18 April 2019: High-level speakers discussed an overhaul of the global trade system, energy pricing schemes, debt restructuring, and fiscal policies in support of the SDGs during the 2019 Forum on Financing for Development (FfD) Follow-up. Participants from governments, the UN system, international institutions, private sector, academia and civil society explored ways to turn global challenges – such as decreasing trust in institutions and rising sea levels – into opportunities to reform systems in support of the 2030 Agenda.

The UN Economic and Social Council’s (ECOSOC) FfD Forum took place from 15-18 April 2019, at UN Headquarters in New York, US. The Forum was established by the Addis Ababa Action Agenda (AAAA) to support the follow-up and review of FfD outcomes and the means of implementation of the 2030 Agenda. The Forum’s conclusions and recommendations will feed into the July 2019 session of the UN High-level Political Forum on Sustainable Development (HLPF). In addition, the AAAA will be reviewed for the first time since its adoption at a High-level Dialogue of the UN General Assembly (UNGA), in September 2019.

Opening the meeting, ECOSOC President Inga Rhonda King said there has been progress on FfD at national, regional and global levels since the AAAA was adopted in 2015. However, the broad transformation of financial systems needed to achieve the SDGs by 2030 has not happened. At the same time, climate change has reversed development gains, and rising debt in developing countries is increasing their vulnerability and reducing investment. Against this backdrop, she reminded participants that 2019 “is a critical year” as the world concludes the first four-year cycle since the adoption of 2030 Agenda and the AAAA. She said the FfD Forum’s outcome should contain a set of action-oriented conclusions and recommendations, as well as a strong signal of commitment.

Maria Fernanda Espinosa Garces, UNGA President, said the rate of business transactions went from 5.3% in 2017 to 3.8% in 2018, while the deficit in climate financing is between USD2.5 and 4.5 trillion. To close SDG financing gaps, she called for: developed countries to deliver on the commitments made in the AAAA and official development assistance (ODA); both the private and public sector to make additional investments aligned with the SDGs; financial systems to provide “real support;” and favorable political environments at all levels. All of these elements also must focus on generating the 600 million new decent jobs that are required by 2030.

UN Secretary-General Antonio Guterres said the AAAA is international community’s blueprint for “the global partnership to finance sustainable development,” and everyone, “particularly developed countries,” need to meet their commitments in full. He said that the public services needed to achieve the SDGs will be sufficiently financed if development aid is maintained, countries support domestic mobilization of resources especially by increasing tax revenue, and measures are enacted to eradicate tax evasion, money laundering and illicit financial flows (IFFs). Guterres announced that he is convening a new group, the Global Investors for Sustainable Development Alliance, comprising the CEOs of large companies around the world.

Tao Zhang, International Monetary Fund (IMF), said joint action is needed to confront climate change, including through revamped fiscal policies, energy pricing, and building resilience for vulnerable countries. Mahmoud Mohieldin, World Bank Group, said the aspiration to leave no one behind will not be met by maintaining the status quo, and in this scenario hundreds of millions of people will suffer from extreme poverty by 2030. According to the World Bank Atlas for the SDGs, he reported, nine out of ten of these extremely poor will be in Africa.

Tim Yeend, World Trade Organization (WTO), reflected on current global trade tensions. He suggested that as an upside to the tensions, they offer an opportunity to determine whether aspects of the global trading system can be fixed to meet current needs.

Achim Steiner, UN Development Programme (UNDP) Administrator and Co-Chair of the UN Task Force on Digital Financing of the SDGs, said the Task Force Financing aims to anticipate a range of possibilities likely to emerge in the future. Steiner said the “triangle of technology, the SDGs, and financing” is a crucial new arena that requires both attention and the deployment of financing “on an unprecedented scale.” The Task Force is expected to issue an interim report by September 2019 and present its outcome in early 2020.

