Four years after the roll‑out of the Addis Ababa Action Agenda, the gap in financing the Sustainable Development Goals has widened, the chief United Nations trade expert told the forum on financing for development follow-up today, as participants explored ways to mobilize domestic resources, curb corruption and create enabling environments for increased investment in their economies.
Opening the forum’s second day with a keynote address, Mukhisa Kituyi, Secretary-General of the United Nations Conference on Trade and Development (UNCTAD), said the financing gap has grown to $2.6 trillion per year for developing countries alone, up from $2.5 trillion in 2014. Trade talks are the furthest they have been from the development agenda in decades, while debt, threats of default and other major distresses are clouding the outlook for a growing number of countries.
Against that backdrop, he said raising domestic revenues and managing public debt can create the fiscal space for Governments to invest in areas such as health care and education. Mobilizing private investment — notably through incentives — in turn, can create decent jobs and drive growth. Global public finance, meanwhile, can support the public services and infrastructure needed to reach the poorest. He expressed hope that integrated planning for the global development agenda will be more feasible in the future than it appears today.
Those remarks set the tone for two ministerial dialogues — on designing integrated national frameworks to finance the Goals, and on harnessing new technologies in those efforts — with Uganda’s Minister for Finance, Planning and Economic Development, Matia Kasaija, arguing that the most sustainable way to help a country escape poverty is to create wealth through trade. He pressed developing countries to make domestic revenue raising a critical focus.
When the floor was opened, Dereje Alemayehu, Coordinator of the Global Alliance for Tax Justice, took issue with those ideas. Expecting developing countries to marshal resources without stopping “resource leakage” is like asking them to collect water with a sieve. He described corruption, widespread misuse of public resources and give-aways through the provision of tax incentives as major problems. He recommended the creation of an intergovernmental tax commission under United Nations auspices.
The day also featured a special high-level meeting with the Bretton Woods institutions, World Trade Organization (WTO) and UNCTAD, in which experts discussed how to improve policy coherence in tackling public debt and unleashing the potential of “fintech” — technology that automates the delivery and use of financial services. Delegates took part in two interactive discussions on “Public debt, vulnerabilities and the Sustainable Development Goals” and “Fintech and financial inclusion”.
Opening the segment, Economic and Social Council President Inga Rhonda King (Saint Vincent and the Grenadines) said a growing number of developing nations face mounting debt-service costs, limiting their ability to invest public funds in sustainable development. “The question on the minds of many is: how can heavily indebted developing countries maintain sufficient fiscal space to carry out investment in sustainable development?”, she said.
Calling for a strengthened multilateral trade framework and incorporating a gender perspective into financial policies, General Assembly President María Fernanda Espinosa Garcés (Ecuador) said the new financial architecture must work to close the digital gap and the climate-financing deficit — not only by investing with fresh resources, but by creating ways to access low-carbon technologies.
“The global economy is at a delicate moment,” said Sabina Bhatia, Deputy Secretary of the International Monetary Fund (IMF). With global growth predicted to slow, officials must strike the right balance among debt sustainability, demand and social objectives. Noting that fighting corruption can save $1 trillion in global tax revenue per year, she said the Fund will continue to help countries boost tax revenue through its Platform for Collaboration on Tax.
Tim Yeend, Chef de Cabinet and Principal Adviser to the World Trade Organization Director General, pressed Governments to ensure that the benefits of trade flow to all segments of their populations, and to consider redistributive policies if necessary. “Trade opening by itself is not enough,” he stressed.
As the floor opened for comments, a speaker from the Centre for Economic and Policy Research condemned the “new digital colonialism” being promoted by WTO which allows only monopolistic companies and the countries supporting them to gain power. No international agreements on these matters should be concluded until there is greater clarity on how to regulate those companies, she stressed.
The Economic and Social Council will resume its forum on financing for development follow-up at 10 a.m. on Wednesday, 17 April.
Ministerial Dialogue I
The forum began the day with a ministerial dialogue on “Designing integrated national financing frameworks for sustainable development”. Moderated by John Authers, Senior Editor for Markets, Bloomberg, it featured a special presentation by Mukhisa Kituyi, Secretary-General of the United Nations Conference on Trade and Development (UNCTAD). Panellists included: Matia Kasaija, Minister for Finance, Planning and Economic Development of Uganda; Bambang P. S. Brodjonegoro, Minister for National Development Planning of Indonesia; Gloria Amparo Alonso Másmela, Minister for National Planning of Colombia; and Luis Daniel Soto, Vice-Minister for Planning and Economic Policy of Costa Rica.
