Financing Is ‘the Test of Our Seriousness’ Secretary-General Says, Stressing World Falling Behind on Pledges to Deliver Prosperity for People, Protect Planet
Declining levels of official development assistance (ODA) and rising levels of debt are impeding the world’s ability to pay for the Sustainable Development Goals and address the negative impacts of climate change, particularly in Africa and among small island developing States, speakers warned today as the General Assembly hosted a high-level dialogue on financing for development.
Participants, including Heads of State and Government, Ministers, senior officials and representatives of stakeholder groups, debated the pros and cons of innovative financing mechanisms, the role the private sector can play, and the challenges faced by developing States which, solely on the basis of their gross domestic product (GDP), find themselves thrust in the ranks of middle-income countries and no longer eligible for sorely needed aid on favourable terms.
“Financing is the test of our seriousness,” said António Guterres, Secretary-General of the United Nations, who stressed that “without resources, we simply will not deliver for people or planet.” Underscoring the need for adequate, predictable and sustainable funding, he warned that the world is “not on track to achieve the Goals” and is falling short of the required funding from both public and private sources.
Declining ODA levels and rising levels of debt are limiting spending on the Goals, he said, adding that almost one third of the world’s least developed countries now find themselves in, or in high risk of, debt distress. Of special concern are heavily-indebted small island developing States that are wrestling with the high costs of climate change.
“We need to find ways for big money to flow to small projects,” he said, drawing attention to the October launch of the Global Investors for Sustainable Development Alliance that will bring together 30 Chief Executive Officers from every region, which collectively manage nearly $16 trillion.
President Nana Akufo-Addo of Ghana said that since he assumed office, his goal has been to help build a country that rejects a mindset of dependency, charity and handouts, charting instead a path of self-reliance. However, even with the best will in the world, and with the most charitable donor countries in place, “there will never be enough aid to develop Ghana, let alone Africa, to the level we want”. While increasing domestic revenue mobilization and leveraging technology to strengthen the performance of revenue institutions, it is necessary to pay attention to how revenue is spent and accounted for, he said, stressing the need for transparent budget and expenditure management systems that allocate resources wisely to agreed national priorities.
Bill Gates, Co-Chair of the Bill and Melinda Gates Foundation, said the world is far from fulfilling the promise of the Goals, and headwinds — such as climate change, rising debt levels and a softening outlook for global economic growth — are putting progress at risk. There is no single solution for getting back on track, but some things can make a significant impact, he said, emphasizing that different challenges call for different types of financing. “We must be realistic about gaps that the private sector can and cannot fill,” he added. The past two decades have seen amazing progress in improving the lives of billions, with significant strides in reducing poverty, but such progress has been uneven and there is still a far way to go towards fulfilling the promise of the Goals.
Sola David-Borha, Chief Executive Officer of Africa Regions of the Standard Bank Group, said achieving the Goals requires $2.5 trillion annually, yet financing available to Africa is “a drop in the ocean”. Africa needs “long-term patient capital”, she said, noting that the continent has only been successful in attracting money for large‑scale projects. She went on to describe how Africa is shifting to affordable clean energy, stress the importance of increasing intercontinental trade and emphasize that gender equality is a business imperative.
With $2.5 trillion a year needed to close the development financing gap, “much more must be done,” added Tijjani Muhammad-Bande (Nigeria), President of the General Assembly. He called for ODA commitments to be honoured alongside greater public and private investment to create more growth and jobs. Domestic resources must also be further mobilized, he said, adding that that the trillions of dollars lost every year due to illegal financial flows in developing countries far exceeds the volume of development aid.
Once again, alarming signs of debt accumulation and distress are being seen, disproportionately affecting least developed countries, small-island developing States and landlocked developing States, he said. “Debt sustainability must be addressed so that recent history does not repeat itself,” he said, adding that investment in clean and accessible energy can generate revenues.
Speaking in a video presentation, Prince Charles of Wales, United Kingdom, said the current market economy system “is no longer fit for purpose”. He called for a global shift in mindset which recognizes that what is good for people and planet is also good for business and Government. The world needs to think differently about capital — not only financial capital, but also human, community and natural capital. How capital pools are managed will be key, he said, adding that young people are “fed up” with inaction in the face of a global climate emergency.
Over the course of the day, delegates pitched ideas and exchanged views during thematic interactive dialogues that focused on ways to put public resources to work for more equal sustainable societies, including by combating illicit financial flows; financing the Goals and climate action at a time of rising debt burdens; and shifting the money needed to fill development financing gaps.
At the end of the day, several Member States and stakeholder groups also presented new announcements, commitments and initiatives to support implementation of climate action and the Goals.
Marc-André Blanchard (Canada), Co-Chair of the Group of Friends of Financing for Development; Amina J. Mohamed, Deputy Secretary-General of the United Nations; and Mona Juul (Norway), President of the Economic and Social Council; and the President of the General Assembly made closing remarks.
