems of financing for sustainable development, and reiterated his call for “a new Bretton Woods moment when countries come together to agree on a global financial architecture that reflects today’s economic realities and power relations.”

Calling on governments to “take immediate steps to rescue the SDGs,” the Secretary-General stressed the need to, among other actions:

Support the SDG Stimulus that would release at least USD 500 billion per year in affordable long-term financing for investments in sustainable development and climate action;
Increase the capital base of multilateral development banks (MDBs) and change their business model to enable governments to scale up development and climate investments;
Enable the banks to transform their approach to risk, improve their lending terms, and leverage massive amounts of private finance at reasonable cost to developing countries by way of recapitalization and stronger engagement with credit rated agencies;
Create an effective debt workout mechanism to support payment suspensions and increase contingency financing “when countries run into trouble,” including by rechanneling an additional USD 100 billion of Special Drawing Rights (SDRs), primarily through the MDBs; and
Align national budgets with the SDGs.

Speaking at the closing of the High-Level Dialogue, UNGA President Dennis Francis highlighted “broad consensus on the need for reform of the international financial architecture – to promote a system that better represents and supports the United Nations’ Membership and that meaningfully addresses the current realities and needs.”

Among other takeaways from the Dialogue, Francis mentioned the need to: continue exploring innovative approaches to financing and to sustainable public and private financing; “take a hard look” at how credit agencies and international tax structures work; and address the debt crisis, especially in developing countries. He welcomed Member States’ commitments to scale up financing for sustainable development, as well as their support for the SDG Stimulus. The UNGA President will issue an official summary of the High-level Dialogue.

The High-level Dialogue on FfD convened on 20 September 2023. It brought together leaders from government, representatives of the private sector and civil society, international financial institutions (IFIs), including MDBs, and other relevant actors to discuss “innovative solutions to unlock SDG investments [… and] reforms to strengthen the resilience of the international financial architecture.” The need to reform the global financing system also emerged as a point of convergence at the 2023 SDG Summit, held from 18-29 September. [High-level Dialogue on FfD] [UN Press Release] [UN News Story]