Mr. KITUYI said that, four years after the roll‑out of the Addis Ababa Action Agenda, “we feel we are further away from financing the ambitions of the Sustainable Development Goals”, daunted by the challenge of closing a financing gap that has grown to an $2.6 trillion annually in developing countries, from a projected $2.5 trillion in 2014. Stressing that raising domestic revenues and managing public debt can create the fiscal space for Governments to invest in such basic services as health care and education, he said mobilizing private investment — notably through incentives — in turn, can create decent jobs and drive growth. Global public finance meanwhile can support public services and infrastructure to reach the poorest and most isolated. In addition, trends are showing complementarities among various sources of finance — public and private financing hybrids — which are proving effective in building infrastructure and impact projects.
He described the UNCTAD action plan for private investment in the Goals, which focuses on leadership, mobilizing funds, channelling funds to the Goals and maximizing positive impact — all of which are pillars of an integrated financing framework. However, each of these areas has constraints. For example, in terms of leadership, Governments’ long-term financing strategies are often constrained, as sectors such as health and education are not natural private sector targets. A central question hinges on how to attract it. Domestic revenue mobilization is important, and countries can do more to stimulate investment in their economies. He cited other questions around ensuring that investment targets the sectors “that matter most” for the Goals, and maximizing impact, stressing that finance frameworks need clear perimeters for measuring impact. Emphasizing that trade talks are the farthest away from the development agenda that they have been in years, he said other challenges of debt, threats of default, major distress and growing numbers of vulnerable countries are clouding the outlook. He expressed hope that integrated planning for the global development agenda will be more feasible in the future than it appears today.
Mr. AUTHERS, stressing that “there is money that wants to invest in the developing world”, said today’s discussion will focus on closing the gap between the need for and the desire to finance sustainable development projects.
Mr. KASAIJA, taking up the issue of leadership, focused on vision. In Uganda, the Government wants to know where the country will be in 2030 and has geared all efforts towards achieving its objectives. Using an example from his culture, he said a sick person must takes steps to find medicine. Expanding that idea to raising resources, he said: “If you think everything is going to be done for you, you are missing the point.” Raising domestic revenue must be a critical focus for developing countries. Comparing investors to a beautiful girl who has several suitors, he said investors must be able to use a domestic stock exchange to buy company shares, and in turn, expand their enterprises. The most sustainable way to help any country escape poverty is to create wealth through trade. When a country trades, it produces efficiently, and in that way, creates jobs and more fiscal space to tax. A producing country must create the right environment for investors to feel comfortable. However, social barriers can either make the quality of products exceptionally difficult to achieve or create an adverse environment for investment.
Mr. BRODJONEGORO said that, since 2015, Indonesia has created more fiscal policies and carried out reforms to encourage domestic financing. It introduced fiscal incentives, tax policy harmonization and a system to monitor tax payers’ compliance. Such efforts have improved tax administration efficiency and increased revenues. It also applied an income tax reduction to small and medium‑sized enterprises as a way to stimulate opportunities, and tax exemptions to the construction sector. In addition, Indonesia has established public-private partnerships and non-Government budget financing to mobilize private financing to fulfil the Goals. He described two projects at the operational phase, along with 11 others in various other stages, having identified public-private partnership opportunities in such areas as road development and information and communications technology (ICT). A national financing framework is at the heart of Indonesia’s Sustainable Development Goal framework, he said, noting that it is finalizing a road map for the Goals, in which 19 of 34 provinces have submitted subnational plans. Developing a sound project pipeline also helps to secure private sector investment, he said.
Ms. ALONSO MÁSMELA said her country is approving its “Pact for Colombia, Pact for Equity” programme, seeking to generate equal opportunities for all Colombians. Describing it as a road map for inclusive development, she said its objectives align with the Sustainable Development Goals. More broadly, Governments must seek to retain capital flows by achieving fiscal stability and outlining clear rules on the administration of transparent resources. That is the only way to attract the private sector to financing the Goals. Also, official development assistance (ODA) continues to be essential as a complement to national efforts. Describing international cooperation as a tool that Colombia has used to enhance institutional capacities, she said that, at the global level, such cooperation has promoted capacity-building. Financing for development has improved significantly in that various States have instituted strategies for attracting investment, she said, pressing countries to demonstrate macroeconomic stability and a commitment to transparency to ensure that capital flows are allocated for development.
