The current geopolitical upheaval has torn the international community apart and shifted countries’ priorities. While 60% of the world's low-income countries are in debt distress or at high risk of it, world military expenditures reached USD 2.4 trillion in 2023.
The United Nations now estimates the financing gap for sustainable development at USD 4.2 trillion annually until 2030. A reform of the international financial architecture is only getting more urgent and necessary: it’s time to #FreeTheFunds.
The recent 2024 Spring Meetings of the World Bank Group and the International Monetary Fund in Washington DC were a significant milestone in this endeavor. Yet, the outcomes of these meetings are mixed, to say the least. This newsletter presents a round-up of the latest news on initiatives to better finance the fight against poverty and for the climate, including perspectives from civil society actors.
Last June, France convened the Summit for a New Global Financing Pact, where 300 global leaders identified a series of reforms and initiatives to be implemented in 2023 and 2024. Almost a year on, where does the international community stand on implementing the “Paris Pact for People and the Planet” (4P)? Find out in Focus 2030’s tracker.
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Focus 2030 supports the international solidarity movement to promote effective and transparent public policies to reach the UN Sustainable Development Goals by 2030.
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Implementing the Paris Pact for People and the Planet, where do we stand?
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#SpringMeetings
- #VisionToImpact The Spring meetings ended with a few concrete announcements, namely commitments from the World Bank to provide 300 million people in Africa with electricity access by 2030 with the support of the African Development Bank, and to support countries in delivering health services to 1.5 billion people by 2030. Eleven countries, including the United States, France, Japan, the United Kingdom, and Italy, collectively pledged USD 11 billion to the Portfolio Guarantee Platform, the hybrid capital mechanism, and the new Livable Planet Fund, that could be leveraged to reach USD 70 billion.
- #NotFastEnough Discussions at the Spring meetings resulted in a “lack of outcomes”, according to Eurodad, which highlights the remaining structural problems of these institutions. Decisions made last week are certainly not living up to civil society’s expectations, formulated in an open letter to G20 leaders ahead of the meetings, nor to the Vulnerable 20 (V20) Group demands.
- #WorldBankGroup The Development Committee met on April 19 and notably examined the update on the World Bank Group’s evolution process. However, members failed to agree on a shared communiqué, and discussions were summarized in a Chair’s statement. Meanwhile, the G20 Independent Expert Group noted that “the pace of MDB reforms remains inadequate to have a material impact on sustainable development” and identified five areas where acceleration is required.
- #MDBs The heads of ten multilateral development banks (MDBs) met on the margins of the Spring meetings to discuss joint and coordinated action on the SDGs. They committed to deliver in five critical areas, including scaling up MDB lending capacity in the order of USD 300-400 billion over the next decade. They launched the Global Collaborative Co-Financing Platform, aimed at channeling additional capital for development scale and impact.
- #IMF The IMF Board selected Kristalina Georgieva for a second five-year term as Managing Director, starting in October 2024. According to Oxfam International, “the IMF chooses to cling to the past and the archaic ‘gentleman’s agreement’ that keeps a European at its helm”.
- #G7 Meanwhile, G7 Foreign ministers met on the other side of the Atlantic for the first time this year. In their 23-page final declaration, they recognize the “insufficient progress towards the 2030 Agenda” and reaffirm “the need for strengthened international financial institutions”, underscoring the role of MDBs in the SDGs achievement. CSOs gathered in the official Civil 7 engagement group had previously shared a communiqué to inform the discussions. G7 Finance ministers and Central Bank Governors also met in D.C., sharing a statement.
#ForeignAid
- #ODA2023 The OECD released on April 11 the preliminary data on official development assistance in 2023. The verdict: ODA reached USD 223.7 billion in 2023, a modest 1.8% increase compared to 2022, representing 0.37% of DAC countries’ gross national income. The DAC Civil Society Reference Group reacted to those figures, raising concerns about the broadened ODA definition (including in-donor refugee costs), uneven aid distribution, insufficient support for Least Developed Countries, and the failure of most wealthy countries to allocate 0.7% of their GNI to aid.
- #FrenchODACuts Among top-five donor countries, France stands out with a 11% decrease in its ODA in 2023 (USD -1.8 billion). This significant step back is the latest in a series of renouncements (see Focus 2030 analysis) criticized by CSOs. Oxfam France, ONE, and Global Citizen conveyed a joint message to Emmanuel Macron via Le Monde and the Wall Street Journal. CSOs are urging President Macron to reverse the cuts and strengthen the financial transactions tax to fund international solidarity efforts. As France is gearing up to co-host Gavi’s investment opportunity launch on June 20, what signal does this send?
#IDA
- #IDA According to a recent World Bank report, one in three countries eligible for International Development Association (IDA) assistance is experiencing increased poverty compared to pre-Covid-19 levels. One in four people in these countries now live in extreme poverty. As preparations for IDA21 replenishment, slated for December 2023, are underway -with the location yet to be determined- World Bank President Ajay Banga has urged for a 20% to 25% boost in donor contributions to achieve a $100 billion replenishment target. However, in a Bretton Woods Project analysis, Maria Jose Romero, Policy and Advocacy Manager at Eurodad, cautions against focusing solely on quantity and neglecting the necessity of policy reforms to facilitate equitable and environmentally sustainable economic transformations in developing countries.
