Muhammad Hammad

Financing challenges are a significant obstacle to achieving Sustainable Development Goals (SDGs). Financing is a crucial part of SDGs and there is huge finance required for it. The Fourth International Conference on Financing for Development next year in Spain is a great opportunity to make changes in financing at all levels and to overcome the challenges.

Sustainable Development Goals (SDGs) are falling short and without urgent action, the 2030 Agenda will not be achieved. Countries are off track on the 2030 Agenda for Sustainable Development to accelerate progress towards the SDGs and have proposed several actions that countries can take to get back on track. Poverty reduction is a key priority.

Experts estimate almost 600 million people will continue to live in extreme poverty in 2030, majority of which are women. Progress is woefully inadequate on climate action. The reduction of greenhouse gas emissions is critical to mitigating the impacts of climate change, which affects not only the environment but also human health, economic growth, and global sustainability.

Financing is crucial for achieving the Sustainable Development Goals (SDGs) because it enables countries to invest in the infrastructure, programs, and services necessary to achieve the goals. Without sufficient financing, countries may struggle to make progress towards the SDGs. The United Nations estimates that achieving the SDGs will require an additional $2.5 trillion in annual investment until 2030. Due to misaligned incentives, both public and private actors still invest in brown activities and have not yet fully aligned their decision-making and financing with the SDGs.

While there has been real progress across the financing agenda since the adoption of the Monterrey Consensus on Financing for Development in 2002, financing for development has not kept pace with rising needs amid a changing and less benign global environment. Systemic risks, especially climate and disaster-related risks, have risen dramatically.

There has been a sea-change in global macroeconomic and macro-financial conditions, with GDP growth rates in developing countries falling to just over 4 percent annually on average between 2021 and 2025, after averaging around 6 percent before the 2009 global financial crisis. Income, wealth, gender, and other forms of inequality, which are often perpetuated by financing policies, have become entrenched. Enormous technological change, digitalization in particular, is affecting all financing areas. And there are growing risks of fragmentation in the global economy.

While some of these trends have created opportunities for development and financing progress, in their totality, they have put national financing frameworks and the international financial architecture under severe stress.

Today, many countries are faced with tight fiscal constraints and high risks of debt distress, with the median debt service burden for LDCs rising from 3.1 percent of revenue in 2010 to 12 percent in 2023 – the highest level since 2000. Global population mostly lives in countries where governments spend more on interest payments than on education or health. Private sector development, a key driver of sustainable growth and development, has stalled in recent years as investment growth, trade, and technology diffusion slowed.

Structural changes pose new challenges for countries’ productive integration into the world economy, necessitating a search for new growth and development strategies. And while financial inclusion is a bright spot, financial and capital markets remain underdeveloped in many developing countries, with financial volatility contributing to the dearth of long-term investment.

The Fourth International Conference on Financing for Development is scheduled to take place from June 30 to July 3, 2025, in Spain. The conference will be held at the highest possible political level, including Heads of State and Government, relevant ministers, and other special representatives. The conference aims to:

• Assess the progress made in the implementation of the Monterrey Consensus, the Doha Declaration, and the Addis Ababa Action Agenda.
• Identify obstacles and constraints encountered in achieving the goals and objectives.
• Agree on actions and initiatives to overcome these constraints.
• Address new and emerging issues.
• Accelerate the implementation of the 2030 Agenda and the achievement of the Sustainable Development Goals.
• Support reform of the international financial architecture.

This 2024 Financing for Sustainable Development Report is designed to enable a productive and substantive preparatory process for this Conference. To that end, the Task Force highlights four sets of overarching questions that warrant Member States’ attention:

How can Financing for development help close large financing and investment gaps, at scale and with urgency, and enhance spending effectiveness?

What is the package of reforms that can help deliver the rapid scaling up of public and private investments in the SDGs, and containing actions across tax, private investment and blended finance, concessional financing and development bank reform, and innovative financing instruments? How can the Conference help governments do more on domestic resource mobilization and optimizing spending through growth- and revenue-enhancing reforms, to better allocate scarce resources while prioritizing the SDGs?

How can financing for development help address issues in the international financial architecture and support international rules for trade, investment, and finance that are fit for today’s challenges?

Which international financial architecture reforms could enhance countries’ resilience in a more crisis-prone world and enable access to financing on the right terms and conditions? How can the international community fully align trade, investment, and technology agreements and rules with sustainable development?

How can financing for development close credibility gaps and rebuild trust in global partnership and multilateralism?

How can public and private actors reconcile misalignment between rhetoric and action and renew momentum for finally meeting long-standing commitments on concessional financing, global governance reform, and fully aligning domestic and international policy frameworks and investment allocations with commitments to the SDGs?

How can financing for development help formulate and finance new development pathways to deliver on the SDGs and ensure no one is left behind?

How can the ongoing rethinking of economic development paradigms, not least the relationship between states and markets in achieving sustainable transformations, inform new national and international financing policy frameworks for sustainable development?