Mr. SOTO said that, in Costa Rica, the ministries of finance and economic development work together in efforts to raise new resources and use existing ones. The Government has refined its planning instruments so that projects have the necessary financing, noting more broadly that countries in the region have been able to “do a lot with relatively little”. Land is important to Costa Rica’s development. The country’s track record of economic stability has allowed it to attract investment. Eight per cent of its gross domestic product (GDP) is allocated to education, from preschool to post-secondary schooling. Costa Rica is also focused on renewable energy, with 93 per cent of its energy mix based on such sources as wind and solar, allowing it to carry out long-term planning. Anticipating greater links between energy production and the economy, he said Costa Rica needs more public-private cooperation. “We are very clear as to what we want” over a 30-year horizon and based, not on a particular Government administration, but rather on its sustainable development needs. Citizen participation has also improved conditions. Social organizations commented on the country’s four-year development plan and assessed public initiatives, he said, citing transport and water purification as the two largest challenges ahead.
When the floor was opened for questions and comments, lead discussant DEREJE ALEMAYEHU, Coordinator, Global Alliance for Tax Justice, said to expect developing countries to mobilize domestic resources without stopping “resource leakage” is like expecting them to collect water with a sieve. To expect them to create integrated financing frameworks without an enabling international environment is like expecting them to run fast with their hands tied. Underscoring the need for Governments to be accountable, he described corruption, the widespread misuse of public resources and give-aways through the provision of tax incentives as major problems. While Governments have committed to creating progressive tax systems, their efforts have centred on raising their GDP tax ratio through regressive taxation. To finance the Goals, illicit tax flows and avoidance must be curbed. He advocated for the creation of an intergovernmental tax commission under United Nations auspices. The representative of Guyana asked Mr. Soto about lessons learned from other countries, while the representative of Nepal focused on the need to ensure that trade is a vehicle to finance the Goals.
Mr. SOTO, replying that 8 per cent of Costa Rica’s GDP is spent on education, said access is essential in terms of how it has structured its education system. Education is also mandatory, making it possible to have a high literacy rate. As a small country, Costa Rica does not have economies of scale in industries such as agriculture, an aspect that differentiates it and which has played a role in developing its human resources and the design of economic development plans.
Mr. KASAIJA said trade is a means of production. Countries can use the foreign exchange garnered to meet their debt obligations. When they trade, they receive the goods and services they want through import substitution. When they produce, they create jobs. More jobs and corporate profits translate to more domestic revenue. More domestic revenue, in turn, translates to increased ability for the State to invest in social sectors or productive activities. He sees trade as the anchor to help countries meet the Goals. Handouts have never helped countries achieve what they want.
Mr. BRODJONEGORO said trade is crucial to macroeconomic management, first as a source of growth. Then, a country can rely on household consumption and other aspects. In terms of macroeconomic stability, the balance of trade is critical. When a country is growing, there is often a current account deficit, derived from its balance of payments status. If a country can manage a bigger surplus, it can then reduce the current account deficit and maintain economic stability. Strong growth, fuelled by trade activities, can create jobs, he added.
Ms. ALONSO MÁSMELA said that, in designing trade plans, the most important factor to consider is that trade should generate greater efficiencies in an economy. When a country transforms its productive structure towards productive industries, such efforts should lead to greater growth. They must first identify areas where there is the greatest potential for production, and then ensure that trade involves the transfer of technology and capital. On the issue of taxes, she noted that, when everyone pays them, everyone feels that public resources are worth something.
Ministerial Dialogue II
The forum then turned to its fourth ministerial dialogue, on the theme “Harnessing new technologies for financing the Sustainable Development Goals”. Moderated by John Authers, Senior Editor for Markets, Bloomberg, it featured four panellists: Achim Steiner, Administrator of the United Nations Development Programme (UNDP) and Co-Chair of United Nations Task Force on Digital Financing; Maiava Atalina Ainuu-Enari, Governor, Central Bank of Samoa; Edward Scicluna, Minister for Finance of Malta; and Patrick Njoroge, Governor, Central Bank of Kenya. Serving as discussants were Shamika Sirimanne, Director, Division on Technology and Logistics of the United Nations Conference on Trade and Development (UNCTAD); Elenita Dano, Co-Coordinator of the Action Group on Erosion, Technology and Concentration; and Pooma Kimis, Managing Director of the Official Monetary and Financial Institutions Forum.
Mr. AUTHERS, kicking off that discussion, posed a question about whether new technologies can assist sustainable development financing, or conversely whether they increase risks for financing. In that regard, he noted that some of the most interesting financial innovations emerging in the recent years have come from developing countries, including Kenya’s Mpesa mobile payment system.