At the start of the meeting, the Secretary-General expressed condolences upon the death of Jacques Chirac, former President of France.
TIJJANI MUHAMMAD-BANDE (Nigeria), President of the General Assembly, said today’s High-Level Dialogue will assess progress since the adoption of the Addis Ababa Action Agenda four years ago and provide leadership and guidance on the way forward to accelerate implementation. “We have kick-started the decade of delivery” with ambitious climate action, building a healthier world through universal health coverage and speeding up implementation of the 2030 Agenda for Sustainable Development and the Sustainable Development Goals, he said. But these cannot be achieved without closing existing financing gaps and seizing tremendous investment opportunities in financing sustainable development.
Emphasizing that about $2.5 trillion a year is required to close the financing gap, he said that, despite encouraging signs, “much more must be done”. Official development assistance (ODA) commitments must be honoured and made public and there must be greater public and private investment to create more growth and jobs. Recommendations in this year’s report on financing for sustainable development should be heeded, particularly to assist those countries that need financing the most — least developed countries, middle-income nations and small island developing States. Domestic resources must be further mobilized, and illicit capital flows addressed, he said, adding that the trillions of dollars lost every year due to illegal financial flows in developing countries far exceeds the volume of development aid.
Once again, alarming signs of debt accumulation and distress are being seen, disproportionately affecting least developed countries, small island developing States and landlocked developing States. “Debt sustainability must be addressed so that recent history does not repeat itself,” he said. Global trade, meanwhile, remains an engine for growth and strengthening the multilateral trade framework will help integrate all countries into the global economy. Priority should be given to expanding innovation, technology transfer and digitalization in Africa and small island developing States.
He went on to say that the fight against climate change is not at odds with creating economic dividends, adding that investing in clean and accessible energy will generate revenues. Emphasizing that women are agents of change, he stressed that reaching development targets can only happen with their active participation. Sustainable development in the future requires investing in the present, he said, calling for bold and united action to deliver for all.
ANTÓNIO GUTERRES, Secretary-General of the United Nations, stressed that “financing is the test of our seriousness”, stating that “without resources, we simply will not deliver for people or planet”. Emphasizing the need for adequate, predictable, sustainable funding, everything is possible, he pointed out that the world is “not on track to achieve the Goals” and is falling short of the funds needed, both public and private. He went on to warn that declining ODA levels and rising levels of debt are limiting spending on the Goals, and almost one third of the world’s least developed countries are currently in, or at high risk of, debt distress. Heavily indebted small island developing States, wrestling with the sky-high costs of climate-related devastation, are a special concern.
However, there is promising news to build on, he said, explaining that financial markets are increasingly integrating sustainability into the way they carry out their activities. Various investors, insurers and stock exchanges have adopted social responsibility and sustainable principles. Welcoming that, earlier in the week, the principles for responsible banking were adopted by banking institutions, committing a sector worth $35 trillion to sustainable practices, he noted that investors are paying greater attention to the environmental footprints of the companies in which they invest, and demanding more information and disclosure about climate risks and other related threats to bottom lines. Several financial institutions have already started to implement the recommendations of the Task Force on Financial Disclosure. “We need every single company to do so urgently,” he said, adding that there is more than $200 trillion in private capital invested in global financial markets, often at negligible rates of return. These funds can be channelled towards more productive sustainable investment projects, including by making use of innovative financing instruments. The green bond market has grown by 45 per cent. The use of social impact bonds has also grown significantly.
Mr. Guterres said that the Road Map for Financing the 2030 Agenda that he has put forward aims to align the international financing system behind the Sustainable Development Goals, meaning removing the disincentives to long-term financing, and encouraging the financial industry to take full account of the true risks of unsustainable practices. It also aims to support individual countries as they mobilize domestic resources for financing their sustainable development strategies, and address the exclusion from financial services that has afflicted so many people. He said he has set up a task force that is exploring how the digitalization of finance can contribute to accelerating inclusive and sustainable development. Women must be a particular focus for inclusion — especially poor women, women entrepreneurs and female heads of household. Least developed countries, where private financing is lowest, are also a priority. The Road Map also aims to promote international cooperation as an imperative. Collaboration is crucial in cracking down on tax avoidance, tax evasion, corruption and illicit financial flows that deprive developing countries of tens of billions of dollars of potential resources for their development every year.
Multilateral development banks can play a key role in bringing public and private finance together, in de-risking private financing for critical projects, and in funding for infrastructure, especially in countries that cannot attract sufficient private investment. “We need to find ways for big money to flow to small projects,” he said, drawing attention to the upcoming October meeting of 30 Chief Executive Officers from every region to launch the Global Investors for Sustainable Development Alliance, which collectively manage nearly $16 trillion.