Maiava Atalina Ainuu-Enari, Governor, Central Bank of Samoa, said Samoa is exploring the potential of green bonds and adaptation strategies, such as pooling risk with its island neighbors. Noting that central banks often fear for their own survival when it comes to the changes brought by the new technologies, Edward Scicluna, Minister of Finance, Malta, said old regulatory frameworks cannot be used to regulate new technologies. He explained that Malta decided to adopt “fresh” system regulation for its gaming industry as a good practice, and emphasized the importance of restructuring tax systems to respond to technological shifts, such as the EU’s new digital tax.

Patrick Njoroge, Governor, Central Bank of Kenya, said mobile phone penetration in Kenya is 106% (with some people having more than one SIM card), which has enabled an increase in financial inclusion. Between 2006 and 2019, financial inclusion rose from 27% to 83% due to digital financial services. He said the government employs a flexible “test‑and‑learn” approach to foster innovation. Observing that regulators often do not understand the technologies they are regulating, he called for more collaboration between regulators and innovators, as well as for the development of smart – not “half baked” – products for poor people.

Carin Jämtin, Director General, Swedish International Development Cooperation, emphasized the need to both work in new ways and to protect the level and integrity of ODA, adding that 0.7% of gross national income (GNI) is the minimum that governments must set aside for ODA. She said the Swedish Investors for Sustainable Development Group has been “pushing” private actors to invest more in the least developed countries (LDCs). Gladys Ghartey, Ministry of Finance and Economic Development, Ghana, underlined that capacity-building must be part of all international development assistance projects.

Hans Docter, Netherlands Ministry of Foreign Affairs, said blended finance should be used “with restraint.” Kotaro Katsuki, Ministry of Foreign Affairs, Japan, said Japan will use the upcoming G20 Summit to promote innovative financing, and he described an international solidarity transaction tax.

Laurent Sarazin, co-chair of the EU’s Total Official Support for Sustainable Development (TOSSD) Task Force, said the EU supports the creation of TOSSD in order to fill a knowledge gap on official flows beyond ODA to help countries achieve the SDGs. He invited the use of the ‘EU Aid Explorer’ to find relevant data on which to base development strategies.

Marc-André Blanchard, Permanent Representative of Canada, said the UNGA’s High-level Dialogue on FfD in September 2019 will provide a new chance to galvanize action by engaging world leaders on FfD. Mauricio Escanero, Head of Mexico’s Mission to the EU and facilitator of the Monterrey Consensus, underscored the need to build synergies between the upcoming high-level meetings, as well as to use the High-Level Dialogue on FfD as an opportunity to “relaunch the FfD process at a higher level.”

Over the Forum’s four days, many more speakers and participants explored issues related to the current global economic context, non-economic trends, financial inclusion, climate financing, integrated national financing frameworks, new technologies, domestic public resources, domestic and international private business and finance, trade, debt, and science, technology and innovation (STI).

On the final day of the Forum, UN Member States adopted the Forum’s outcome “to a burst of applause.” The outcome was agreed after a series of intergovernmental negotiations that started on 8 March 2019 (SDG Knowledge Hub stories on negotiations here, here and here). The Forum’s outcome document will feed into the HLPF in July 2019. The document notes that international public finance plays an important role in “complementing” country initiatives to mobilize domestic public resources, while calling on donors to intensify efforts to fulfil official development commitments and on providers of blended finance to “engage strategically” with host nations to ensure that projects are aligned with national priorities.

Upcoming events related to financing for sustainable development include UNGA-mandated events on Inclusive Development and Inequality, Commodity Markets, and Illicit Financial Flows, taking place from 14-16 May 2019, in New York, US, and the UNGA’s High-level Dialogue on FfD, which convenes on 26 September. The next FfD Forum will take place from 20-23 April 2020, according to the outcome document. [FfD Forum Website] [UN Meeting Coverage, 15 April] [UN Meeting Coverage, 16 April] [UN Meeting Coverage, 17 April] [UN Meeting Coverage, 18 April] [SDG Knowledge Hub sources]