Mr. STEINER agreed that many new financial technologies hail from countries not typically seen as being on the cutting edge of technology. However, those technologies can help countries become leaders in that sphere. Noting that the Task Force on Digital Financing of the Sustainable Development Goals is intended to anticipate a range of possibilities likely to emerge in the coming years — with its outcome expected in early 2020 — he pointed out that, today, many people are already using digital platforms to manage their own personal finances. The whole information and risk database used by intermediaries in the financial system — as well as clients — are fundamentally shifting, he said, adding that Governments are exploring how to regulate that space and manage its inherent risks. Among those, he spotlighted the protection of fundamental rights, data protection and privacy, as well as the risk of exclusion in the use of new technologies. Indeed, the triangle of technology, the Sustainable Development Goals and financing is a crucial new arena that will require attention and the deployment of financing on an unprecedented scale.
Ms. AINUU-ENARI, describing how the issues studied by the Task Force manifest in small island developing States such as Samoa, said her country is a family-oriented one with a population of 197,000 people. While other countries can take connectivity for granted, Samoa cannot, she said, recalling how difficult it is to lay undersea cables capable of linking remote islands with other locations. “Financing the [Sustainable Development Goals] is about more than financial inclusion,” she stressed. While the latter remains a priority for Samoa, much of whose population lacks access to financial services, its focus is also on the increasingly frequent and severe impacts of climate change. The country is exploring the potential of green bonds, as well as climate adaptation strategies, including pooling risk with its island neighbours. Among other things, regulators around the world are charged with creating space for innovations that may have the potential of advancing the interests of their populations. In that vein, she said, they need to understand how digitalization will affect businesses and consumers, and that is especially true in small markets such as Samoa’s.
Mr. SCICLUNA agreed that, while many small island countries face structural and geographic constraints, they are also bolstered by their strong sense of survival. For example, Malta has been seeking to diversify its economy and enjoys a flexibility that many larger countries lack. The country is today described as “block chain island”, he said, noting that the pace of innovation in big data, artificial intelligence and financial technology has increased considerably in recent years. “This is another revolution,” he said, stressing that it is up to countries to choose how they respond to such platforms that might be seen as disruptive. Pointing out that central banks often fear for their own survival in the face of such changes, he warned that old regulatory frameworks cannot be used to regulate new technologies. In that regard, he cited Malta’s decision to adopt a fresh system regulation for its gaming industry as a good practice, noting that larger countries will naturally take longer to implement such shifts. He also underlined the importance of restructuring tax systems to respond to technological shifts, citing the European Union’s new digital tax as an example.
Mr. NJOROGE, sharing Kenya’s experience with digital innovation, said the country has been a leader in developing new kinds of digital financial services. The Mpesa mobile payment system is a well-known example, but not its only innovation. Mobile phone penetration in Kenya stands at 106 per cent today, with some people even having more than one SIM card. With those innovations, financial inclusion in the country increased from 27 per cent in 2006 to 83 per cent in 2019, lifting many people out of poverty. “Today our task is the democratization of financial services,” he said. Going forward, the focus should be on how innovations and new technologies can be encouraged, with the aim of benefiting society as a whole. Turning to regulation, he said Kenya recognizes the need for oversight, but also employs a flexible “test‑and‑learn” approach that fosters innovation, as more prescriptive polices are likely to hinder innovation. Regulators themselves often do not understand the technologies they are regulating, he said, underlining the need for more collaboration between regulators and innovators and for the development of smart products — not “half-baked” ones — for poor people. Kenya is now pursuing a new “eCitizen” platform, allowing for the delivery of services.
Ms. SIRIMANNE said the world has already seen new financial service — or “fintech” — tools contribute to financial inclusion. They help cut down the middle man in financial services, adding value for users. Trade in such tools is expected to amount to $29 trillion by 2020, but most of that trade takes place in developed countries. If people lack access to the Internet, they have no hope of benefiting from such tools, she stressed, noting that about half the world’s population finds itself in that situation. Underlining the importance of trust, she said appropriate regulation is crucial. Only 36 per cent of developing countries have data protection and cybercrime laws, and many such laws are outdated or contradictory. Warning that those multitudes of divides can lead to countless people around the globe being left behind in the world’s new digital economy, she called for a whole-of-Government approach and a back-to-basics approach to ensure broader inclusion in the benefits of financial technology.
Ms. DANO underscored the need to “look before we leap”. Countries cannot afford to embrace new technologies without first considering their broader implications. The creation of the Task Force is an important part of that process, she said, noting that governance — not just regulation — will be crucial to understanding the nature of new technologies and their risks and benefits. As inclusiveness will not emerge from financial technology automatically, she called for explicit efforts by the United Nations, civil society and grass‑roots organizations to help design strategies to drive inclusivity. Echoing the importance of focusing on the fundamental elements of inclusivity, she drew attention to infrastructure development, outreach and education, making new technologies affordable and accessible and protecting basic rights. She also called for more attention to the natural resources needed to produce and implement new technologies, while raising questions about who will control emerging platforms and warning against the further consolidation of power “at the top of the totem pole”.
