Tackling the high cost of debt, scaling up affordable long-term financing for development, and expanding contingency financing to countries in need are among the recommended actions identified in the SDG Stimulus.
A UNDP policy brief recommends policy steps to reverse the current debt crisis and demonstrates the “potentially transformative” impact of tackling debt and expanding access to lower cost and long-term maturity funding.
The UN has issued the ‘United Nations Secretary-General’s SDG Stimulus to Deliver Agenda 2030,’ which offers recommendations on how to transform the global financial system. It calls on the Group of 20 (G20) to endorse the SDG Stimulus and outlines a three-point plan of action. A UN Development Programme (UNDP) brief finds its implementation could secure up to USD 148 billion in savings for developing economies by 2030.
The report highlights the multiple shocks that are threatening to derail the SDGs, including the COVID-19 pandemic, climate change, the war in Ukraine, high inflation and weak economic growth, tightening monetary and financial conditions, and unsustainable debt burdens. It argues that “an unfair global financial system that is short-term oriented and crisis-prone” aggravates that the impact of these crises on developing countries, further exacerbating inequalities.
The SDG Stimulus identifies three areas for immediate action:
- Tackle the high cost of debt and rising risks of debt distress, including by converting short-term, high interest borrowing into long-term debt at lower interest rates;
- Massively scale up affordable long-term financing for development, especially through public development banks (PDBs), including multilateral development banks (MDBs), and by aligning all financing flows with the SDGs; and
- Expand contingency financing to countries in need.
In addition to implementation of the SDG Stimulus at the global level, the report calls for the UN, the International Monetary Fund (IMF), and MDBs to work together to support countries “in 2023 and beyond” to implement the Stimulus “on a case-by-case basis.”
“We need to massively scale up affordable long-term financing by aligning all financing flows to the SDGs and improving the terms of lending of multilateral development banks,” stressed UN Secretary-General António Guterres, marking the launch of the SDG Stimulus. He called for at least USD 500 billion dollars to be made available to developing countries annually, warning about the “great finance divide,” which leaves the Global South more susceptible to shocks.
The SDG Stimulus was launched on 17 February at a press conference by Under-Secretary-General for Economic and Social Affairs Li Junhua and UNDP Administrator Achim Steiner.
On 22 February, UNDP published a policy brief titled, ‘Building Blocks Out of the Crisis: The UN’s SDG Stimulus Plan.’ The brief recommends policy steps to reverse the current debt crisis and demonstrates the “potentially transformative” impact of tackling debt and expanding access to lower cost and long-term maturity funding – two of the action areas outlined in the SDG Stimulus Plan.
The policy brief finds that for 52 most debt-vulnerable economies, a 30% trim of 2021 public external debt stock could lower 2022-2029 debt service payments by between USD 44 billion and 148 billion. It highlights that for all developing economies, a 40% “refinancing” of their 2021 bond debt stock to “average official creditor rates” could result in USD 121 billion in savings on interest payments in 2022-2029.
The publications came ahead of the G20 Finance Ministers and Central Bank Governors Meeting, which convened in Bengaluru, India, from 24-25 February 2023. [Publication: United Nations Secretary-General’s SDG Stimulus to Deliver Agenda 2030] [Launch of SDG Stimulus: Video] [UN News Story about SDG Stimulus Launch] [Publication: Building Blocks Out of the Crisis: The UN’s SDG Stimulus Plan] [Policy Brief Landing Page] [UN News Story about Policy Brief] [UNDP Press Release] [SDG Knowledge Hub Story on Moving Our Common Agenda from Ideas to Action]