The UN has published the 2022 report on financing for sustainable development, which warns that the war in Ukraine could deal a “crippling blow” to the SDGs as it raises food and fuel prices in developing countries among other impacts.

The FSDR is produced each year by the UN Department of Economic and Social Affairs (DESA) in collaboration with the UN’s Inter-Agency Task Force on Financing for Development, which includes over 60 international organizations. The report assesses progress in implementing the seven action areas of the Addis Ababa Action Agenda on financing for development (FfD). Its findings will inform discussions at the UN Economic and Social Council’s (ECOSOC) Forum on FfD Follow-up in April 2022.

The poorest developing countries pay an average of 14% of revenue for interest on their debt, while developed countries pay 3.5%.

The ‘Financing for Sustainable Development Report 2022: Bridging the Finance Divide’ identifies some positive aspects of performance on financing for sustainable development in 2021. Investment in developing countries grew, for example: private equity and venture capital investment rose to USD 230 billion from USD 150 billion in 2020, sustainable bond issuance doubled to over USD 1 trillion, and sustainability-themed funds grew 62% from 2020.

But the report also finds that getting key sectors on track to achieve the SDGs will require a 20% increase in spending in the poorest countries. Liu Zhenmin, head of DESA, said that the international community must ensure that developing countries can invest at similar levels to what the developed world has done in the past two years.

The FSDR provides recommendations to address financing gaps and debt risks, such as expanding eligibility to highly indebted middle-income countries and strengthening the system of public development banks. The report explains that many developing countries have had to spend their resources to cover debt financing costs rather than on development, recovery, and resilience to future shocks. Many thus reduced budgets for education and infrastructure, among other areas. 

According to the report, rich countries borrowed record sums at ultra-low interest rates and thus supported pandemic recovery, while “the poorest countries spent billions servicing debt, preventing them from investing in sustainable development.” The poorest developing countries pay an average of 14% of revenue for interest on their debt, while developed countries pay 3.5%.

To ensure that “all financing flows” are aligned with sustainable development, the report says countries should accelerate investments in sustainable energy amid current high fossil fuel prices, and the international tax system should allow for addressing vaccine inequality. It also notes the need for globally consistent standards for sustainability reporting for companies.

The report also finds that in the course of the pandemic, the wealth of the world’s ten richest men doubled. For people in the bottom 40%, meanwhile, average income dropped 7%. An estimated 77 million people became extremely poor in 2021.

The 2022 FfD Forum will take place from 25-28 April 2022. [DESA news] [Video of press conference] [Publication: 2022 Financing for Sustainable Development Report: Bridging the Finance Divide] [FfD Forum webpage] [Press conference to launch FSDR 2022] [Note of UN Secretary-General with key findings from FSDR 2022 (E/FFDF/2022/2)]