NANA ADDO DANKWA AKUFO-ADDO, President of Ghana, said that, since assuming the current position, his goal has been to help build “a Ghana beyond aid” that is a country which has discarded a mindset of dependency, charity and handouts, and chartered a path of self-reliance for its progress and prosperity, grounded on an intelligent, disciplined use of its considerable human and material resources. Even with the best will in the world, and the most charitable Governments in place, so-called donor countries, “there will never be enough aid to develop Ghana, let alone Africa, to the level we want”.
Aid was never meant to be what would bring African States to the status of a developed nation or continent, he said, pointing to a need to harness domestic resources and deploy them creatively and effectively to finance rapid economic growth and social transformation. While increasing domestic revenue mobilization and leveraging technology to strengthen the performance of revenue institutions, it is necessary to pay attention to how revenue is spent and accounted for, he said, stressing the need for transparent budget and expenditure management systems that allocate resources wisely to agreed national priorities.
BILL GATES, Co-Chair, Bill and Melinda Gates Foundation, said the world is far from fulfilling the promise of the Goals and headwinds are putting progress at risk. A softening outlook for growth, climate change and rising debt levels are among issues of concern. There is no single solution for getting back on track, but some things can make a significant impact. He emphasized that different challenges require different types of financing, adding that financing can be targeted towards specific needs, geography and groups of people. Given the large gap between what is available and what is needed, domestic resources must be mobilized. Extra domestic revenue can finance a third of the amount of what is needed and working with States to strengthen their tax collection systems is central to closing the financing gap. To avoid the temptation to tax even the poorest, tax systems in developing countries need to be more progressive, he said, adding that a related initiative, supported by the Foundation, is greater transparency, which would help the collection of personal and corporate taxes.
Aid plays a critical role, particularly in addressing basic needs in least developed States, but there are worrying trends, he said, citing data that indicates that net aid flows are decreasing, particularly to sub-Saharan Africa. Further restrictions can hurt progress already made. He acknowledged enthusiasm for the potential of blended financing, and that the private sector can contribute to development through investment and knowledge sharing, but such financing is not a panacea. “We must be realistic about gaps that the private sector can and cannot fill.” The past two decades have seen amazing progress in improving the lives of billions, with significant strides in reducing poverty, but such progress has been uneven and there is still a far way to go towards fulfilling the promise of the Goals.
SOLA DAVID-BORHA, Chief Executive Officer, Africa Regions, Standard Bank Group, said that her institution was among the 131 banks that signed the Principles for Responsible Banking. Noting that the achievement of the Sustainable Development Goals requires $2.5 trillion annually, which is beyond the capacity of Government, she said financing available to Africa is “a drop in the ocean”. The public and private sectors must work together, she pointed out, stressing the importance of engagement between both sides based on trust and mutual respect.
Highlighting the need for the development of key infrastructure, she said capital flows are declining in Africa. As the Addis Ababa Action Agenda points to the need for blended financing, all actors must come together to channel capital to development financing. Africa needs “long-term patient capital”, she said, noting that the continent has only been successful in attractive money for large‑scale projects. She also called for the establishment of partnerships in digital financing to ensure that every African State has access to financial services, including e-commerce. Concerns about the risk of new technology should not prohibit the use of such innovations.
She went on to describe how Africa is shifting to affordable clean energy, stressing the importance of increasing intercontinental trade, and therefore, welcoming the free trade agreement taking effect in July 2020. Lastly, she said gender equality is not just a human rights issue, but it is a business imperative. She noted, in that regard, that her bank partners with the United Nations Entity for Gender Equality and the Empowerment of Women (UN-Women).
Interactive Dialogue 1
The High-Level Dialogue held a panel discussion titled “Putting public resources to work for more equal, sustainable societies, including by combating illicit financial flows”, moderated by Sarah Cliffe, Director of New York University Center on International Cooperation. The dialogue features statements by Member States, as well as comments by experts, including Manuel Montes, Senior Adviser of the South Centre; Kevin P. Gallagher, Professor of Boston University; Irene Ovonji-Odida, Commissioner, Independent Commission for the Reform & International Corporate Taxation, and Member of African Union/Economic Commission for Africa (ECA) High-Level Panel on Illicit Financial Flows; and Sneha Shah, Refinitiv of Thomson Reuters.
MAHMOUD ABBAS, President of the State of Palestine, speaking on behalf of the “Group of 77” developing countries and China, said it is counterproductive to highlight the importance of domestic resource mobilization in developing countries without addressing the international loopholes that impede their ability to retain a large chunk of the resources. Citing challenges posed by the lack of international tax cooperation, the existing illicit financial flows and tax evasion, he pointed out that there is no single global inclusive forum for international tax cooperation, he said, calling for upgrading the Committee of Experts in Tax Matters to an intergovernmental body.