Ms. KIMIS underlined the need to connect capital with technology. “Data is sometimes called the new oil,” she said, emphasizing that it must, therefore, be properly regulated. Indeed, commercial gains should be balanced with the public good. As technology marches forward, she said digital financing can help prevent people from being left behind, advocating for the deployment of more capital to engage communities for change. New technologies that will reshape markets should seek to unlock stranded assets, she stressed, highlighting the important of engaging sovereign wealth funds and private pension plans in such efforts.
In the ensuing discussion, several speakers posed questions related to social divides around technology, as well as the management of related risks.
The representative of Bangladesh drew attention to a generational divide in his country, noting that, while central bank governors and other officials may be cautious in embracing new financial technologies, young people on the ground have already adopted them. Such technology is promoting public service delivery in Bangladesh, he said, noting that some 13 million poor mothers receive cash transfers online and often use those funds to send their children to school. However, he said more tension exists around financial technologies designed for commercial purposes and asked the panellists how tax evasion by technology companies can be avoided.
The representative of Guyana, striking a similar tone, asked how financial technologies can be pursued without exacerbating existing social divides or creating new ones. Meanwhile, Nepal’s representative raised concerns about technology’s potential displacement of human resources, thereby compromising the ability of States to create employment opportunities for their people.
The panellists briefly responded to those questions, as well as several posed by Mr. Authers about how technology can facilitate financial flows between countries.
Mr. STEINER said a core question now is “who controls what happens next”, noting that efforts will be needed to explore the governance of spaces that currently elude national Governments. Technology — when connected to demand — is very powerful, he said, emphasizing that regulators need to find ways to oversee the technology landscape in the interest of inclusivity.
On the question about generational divides, Mr. NJOROGE said that is less about age than of appreciation of risk. The very business of central bankers is to navigate risk, making them naturally more reluctant to embrace new technologies. However, they need to become more innovative, as in the case of Kenya’s Mpesa platform — which was eventually embraced by Government officials once they understood that tool’s potential.
Special High-Level Meeting with Bretton Woods Institutions
The forum then held a special high-level meeting with the Bretton Woods institutions, World Trade Organization (WTO) and UNCTAD.
INGA RHONDA KING (Saint Vincent and the Grenadines), President of the Economic and Social Council, recalled in opening remarks that the high-level meeting has become a hallmark of promoting mutual understanding among global trade and finance institutions. Noting that it will cover two global concerns — public debt, as well as “fintech” and financial inclusion — she said the spectre of debt distress is an immediate challenge, with a growing number of developing nations facing mounting debt-service costs, crowding out public investment in sustainable development.
“The question on the minds of many is: how can heavily indebted developing countries maintain sufficient fiscal space to carry out investment in sustainable development?”, she said. There is an urgent need to revise policies so as to expand social spending and resolve debt crises. Financial technology, meanwhile, is emerging as a new promise for financial inclusion, giving micro-, small and medium-sized enterprises access to financial services. It also poses challenges for policymakers in terms of consumer protection. She highlighted the importance of exploring new avenues to adapt regulations and financial system supervision of “fintech” actors and products. She drew attention to the report of the Inter‑agency Task Force on Financing for Development, which recommended reshaping both national and global financial systems to align with sustainable development.
MARÍA FERNANDA ESPINOSA GARCÉS (Ecuador), President of the General Assembly, welcomed today’s meeting as a way to foster understanding of global conditions, with a focus on systemic issues in the international financial world, including indebtedness and access to financing for countries with vulnerabilities. In September, the world will assess implementation of the Sustainable Development Goals, and progress on both the Addis Ababa Action Agenda and the Samoa Pathway. The objective of those events is the same: to guarantee implementation of the 2030 Agenda. Today’s economic climate is marked by high financial risk and nervous capital markets, she said, creating difficulties for development financing. The uncertainty will not allow for more than 3 per cent global growth.
