Action for Stronger Global Financial Architecture ‘Not Beyond our Means’, Stresses Deputy Secretary-General at Launch of Development Financing Report

DSG/SM/1270-ENV/DEV/1937
4 April 2019

Action for Stronger Global Financial Architecture ‘Not Beyond our Means’, Stresses Deputy Secretary-General at Launch of Development Financing Report

Following are UN Deputy Secretary-General Amina Mohammed’s remarks, as prepared for delivery, at a press briefing to launch the 2019 Financing for Sustainable Development Report, in New York today:

The 2019 Financing for Sustainable Development Report is the result of collaboration among 60 entities from the United Nations system and beyond, including the World Bank, International Monetary Fund (IMF) and the Organisation for Economic Co-operation and Development (OECD).

Despite domestic public revenues in 80 developing countries rising in 2017, the report contains sobering messages.  Global economic growth has peaked at about 3 per cent, while growth in wages is down to 1.8 per cent, the lowest in more than a decade.  Inequality is on the rise and some 30 developing countries are in, or at high risk of, debt distress.

Aid levels are stagnating and falling short of commitments.  Private investment levels in developing countries are lower than they were in 2012.  And, while foreign direct investment flows to developing countries increased in 2018, they remain unevenly distributed, largely bypassing many least developed countries.

Furthermore, climate change continues to threaten sustainable development in all regions.  The current challenges reinforce the urgency of adopting national and global approaches to financing sustainable development and fulfilling the promise of the 2030 Agenda for Sustainable Development to leave no one behind.

Five key messages emerge from this year’s analysis.  First, the multilateral system is under strain in a rapidly changing global environment.  While this is forcing the global community to revisit existing multilateral arrangements, it also opens the door to make multilateral institutions fit for purpose.

Second, and in response, the international community must recommit to action.  Remaking the global financial architecture — for example, revamping the arrangements for sovereign debt, international tax norms, and especially the multilateral trading system — is a huge task, but not beyond our means.  Indeed, discussions are already under way in all these areas.  The question is what type of system we will end up with.  Rather than retreating from multilateral cooperation, we must strengthen collective action to address global challenges in support of sustainable development.

Third, global approaches need to be complemented by national action.  We have put forward building blocks for countries to operationalize integrated national financing frameworks, so their development strategies can access the needed resources.  National financing frameworks were introduced in the Addis Ababa Action Agenda on Financing for Development, and it is time to start using them for sustainable financing on the ground.

Fourth, achieving sustainable development and combating climate change require a long-term perspective.  Public and private incentives need to be aligned with long-term sustainable development.  This calls for building long-term indices, encouraging longer-term credit ratings, accounting for external costs — through carbon taxes or similar instruments — and requiring more meaningful disclosure by businesses on social and environmental issues.

Fifth, we must harness the potential of innovation to strengthen development finance.  Half a billion people have gained access to financial services in recent years, in large part due to financial technologies.  This has also made low-cost, prepaid or pay-as-you-go business models viable in sectors such as energy and has thus enabled progress on the Sustainable Development Goals.  But, it also creates its own risks that need to be properly managed.

The report calls for a rethinking of the focus of regulatory frameworks to highlight underlying risks, including from the growth of financial technologies. These issues are also highlighted in the Secretary-General’s strategy for financing the 2030 Agenda.  That strategy sets out priority actions to align global economic policies and financial systems with the 2030 Agenda, enhance sustainable investments at regional and country levels and seize the potential of financial innovation, new technologies and digitization.

The Financing for Sustainable Development Report provides the evidence and detailed policy recommendations to support the Secretary-General’s strategy and provides financing policy options to Governments.  It highlights the need to combat climate change, including through public budgets and providing incentives for the private sector to act.

We also need to combat inequalities using public revenue and expenditure policies, and also through shaping trade arrangements and regulating the financial sector.  Gender issues are also addressed throughout, as all policies, legal frameworks and programmes need to promote women’s rights and the empowerment of women and girls.

In closing, I would like to emphasize the excellent collaboration behind this report.  The task force that produced it is an important mechanism for the United Nations to engage in a substantive dialogue with other international institutions.  It has helped bring more coherence on financing issues within the international system.  That coherence is sorely needed.

As the Secretary-General states in his foreword to the report:  “The world cannot achieve the Sustainable Development Goals without a fundamental shift in the international financial system that enables us to address urgent global threats and restore trust in international cooperation.”  I urge the international community and countries to act on the report’s recommendations.

For information media. Not an official record.