KOKHIR RASULZODA, Prime Minister of Tajikistan, described how transition to sustainable development is complicated and difficult, stressing the need to create environments conducive for sustainable development at the international level. His Government is undertaking measures to address financial and economic problems, dedicating 43 per cent of the national budget to human capital development, particularly to support vulnerable groups.
ALEXANDER DE CROO, Deputy Prime Minister and Minister for Finance and Development Cooperation of Belgium, pointed out that corruption distorts the market mechanism, and good governance is required to fight against the menace. Unlocking new resources is also important for Africa and small States, he said, calling for more private sector involvement in developing countries. Expressing concern about debt stress facing many developing countries, he said his Government supports multilateral financial institutions in early warning and analysis.
The representative of Nigeria, speaking on behalf of President Muhammadu Buhari, described how his country is mobilizing domestic resources to finance critical projects and how it diversified its revenue base. The Government has modernized its taxation system to curb tax evasion, channelling more resources to investment in inclusive socioeconomic development, empowering youth and supporting the vulnerable population. It also enacted an anti-graft law to combat illicit financial flows.
DARREN ALLAN HENFIELD, Minister for Foreign Affairs of the Bahamas, expressing gratitude for support for his country in the wake of Hurricane Dorian, said that the Bahamas remains open for business, except disaster-stricken areas. The best strategy is to make the country resilient and ending the vicious cycle of development, destruction and rebuilding, which is not sustainable. The Government is reforming fiscal policy and reducing debt to allocate more resources to socioeconomic growth. Cross-border cooperation is critical to combat illicit financial flows.
SVETLANA V. LUKASH, G20 Sherpa and Deputy Chief, Presidential Experts' Directorate, Office of the President of the Russian Federation, said that the international community needs an effective tool to combat tax avoidance. There is a need for international cooperation to recover criminal assets, she said, proposing the establishment within the United Nations of an intergovernmental body for the return of criminal assets and calling for joint efforts among Governments, financial institutions, the private and civil society.
Making brief comments, Mr. MONTES said that the United Nations can be involved in standard‑setting.
Mr. GALLAGHER said it is necessary to regulate cross-border financial flows.
Ms. OVONJI-ODIDA stressed the need for international tax reform and creating a space within the United Nations for addressing taxing rights of developing countries.
Ms. SHAK said that illicit financial flows take $1.5 trillion a year out of the global economy. So, the money is there, but in the wrong place. “We are not winning the battle” against this social ill preventing the allocation of funds to socioeconomic development, she said.
IDRISS DÉBY ITNO, President of Chad, stressed the urgent need to mobilize domestic resources, drawing attention to the Addis Ababa Action Agenda and the Road Map for Financing the SDGs. While developed countries must fulfil their commitments, developing countries must step up fiscal reform and mobilization of national resources and private investments. African countries must be more involved in decision-making of international financial intuitions.
IMRAN KHAN, Prime Minister of Pakistan, said the money that could have been well spent on health, education and employment in developing countries end up in Western countries’ bank accounts and offshore accounts. Even though developing countries try to get that money back, there is a lack of political will in richer States. Poorer counties do not have lawyers to fight for the return of assets.
NEVEN MIMICA, Commissioner for International Cooperation and Development of the European Union, said that the bloc is the world’s largest provider of official development assistance (ODA) and the European External Investment Plan aims to leverage, through innovative financing, €44 billion of public and private investment in Africa and the European neighbourhood by 2020. The Union and the United Nations have started working towards a multilateral partnership to support Governments in designing and implementing Integrated National Financing Frameworks.
JOSE VALENCIA AMORES, Minister of Foreign Affairs and Human Mobility of Ecuador, said that as a middle-income country, his Government has made it a priority to manage finance responsibly.
DAG-INGE ULSTEIN, Minister of International Development of Norway, pointed out that illicit financial flows thrive on distrust. The international community must make one big moral decision to abolish financial secrecy. Calling for an end to massive drain of public finance and fair distribution of tax rights, he said strong penalties must be levied for such secrecy.
MA ZHAOXU, Vice‑Minister for Foreign Affairs of China, stressed the need for enhanced political will, capacity building in developing countries, and optimal use of funds for poverty reduction, infrastructure and health, among others. The economy must be opaque based on multilateral trading system. China intends to align its Road and Belt initiative with the 2030 Agenda.
Mr. MONTES stressed the need to make some financial flows that are now legal internationally illegal. Only 35 per cent of illicit financial flows are illegal now.
Mr. GALLAGHER said multilateral coordination is crucial to channel resources to development.
Ms. OVONJI-ODIDA said that illicit flows are “a civil rights issue of our time” as it impacts all. The United Nations must make hard rules to bring a true reform.
Ms. SHAH stressed the need to shut down “third and fourth actors” in the network of channeling illicit financial flows. Infrastructure must be built adequately, and collective action is key.
