The Brookings Institution has published a working paper that outlines opportunities for the Fourth International Conference on Financing for Development (FfD4) to integrate development, climate, and nature into a coherent sustainable development program. It argues that FfD4 is the only forum for reaching a political consensus on an overarching new strategy that would reflect the voices of all countries.
The February 2025 working paper, written by Homi Kharas and Mahmoud Mohieldin, is titled, ‘Four Priorities for Success at the Sevilla Fourth International Conference on Financing for Development.’
“Geopolitical tensions and evolving views on trade, industrial policy, multilateralism and the role of the public sector have shaken accepted wisdom on appropriate development strategies, leaving an intellectual vacuum,” the authors underscore, providing context for the Conference. They highlight tighter global capital markets and higher debt service costs, along with debates around official development assistance (ODA) volumes and effectiveness among the challenges facing emerging market and developing economies (EMDEs).
Recognizing the importance of countries using domestic resources to the maximum extent, the authors underscore that “the real value of the discussions will come from changing underlying norms on how external financing for all sustainable development purposes… is delivered.” At the global level, they recommend aggregating all elements of development finance and matching them to investments. At the national level, they call for converting SDG budgeting and application of integrated national financing frameworks (INFIs) “from paper studies into operational tools.”
The authors identify the following four elements of a successful outcome for FfD4:
- Acknowledging and broadly quantifying the significant new investments that EMDEs should undertake in the next ten or 20 years and shifting the discourse from aid to an investment-driven model;
- Building a supportive financing strategy with a new approach to private finance and investments, with “know thy investment” principles for responsible private finance governing private lending to sovereign entities;
- Resetting concessional aid for sustainable development and reflecting on the role of all multilateral, bilateral, and national development finance institutions, by developing methods and guidelines for effective aid allocation and expanding pools of investable finance in all EMDEs through multilateral and bilateral non-concessional lending; and
- Devising a fresh approach to fiscal space that encourages high-return, quality investment, including by comparing debt to the value of assets that are created through debt-financed investments.
The paper also offers recommendations on how to expand fiscal space through a three-pronged approach that envisions policy and institutional reforms in EMDEs, development partners committing to support the development and execution of high-quality investment programs, and partners providing sufficient financing to implement these programs. Tailored recommendations are provided for countries facing debt distress and small island developing States (SIDS), among others.
The paper concludes by emphasizing that instead of focusing on elements where breakthrough at FfD4 is not feasible, the Conference should strive to “shape a new narrative of the urgency of expanding investment in sustainable development at scale, with associated financing.”
FfD4, scheduled to convene from 30 June to 3 July 2025 in Seville, Spain, will seek to advance conversations around reform of the international financial architecture. [Publication: Four Priorities for Success at the Sevilla Fourth International Conference on Financing for Development] [Publication Landing Page]