Thank you, Secretary-General, Prime Minister Trudeau and Prime Minister Holness. We are meeting at a vital moment to discuss debt and liquidity challenges of developing countries.
These challenges threaten to compromise vulnerable countries’ response to the pandemic. If left unaddressed, they will impede investments in recovery, climate action and the Sustainable Development Goals. As the 2021 Financing for Sustainable Development Report has noted, we would risk a diverging world, with some countries and regions facing another lost decade for development.
What can be done?
Today’s discussions have brought to the fore a wide range of policy actions that could alleviate a debt crisis.
We must act promptly to provide short-term liquidity, through an SDR allocation and extension of debt relief.
But one year into the crisis, and one year into the Decade of Action for the SDGs, we must turn our attention toward recovery.
The Task Force report has underscored just how critical it will be to provide sufficient fiscal space to all countries – to invest in their productive capacities, climate action and the SDGs.
Without these investments, we will not achieve the SDGs.
First, we will need fresh financing – at tenures long enough to match the long-term nature of investments in resilient infrastructure, education and related SDG priorities. The multilateral development banks have a key role to play in this regard. More private investments can be mobilized in sectors that are critical to SDG achievement, such as renewable energy and digital connectivity. To attract private capital, governments will need to develop a pipeline of well designed projects, with mitigated risks, that are aligned with long-term national priorities.
Second, we have to help those countries with debt overhangs that curtail their access to finance. In some cases, debt swaps can free resources for SDG investments. In others, we will need debt cancellations. In all cases, resources should target an equitable and sustainable recovery that puts us back on track to achieving the SDGs.
Third, we must urgently revisit the international financing architecture, where much remains to be done.
Illicit financial flows continue to drain resources from sustainable development. The digital transformation, accelerated by COVID-19, raises new and complex cross-border taxation challenges – if not addressed with the interest of developing countries in mind, they will see a further erosion of their tax base.
On sovereign debt, the key question is whether current, market-based approaches to debt resolution really do provide a clean slate and enough relief for countries.
That must be our yardstick. In other words, do restructurings create enough space for countries to invest in recovery and the SDGs?
We will have an opportunity, at the upcoming ECOSOC Financing for Development Forum, and its special segment on debt on 12 April, to discuss these questions.
I look forward to this continuing dialogue.