#Debt
#TaxJustice
- #G20WealthTax Fortunes of the five richest men in the world have increased by 114% since 2020, according to Oxfam analysis, while nearly five billion people are now poorer. Beyond blatant economic inequalities, the richest 1% also accounted for 16% of global CO2 emissions in 2019. The Brazilian G20 Presidency proposed a 2% wealth tax on billionaires. France endorsed the idea. As a next step, economist Gabriel Zucman will present a report to G20 ministers in June, and the July G20 Finance ministerial meeting should see the adoption of a declaration on international taxation. Nobel Prize laureate Esther Duflo highlights in an open editorial published in Le Monde that combining a wealth tax on billionaires with a 2-3 percentage points raise in the Global Minimum Tax on multinational enterprises could unlock USD 500 billion in tax revenues. The IMF made a contribution on “How to Tax Wealth” in a new report.
- #TaxTaskForce A wealth tax is not the only option on the table to finance the fight against poverty and for the planet. Levies on maritime shipping, aviation, or fossil fuel extraction, a financial transactions tax, an international carbon price: all these solutions are being examined by the international task force launched at COP28. A global 0.1% financial transactions tax could raise up to $418 billion per year, while a levy of USD 5 per ton of CO2 emissions could bring in $210 billion per year, reminds Laurence Tubiana, head of the European Climate Foundation.
- #MaritimeTax At the recent meeting of the Marine Environment Protection Committee, which addresses environmental issues under the International Maritime Organization’s remit, 47 countries expressed support for a global tax on shipping, which could mobilize USD 80 billion a year. China, Brazil or Argentina oppose it, citing a potential penalty on certain developing economies. An assessment of the possible impact of such a measure will be examined at the Committee’s next meeting, from September 30 to October 4, 2024.
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- #FollowThePlan “Extreme poverty and hunger are increasing for the first time in a generation. In 63 months, our carbon budget to stay within 1.5°C will be depleted”. As Kristalina Georgieva prepares for a new five-year term at the helm of the IMF, the ONE Campaign proposes a 10-point plan with specific measures to address current challenges, including a call to give the “Global South a meaningful voice in IMF decision-making” through ambitious quota realignment.
- #MDBReformTracker Ahead of the Spring meetings, the Center for Global Development updated its Multilateral Development Bank Reform Tracker, a tool evaluating the progress of seven MDBs in implementing reforms to better fund the fight against global challenges.
- #FinancialTransfers Net financial transfers to developing countries have been divided by more than four between 2014 and 2022, according to new analysis by the ONE Campaign. This year, USD 50 billion will flow out of developing countries, which will become net financial contributors to the rest of the world.
- #InnovativeFinance In a new report, Global Citizen presents six concrete proposals to scale up grant financing: global taxes or levies on billionaires, financial transactions, fossil fuel, or air transport, phasing out fossil fuel subsidies, and channeling Special Drawing Rights (SDRs). At least USD 675 billion per year in grants could be raised through proposals that are ready to implement.
- #Governance In a Project Syndicate commentary, Brahima Coulibaly et al. suggest six ways to reform Bretton Woods institutions’ governance structure.
- #Survey According to its citizens, what role should the European Union play in international development? Ahead of the June 2024 European elections, Focus 2030 partnered with Stack Data Strategy to survey people's attitudes in France, Germany and Italy. Discover their level of support for a European financial transactions tax, funding for gender equality, and more.
- #ParisAgreement E3G, Germanwatch, the New Climate Institute, and I4CE published a series of best practices for a stronger alignment with the Paris Agreement in Public Development Banks.
- #IDA21 Based on new Oxfam analysis, income inequality is high or increasing in 60% (64 out of 106) of low- and middle-income countries receiving grants or loans from the IMF and World Bank. An ambitious IDA21 replenishment is urgent to support low- and middle-income countries facing development and climate change challenges.
- #DebtSustainability “No country should have to choose between fighting poverty and saving the planet.” Yet, 47 countries with a total population of over 1.11 billion people will face insolvency problems in the next five years as they seek to ramp up investment to meet climate and development goals, according to the Debt Relief for a Green and Inclusive Recovery Project. Debt relief must be administered for these countries to stand a chance to invest in a climate-resilient future and achieve their development aspirations.
- #GlobalSovereignDebt According to the Global sovereign debt monitor 2024, in 130 countries out of 152, the debt situation is at least slightly critical; in 24, the situation is very critical. The percentage of critically or very critically indebted countries has risen from 37% before the COVID-19 to 55% in 2024, affecting those countries’ ability to provide basic social services and invest in the climate transition.
- #Fin4SDGs1&2 The report Financing the fight against poverty and hunger, commissioned by the Brazilian G20 presidency, examines the international financing landscape for SDGs 1 (no poverty) and 2 (no hunger) in low- and lower-middle-income countries and traces their current trajectory against the SDG targets.
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We need urgent action… now.
Discover our updated Development & Climate Finance timeline!
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Best regards,
The Focus 2030 team
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