Ms. Cliffe said illicit financial flows and domestic resource mobilization cannot be discussed separately. The international community must abolish “the secrecy of moral acrobatics”, as a participate said.
Interactive Dialogue 2
The High-Level Dialogue then held an interactive discussion on the theme “Financing the Sustainable Development Goals and climate action against rising debt burdens”. Moderated by Matthew Bishop of the Rockefeller Foundation, it featured presentations by Eric LeCompte, Jubilee USA Network; Gita Gopinath, Chief Economist, International Monetary Fund IMF); Rebeca Grynspan, Ibero-American Secretary-General; and Baba Musa, Director-General, West African Institute for Financial and Economic Management.
Mr. BISHOP said international flows of capital are “going backwards” when they should be supporting developing countries. It is clear that the poorer the country, the bigger the financing gap relative to gross domestic product. Given current trends, 50 per cent or more of the world’s population living in extreme poverty are in countries that face significant fragility issues. It is promising to hear new approaches from the World Bank and others regarding more flexible local financing, but there is a long way to go in practice.
RALPH E. GONZALVES, Prime Minister of Saint Vincent and the Grenadines, said the structural factors and required systemic changes regarding debt have long been known. What is needed is serious political will on the part of developed countries. Noting that more than 33 per cent of his country’s public debt is earmarked for climate-related resilience, adaptability and mitigation, compared with 10 per cent in 2001, he said it is hard for his Government get cheap long‑term money to borrow and grants are drying up. “We have gone through these things over and over and over again,” he said, adding that serious political is required on the part of developed countries.
JOSAIA VOREQUE BAINIMARAMA, Prime Minister of Fiji, said rising debt burdens are exacerbating the growing gap between funding for sustainable development and available resources. Capital pools must be expanded. He summarized some of the steps being taken by his country, such as the issuance of the first sovereign debt bond by a developing country and its plans to issue a blue bond. Calling for new ideas and greater cooperation, he said developed countries should rethink the way aid is provided and consider ideas such as zero-interest loans or loans linked to meeting sustainable development criteria. He added that, in recent years, multilateral banks have tended to be more conservative in their lending, when they should not be afraid to lose money if sustainable development can be achieved.
DIONISIO DA COSTA BABO SOARES, Minister for Foreign Affairs and Cooperation of Timor‑Leste, underscored the difficulty of funding the 2030 Agenda through domestic revenue. Prudent financial management systems are required, alongside robust cost-benefit analysis. Clearly, the need to borrow will continue, as sovereign wealth funds cannot pay for both State budgets and capital development. Given the vulnerability of small island developing States, the international community needs to mobilize specific solutions, he said, emphasizing that a one‑size‑fits‑all approach cannot continue. Debt sustainability should be shared responsibility and the international community needs to work towards a consensus on responsible lending practices, he added.
CIARÁN CANNON, Minister of State for Foreign Affairs and Trade of Ireland, reminded delegates that youth around the world are demanding ambitious climate action. Underscoring his country’s strong support for the Paris Agreement, he said the central role of finance ministries vis-à-vis climate action must be recognized. Ireland was among the first countries to withdraw money from investment in fossil fuels and to announce a whole-of-Government plan to meet its greenhouse gas targets. He added that development finance must be targeted to countries most in need, without disrupting their respective development processes, and that the impact of climate change on national exchequers must be recognized.
Mr. LECOMPTE, noting the growing frequency of extreme weather events, said it is important to acknowledge that the world is facing a new emerging debt crisis. Pointing to the impact of tropical storms in the Caribbean in 2017, where funds should have been allowed to be used for relief efforts, he said active proposals exist to address solvable challenges. He also noted that, according to the United Nations Conference on Trade and Development (UNCTAD), 47 per cent of low-income countries are in a debt crisis or at high risk of entering one.
Ms. GOPINATH said the topic under discussion is “both timely and old”. Noting that 22 of the 45 countries in sub-Saharan countries depend on commodity exports, she said the opportunity costs of building financial reserves is high while collecting more domestic revenue can take a while. What’s left is more efficient management of expenditures, but few countries have proper debt‑management frameworks and that needs to be addressed, she said.
Ms. GRYNSPAN said international cooperation is essential, given that small island developing States alone cannot face the vulnerability and shocks that lead to debt. She welcomed signs that some companies want to change their investment behaviour to become more socially and environmentally responsible. A different legal framework is required for companies to become stakeholders in sustainable development. She went on to ask how the world can take advantage of almost 0 per cent interest rates and ensure that investment is directed into new areas such as climate adaptation.
Mr. MUSA drew attention to recent data from the World Bank that indicated a weak capacity among low-income countries to manage debt. When extending debt relief, the international community must consider a country’s capacity to manage debt. He added that, out of 80 countries recently surveyed, only a few had conducted value-for-money audits. The need to build capacity is therefore very necessary. He went on to say that most bond issues in the last five years have been made by countries with low credit rating, setting the stage for debt unsustainability.