Speaking to the vision of a more stable, inclusive economic order, she underscored the importance of speaking the language of both development and finance — a type of bilingualism — and aligning financing with regional and local priorities. She encouraged a focus on regional cooperation so as to increase the impact of development projects, noting that the smallest countries are often the most interested in working in a regional manner. Indeed, the new financial architecture must work to close the digital gap and the climate-financing deficit — not only by investing with fresh resources, but by creating ways to access low-carbon technologies. She called for bolstering the multilateral trade framework and incorporating a gender perspective into financial policies. The shared responsibility of the private sector must be explored, and the granting of credits and loans must go beyond simply evaluating GDP. Particular attention must be given to middle-income nations, as well as African countries and small island developing States. Recalling that the United Nations must be based on global leadership, shared responsibility and collective action, she said “there is no time to lose”. There is a responsibility to respond to the collective commitment to fight poverty and guarantee a dignified and safe life to people on the margins.
KEN OFORI-ATTA, Minister for Finance of Ghana and Chair of the Development Committee, said he was just in Washington, D.C., attending the World Bank spring meetings as Chair of the Development Committee. Providing an overview of the ninety-ninth meeting of the Committee, which took place on 13 April, he first described the global outlook, which is marked by a moderate slowdown of economic activity. Investments have softened, debt persists and uncertainty weighs on global confidence. He reiterated the important role of global trade and investment as engines of growth and jobs. Governments expressed support for the approach of the World Bank and International Monetary Fund (IMF) for borrowers and creditors to improve reporting on public and private debt. They stressed the importance of growth-enhancing policies, alongside those to contain risks and protect the most vulnerable. He called on institutions to work with policymakers to find the right balance, and help countries improve debt management, transparency and bolster domestic resource mobilization. Governments also welcomed policy reforms, notably the International Finance Corporation’s additionality framework.
For its part, he said the Committee pledged to ending extreme poverty and bolstering prosperity. It expressed support for the World Bank’s role in serving all clients, creating markets and improving the business and operational model. Such efforts are part of a capital package that will enhance the Bank’s leadership in areas including crisis prevention and management, climate change and gender equality. Governments recalled that the fund for helping the world’s poorest countries — the International Development Association — is critical to meeting the Sustainable Development Goals. They called on the World Bank Group to support the themes of jobs, economic transformation, gender, climate change and fragility, as well as the cross-cutting areas of debt, human capital and technology. The Committee welcomed the mainstreaming of disruptive technologies and measures to make them affordable for developing countries. It asked the World Bank to continue working with Governments and partners to mainstream that agenda across various sectors. Governments, meanwhile, requested disaggregated data and refined indicators, with an emphasis on policy reforms that achieve tangible results. They also called on the World Bank to work together in mobilizing private-sector solutions and resources, and in mitigating investment risks. They acknowledged the important role of the Bank’s inspection panel in ensuring accountability. In sum, he said, the Committee urged the World Bank to work with international financial institutions and the United Nations on the most pressing development challenges.
SALIM BADDOURA, President, Trade and Development Board, United Nations Conference on Trade and Development, said many changes have taken place since the last financing for development follow-up forum. Society is beset by risks including nationalism and rising extremism based on the principle of exceptionalism. Meanwhile, overcoming the chronic underfunding of sustainable development — though crucial — is proving a daunting task. In the past, the international community has proven able to measure of to global challenges, as demonstrated by UNCTAD’s establishment in 1964 and the creation of the financing for development framework.
Underlining the need to harness the opportunities presented by today’s emerging challenges, he said one of UNCTAD’s key functions is to help better understand the world and gradually achieve its transformation. The Organization’s three pillars have proven remarkably resilient, opening the door today for more informed international discussion and increasing the chance for the world’s successful adaptation. The General Assembly’s dialogue on financing for development helps enhance links between Geneva and New York as the United Nations continues to push forward its sustainable development agenda. Experiences in bringing together organizational stakeholders can be brought to the wider United Nations system, he said, urging all partners to tap into the Conference’s expertise when formulating policies and working to strengthen global economic governance.
SABINA BHATIA, Deputy Secretary of the International Monetary Fund, speaking on behalf of the Chair of the International Monetary and Finance Committee, summarized the Committee’s priorities, noting that “the global economy is at a delicate moment”. Noting that predictions are that global growth will slow in the next few years, she said officials at the national and international level must work to maintain growth, built resilience, support recovery and strike the right balance between debt sustainability, demand and social objectives. Inflation expectations must remain well‑anchored, she said, noting that climate change is among other priority areas.
Citing a recent IMF recent report titled “Joint Responsibility, Shared Rewards”, she said the Fund works to support well-managed and sustainable growth, including by fighting corruption — which can save an estimated $1 trillion in global tax revenue annually. In addition, it will continue to enhance engagement with fragile and conflict-affected States, and help countries boost tax revenue through its platform for collaboration on tax. Meanwhile, the Fund is committed to helping countries meet the targets enshrined in the Sustainable Development Goals and supports a system that is more inclusive and sees all parties take responsibility for shared common benefit.