JOSÉ ULISSES CORREIA E SILVA, President of Cabo Verde, cautioned about going too deep into debt to pay for climate adaptation and resilience. That is especially important for recently graduated middle-income countries that no longer have access to financing on preferential terms. He also emphasized the need for agile mechanisms to respond to emergencies caused by extreme natural phenomena.
FRANCINE BARON, Minister for Foreign and Caribbean Community (CARICOM) Affairs of Dominica, said climate change is the single largest threat facing small island developing States. Building and rebuilding after successive storms means such States can never get past a certain level of development. There is a direct correlation between debt levels and the ability of States to meet the Sustainable Development Goals, she added. She proposed the establishment of a simple‑to‑administer instrument that would made access to climate-related financing more readily available.
JEROME WALCOTT, Minister for Foreign Affairs of Barbados, expressed frustration with a “myopic definition of development” that puts vulnerable small island developing States into the category of middle-income countries. He called for a vulnerability index to be created to determine when a developing country is truly ready to graduate. Emphasizing that, in the Caribbean, 200 per cent of a country’s GDP can be lost in a single hurricane, and that such storms are increasingly frequent, he said a rise in the number of financially failing Member States must be avoided.
GASTON BROWNE, Prime Minister of Antigua and Barbuda, said priority must be given to debt relief, debt forgiveness and grants for small island developing States and African countries. “Anything less is an affront to the seriousness of which we face.” CARICOM countries are regarded as the most indebted countries in the world by no fault of their own, undermining their ability to achieve the Goals. He said CARICOM’s proposal for a debt-for-climate adaptation swap, endorsed by the Secretary-General, requires support from multilateral banks and donor countries.
DANY FAURE, President of Seychelles, said a more holistic approach — drawing on a variety of financing sources — is required to address the Goals, climate adaptation and the broader development agenda. Small island developing States face inherent vulnerabilities and they cannot rely too much on domestic resource mobilization. He discussed his country’s experience with innovative financing mechanisms, such as the world’s first sovereign blue bond that will raise capital for ocean-based projects that can benefit both the economy and the environment. He emphasized, however, that such innovation cannot replace ODA and domestic financing resources.
EMANUELA CLAUDIA DEL RAE, Vice‑Minister for Foreign Affairs and International Cooperation of Italy, emphasizing the need for more urgent action to make the Goals a reality for all, said that, 12 year ago, her country launched a programme to conjugate its development assistance to Pacific island States with climate action. Similar partnerships have since been set up with CARICOM and other small island developing States. She noted that Italy has more than doubled its ODA to 0.30 per cent of gross national income. However, increasing ODA is not enough, she said, explaining that Italy is trying to engage the private sector to become more active and accountable with respect to truly sustainable development. She also expressed Italy’s support for reforming the United Nations development system, explaining that its voluntary contributions to the Organization’s development entities will depend on how they adapt going forward.
Mr. MUSA said it is not enough to talk about responsible lending. The illegal movement of funds from developing to developed countries also needs to be examined. International monetary institutions must review their policies to ensure that they reflect the needs of developing world in addressing poverty, eradicating illiteracy, building infrastructure and meeting the Goals. He added that the growing frequency and magnitude of climate-related events calls for private sector participation. The current approach of risk mitigation leading to recovery is not enough.
Ms. GRYNSPAN said graduation to middle-income status means nothing for those countries facing big risks from climate change. For such States, a vulnerability index would be key, she said, underscoring the need, as well, to shift “from graduation to gradation”. She added that the issue of high transaction costs for accessing special funds needs to be addressed.
Ms. GOPINATH said that, clearly, debt crises are a major problem “and this is not going away any time soon”. Borrowers, creditors and the international community must work together to address the situation. She said IMF is working to improve its “tool-kit” for borrowers, including better debt sustainability frameworks and better public investment management and resource mobilization. On the creditor side, IMF and the World Bank are preparing a set of practices in the context of the Goals.
Mr. LECOMPTE underscored the progress made in recent years in debt relief that has helped put more children in Africa into education. He added that debt relief must be in place when small island developing States are hit with natural disasters. He also noted that, while countries around the world find themselves forced to borrow, IMF has reported that $15 trillion is lost every year through tax havens and anonymous shell corporations — more than the economies of China and Germany combined.
Interactive Dialogue 3
An interactive dialogue on the theme “Moving the money to fill the climate action and Sustainable Development Goals financing gap” was moderated by Gillian Tett, Chair of the Editorial Board and Editor-at-Large of the Financial Times. It featured keynote addresses by Tharman Shanmugaratnam, Senior Minister of Singapore and Chair of the Group of 20 Eminent Persons Group on Global Financial Governance, and David Lipton, Acting Managing Director, International Monetary Fund.
Ms. TETT said a lot of money will be needed for the Goals. There is also plenty of money in the world to fill the financing gap. However, much of that money is in the wrong place. Today’s group of experts will talk about how to fill the gap.
Mr. SHANMUGARATNAM said that without significant and bold reforms in global financing, “we will not even be close” to achieving the Goals. The next decade will be critical. The needed reforms are not radical or pie in the sky, but they require urgency and involve mobilizing private financing, matching supply with demand and getting more value out of funding and investment. Warning that much of the developing world finds itself with near-unsustainable debt levels, he said blended finance must include private equity and not just loans. Without domestic reforms, external finance cannot be mobilized, and it is the job of the IMF, the World Bank and others to address that matter. He went on to discuss the “greening of finance”, stating that decarbonization can provide global investors with returns that are not correlated with other investments in their portfolios. “Don’t wait for a Greta Thunberg for finance,” he told delegates. “We’re not going to get it. It’s up to us.”
JULIUS MAADA BIO, President of Sierra Leone, said more needs to be done to improve property rights, increase investor confidence and improve economic fundamentals. With the correct structural reforms, bottlenecks can give way to investment opportunities. He added that his Government is giving priority to information and communications technology (ICT).
MONICA JUMA, Cabinet Secretary of the Ministry of Foreign Affairs of Kenya, drew attention to the wide range of economic opportunities on offer in Africa, from manufacturing toothbrushes to advanced technology. She stressed the importance of blended financing, noting the benefits it has delivered for her country, as well as financial inclusion that puts people at the heart of development. She also underscored the value of ICT for attaining the Goals.
MATTHEW RYCROFT, Permanent Secretary at the Department for International Development of the United Kingdom, said getting back on track to deliver the Goals requires not more ODA, but increased flows of private capital into developing markets. That requires “investible” deals and projects, as well as understanding what savers as well as investors want. Citing a recent survey in his country, he said nearly 70 per cent of savers want people and planet to be considerations, and not just return on investment.
FRANK ELDERSON, Executive Director of Supervision of De Nederlandsche Bank, the central bank of the Netherlands, said it is now understood that climate-related risks are a source of financial risk and that one day there will be no fossil-fuelled cars in New York or coal-fired generators in India. Noting that there is no need to revise central bank laws, he said it is time to consider other risks such as biodiversity loss, water scarcity and human rights abuses.
AKINWUMI ADESINA, President of the African Development Bank, noting that that institution is doubling its climate-related financing to $25 billion by 2025, discussed synthetic securitization, investment in projects involving women and the mobilization of global capital. He also pointed to the value of multilateral development banks working together and making infrastructure an asset class.
ANNE FINUCANE, Vice Chair and Chief Executive Officer of the Bank of America, said her institution has found success in funding the Goals, particularly those related to the environment as well as affordable housing and loans to low- and medium-income households. However, Governments, regulators, rating agencies and others must be on board, she said, adding that a lack of prototypes is a problem as well.
MARK WISEMAN, Chairman of BlackRock Alternative Investors, in the same vein, said a better case needs to be made to support investment in sustainable development. In a time of low interest rates, investors will need to accept risk to make returns, but ways must be found to mitigate such concerns as sovereign risk through, for instance, establishing predictable regulatory environments. Scale and diversification are also important, he added.
Mr. LIPTON said the basic promise of the Goals is to ensure that everyone has a chance to thrive, wherever they are in the world. When it comes to climate change, the priority is to help countries sharply reduce their use of fossil fuels. The problem is that carbon, at $2 a ton, is too cheap. A significantly higher price — as much as $75 a ton — is needed. Carbon taxes are the most powerful and efficient tool for getting the right price, though not the only one, but they make sense only if they are implemented in a fair and growth-friendly way. He added that increased spending in low-income developing countries on health, education and priority infrastructure cannot be fully covered by private sector funding, nor will boosting domestic revenue be enough. Concessional financial support will therefore be critical, particularly for those States which have, or risk having, distressing levels of debt.
ANDREW HOLNESS, Prime Minister of Jamaica, said global rules that penalize small island developing States and limit their access to finance must be revised. He called for enhanced access to flexible financial instruments and for the private sector to incorporate climate risks in their investment decisions. A global standard of accounting for climate-related data should meanwhile be part of the world’s financial system.
JUSUF KALLA, Vice President of Indonesia, said his country’s Government is narrowing the financing gap through innovative financing, partnerships and the mobilization of more domestic financing. It has identified public-private partnership projects in 19 sectors, including integrated transportation modes and information and communications technologies. He underscored the importance of cooperation with other relevant stakeholders.