TIM YEEND, Chef de Cabinet and Principal Adviser to the Director General of the World Trade Organization, on behalf of its General Council, said trade opens access to global markets, improves resource allocation and allows countries to specialize in the production of particular goods or services. Those changes in turn help improve people’s living standards, lifting millions out of poverty. However, he said, challenges remain. The income gap between the world’s richest and poorest countries remains large and least developed countries have on average a per capita income of just 4 per cent of developed countries. “Trade opening by itself is not enough,” he stressed, calling on Governments to ensure that the benefits of trade flow to all segments of their population and to consider redistributive policies if necessary. Meanwhile, vulnerable parts of society must be assisted in preparing for trade-related labour disruptions and in finding new employment options.
At the global level, he said, traditional areas of trade cooperation — including agriculture and fishing — still require significant attention, with a need to address market distortions. While the global multilateral trading system is essential, he acknowledged that it also poses major challenges. At WTO, current discussions on reform focus on making the trading system more equitable, inclusive and transparent, while helping to extend affordable credit and market integration to more people around the globe. Citing one important example, he said electronic payment platforms now offer many benefits, including financial inclusion, economic empowerment and lower fees. They have enabled small retailers to expand into the world of online enterprises. “The [WTO] is facing challenging times, but this is not the first time this has happened,” he said, noting that the organization has already made changes that demonstrate that progress is possible.
MERZA HASAN, Dean of the Board of Executive Directors, World Bank Group, described the future of the job market, expressing concern that, by 2050, the international community must create 300 million jobs. “The challenge in front of us is extremely huge,” he said, noting that the Bank’s spring meetings focused in part on strengthening partnerships. Emerging markets will require 4 per cent additional financing. Growth projections are not optimistic, and efforts are under way to increase reliance on the private sector in unleashing the trillions of dollars available to achieve the 2030 Agenda. The Bank is working to tailor itself for impact investing. It adopted the “cascade” framework to maximize financing for development, agreeing to “take the first loss”, if needed, to create an environment for private sector investment. The International Development Association, meanwhile, created a crisis fund which will be scaled up. Partnerships with the United Nations and the private sector will be strengthened, too, he said.
SHONA E. RIACH, Executive Director and Chair of the International Monetary Fund Liaison Committee with the World Bank, the United Nations and other international organizations, detailed ways in which the Fund is supporting implementation of the 2030 Agenda. It has scaled up support for national efforts to boost domestic resource mobilization. It has increased its infrastructure policy support and technical assistance aimed at improving countries’ statistical capacity, intensified the volume of policy work on financial inclusion and — through newly introduced climate change policy assessments — it is helping countries meet their carbon emissions targets. The Fund and the World Bank are working to help the world’s poorest countries address debt vulnerabilities and endeavouring to better tailor both advice and support by improving debt analysis. Turning to “fintech” and financial inclusion, she said the Fund and the Bank launched the Bali fintech agenda in October 2018, which lists 12 policy considerations to help countries harness the benefits of fintech, while also managing the risks.
The forum then convened the first of two panels during the special high‑level meeting segment, on the theme “Public debt, vulnerabilities and the Sustainable Development Goals”. Moderated by Eduardo Porter, The New York Times, it featured: Masaaki Kaizuka, Executive Director, International Monetary Fund; Herve de Villeroche, Executive Director, World Bank Group; and Valentin Rybakov (Belarus), Vice-President of the Economic and Social Council.
Mr. KAIZUKA presented part of the communiqué of the thirty-ninth meeting of the International Financial and Monetary Committee, through which officials pledged to work together to improve debt transparency and sustainable financing practices. Public debt in emerging and low-income countries has risen substantially in recent years, approaching levels not seen since the 1980s debt crisis, he said, adding that high debt levels are not always negative. However, today’s high rates are largely driven by adverse shocks, loose debt policies and hidden abuses. The share of least developed counties in debt distress has doubled since 2013, reaching about 40 per cent in 2018. “This is a very alarming phenomenon,” he said, underlining the need for a rebalancing aimed at helping countries achieve the Sustainable Development Goal targets. In that context, he outlined the multipronged strategy endorsed by IMF and the World Bank.
Mr. DE VILLEROCHE agreed that vulnerability of public debt has increased in recent years, hampering development in low-income countries. Since 2012, there has been a 14 per cent increase in the debt to GDP ratio, with half of beneficiary countries of concessional funding from the World Bank classified as “high risk of default”. The types of lending instruments have changed, with high rates of commercial debt and lending by non-Paris Club of Industrial Country Creditors countries. Meanwhile, the system has become less transparent. Warning that “unpleasant surprises” might be seen should crises arise, he advocated for an expansion of the Paris Club to more countries. However, some States still do not wish to join that group, making debt issues more challenging, he said.