CARIN JÄMTIN, Director General of the Swedish International Development Cooperation Agency, said that for several years, the agency — which focuses on poverty reduction — has sought to work in a more catalytic way so that one plus one adds up to three or even four. She discussed ways to provide access to finance for underserved groups, such as women or refugees living in camps, adding that in that regard, the role of local banks is crucial. She added that governance, accountability and combating corruption can be enhanced through the creation of strong tax systems.
JULIE HANNA, Executive Chairwoman of Kiva, emphasizing that 1 billion people in the world are unbanked, said everyone should have a digital identity and a bank account and that can be accomplished in two years. That may be a bold dream, but since Kiva was founded in 2005, it has harnessed technology to give millions of people access to banking services in 90 countries through a revolutionary blockchain platform. Underscoring the importance of fair access, she said Kiva is a game-changer that enables the world’s poor to save, borrow and contribute to the well-being of their families, communities and countries.
ERIC XIANDONG JING, Executive Chairman and Chief Executive Office, Ant Financial Services Group, emphasizing the value of data, said his company has over a decade been able to assist the credit needs of millions of small- and medium-sized enterprises, many of them offline.
MAURICE TULLOCH, Chief Executive Office of Aviva, said the planet needs “a new Marshall Plan”. Governments can lead the way by allocating 5 per cent of their pensions and sovereign wealth funds to support the Goals. He also suggested the creation of a league table that would rank companies on their sustainability performance. Subsidies should meanwhile be directed to the right places, he said, noting that half a trillion dollars go every year towards making fossil fuels cheaper. If you asked real people how their money is invested, they will say they have no idea, he said, but if you ask them about their values, they will say they care about the planet and humanity.
MICHAEL SABIA, President and Chief Executive Officer of the Caisse de dépôt et placement du Québec, said there is no silver bullet. Thought must go into adjusting the framework for the use of private capital to develop infrastructure in emerging markets. One idea would be to have multilateral development banks work with Governments to focus on building, for example, a port which, upon completion, can be sold to other investors. Governments could then recycle the revenue into new projects. There are no guarantees, but by thinking differently, substantial progress can be made, he said.
Interactive Dialogue 4
Finally, the High-Level Dialogue heard a presentation of new announcements, commitments and initiatives by Member States and other stakeholders supporting the implementation of climate action and the Goals, moderated by Luis Alfonso de Alba, Special Envoy of the Secretary-General for the 2019 Climate Summit.
ALLEN MICHAEL CHASTANET, Prime Minister of Saint Lucia, said his country, together with other CARICOM member States, is encouraged by the Secretary-General’s commitment to advance the Economic Commission for Latin America and the Caribbean (ECLAC) climate debt swap proposal. He also announced that Saint Lucia will be first country to partner with the World Economic Forum on a country financing road map.
MOHAMED AZIM ALI, Minister for Economic Affairs of Malaysia, said his country is establishing a centre of excellence for Islamic financing in Kuala Lumpur. He also announced a joint financing initiative to combat cholera and other diarrheal diseases in the 29 countries of the Organization of Islamic Cooperation.
PETER ERIKSSON, Minister for Development Cooperation of Sweden, said the value of global remittances exceeds ODA by a factor of three, but much of its potential is lost to high transaction costs, which need to be lowered. He announced that Sweden is partnering with the United Nations Capital Development Fund (UNCDF) on an initiative to harmonize digital financial products in three different parts of Africa.
KEITH KRACH, Under-Secretary for Economic Growth, Energy and the Environment of the United States, said his country’s commitment to international development is enshrined in President Donald J. Trump’s national security strategy. Highlighting two initiatives, he said the Mobilizing Institutional Investors to Development Africa’s Infrastructure programme, funded by the United States Agency for International Development, aims to address the significant gap in investment needed for Africa to achieve its sustainable development objectives. He added that by establishing a new Development Finance Corporation, the United States is expanding its capacity to mobilize and facilitate the participation of the private sector capital in emerging markets. “Our model is to promote free enterprise and entrepreneurship that builds self-reliance rather than predatory lending or debt dependency,” he said.
OHOOD AL ROUMI, Minister of State for Happiness and Wellbeing of the United Arab Emirates, said her country is proud to be partnering with more than 30 small island developing States on climate action and financing renewable energy projects. Public-private initiatives spearheaded by the Khalifa Fund for Enterprise Development are providing funding for small- and medium-sized enterprises in a range of key sectors in different regions, she added.
RICHARD CURTIS, filmmaker, charity fundraiser and one of the United Nations Sustainable Development Goals Advocates, announced the launch in 2020 of a public campaign to be called Make My Money Matter. “We intend to tell all employees of big companies and small that it is their right to demand that their pension money is sustainably invested.” Millions will soon know that, through their pensions, they have the power to see that those funds can help deliver the Goals.
Also speaking were ministers, senior officials and representatives of Denmark, Mexico, Morocco, Luxembourg, Finland, Switzerland and France, as well as several stakeholders.