Mr. RYBAKOV said that, today, debt rates have put some 30 countries at risk of levels that threaten distress or disruptive crises. As States strive to achieve the Sustainable Development Goals, their partners should better integrate effective growth, debt and sustainability issues into their efforts to assist them. Similarly, he said, the positive impacts of long-term investments for sustainable development should be incorporated into the international community’s understanding of debt dynamics, and countries vulnerable to disasters and shocks — due to no fault of their own — should be supported. Outlining several proposals in those areas, he spotlighted debt swaps that would cancel debt in return for sustainable development investments and urged all stakeholders to ensure that debt does not become a stumbling block to the achievement of the 2030 Agenda.
In the ensuing dialogue, a representative of the European Union Network on Debt and Development noted that high levels of debt also exist in middle- and high-income countries, adding that a boom in irresponsible lending — including, at times, by the World Bank itself — is responsible for such problems. He asked how to achieve global consensus on responsible lending, and how to ensure compliance.
The representative of the Russian Federation asked what work is being done to strengthen the global financial safety net, how stable is it in the case of future shocks and what can be done to address the challenge of protectionism as well as illegal unilateral coercive economic measures.
The representative of Nepal drew attention to inadequate coordination among the global financial institutions and asked if any changes are planned to address that issue.
Mr. KAIZUKA, responding to some of those questions, described an initiative in the “Group of 20” to conduct a self-assessment aimed at helping countries understand what it means to become a more responsible creditor. Mr. DE VILLEROCHE said guidelines do exist for responsible borrowing, but similar ones for Paris Club member lenders require more attention.
Also participating was the representative of Bangladesh.
The second interactive dialogue focused on the theme “Fintech and financial inclusion”. Also moderated by Mr. Porter, it featured: Koen Davidse, Executive Director, World Bank Group; Vladyslav Rashkovan, Alternate Executive Director, International Monetary Fund; and Kira Christianne Danganan-Azucena (Philippines), Vice-President of the Economic and Social Council.
Mr. DAVIDSE said fintech can bring countries closer to achieving sustainable development targets, including by bringing down the cost of financial services, assisting more people to access credit and reducing the distance between people and services. In conflict-affected countries, for example, that can help establish State services in remote areas that were once cut off from access. The World Bank and IMF are working on a stocktaking survey on those matters, aimed at helping to identify best practices and emerging issues. “Our toolbox is expanding rapidly,” he said, stressing that realizing financial inclusion within the Sustainable Development Goals framework is more possible than ever. However, achieving that aim will require Government commitment and support from international organizations, he said.
Mr. RASHKOVAN recalled that, initially, IMF’s focus on fintech emerged from its efforts to achieve financial inclusion and bring previously unbanked people into more formal financial systems. The Bank considers various policy elements, he said, encouraging States to do the same. Calling for reinforced competition and stronger commitments to open markets, he said fintech can improve people’s access to financial services. However, the World Bank is concerned about the dominance of a small number of large players in that arena and sees a need to improve the entry of smaller players while preventing the misuse of fintech in money‑laundering and other illicit practices. He further warned that, if misused, fintech can pose risks to economic stability and consumer protection, increase the risks of cybercrime and hinder the implementation of the Sustainable Development Goals.
Ms. DANGANAN-AZUCENA, outlining some of the benefits of fintech, said it is helping more underserved people connect with financial services and facilitates small and medium-sized enterprises in accessing credit faster. However, she agreed that technologies and the entry of new actors, instruments and platforms create fresh challenges for consumer protection, adding that vulnerable consumers might fall victim to fraud or find themselves excluded from services due to inappropriate profiling. Meanwhile, she said, data can be improperly collected, posing risks to privacy rights. Describing the Philippines’ policies in those areas, she said the Government is working to strike the right balance between protection and risk.
As the floor opened for comments, the representative of the Centre for Economic and Policy Research, warning against protectionism, said the world’s biggest corporations are currently launching yet another misguided expansion of WTO which will only allow monopolistic companies and the countries that support them to gain more power. Strongly condemning that “new digital colonialism”, she said countries have the right to use their data for their own development. No international agreements on these matters should be concluded until there is greater clarity on how to regulate those companies, she stressed.
Responding briefly to that comment, the panellists expressed their support for a robust, rules-based trading system to combat protectionism and the over consolidation of power.