On June 22 and 23, 2023, the Summit for a New Global Financing Pact was held in Paris, an international meeting intended to contribute to the urgent and necessary reform of the international financial architecture.
As the world faces an unprecedented health, humanitarian, economic and geopolitical crisis, funding to meet the essential needs of populations, particularly the most vulnerable, is in short supply. The financing gap to achieve the Sustainable Development Goals (SDGs) by 2030, estimated by the OECD at $3.9 trillion for developing countries alone, seems colossal compared to the resources currently mobilized for development each year ($204 billion mobilized by official development assistance in 2022). As a result, and against a backdrop of growing indebtedness, the most essential public policies in a large number of developing countries cannot be guaranteed. Health, education and gender equality are taking a back seat, even though they are central to achieving the 2030 Agenda. Meanwhile, the fight against, and adaptation to, climate change, which is disproportionately affecting the most vulnerable countries, cannot be adequately financed.
The Summit for a New Global Financing Pact resulted in the formulation of a number of commitments by the participating parties (governments, international and national financial institutions, the private sector) to accelerate efforts to mobilize increased financing for development and climate change at a time when developing countries are facing an unprecedented contraction of their fiscal space. These commitments are set out in the Paris Pact for People and the Planet (4Ps) and its accompanying roadmap.
As a follow-up to this Summit, and to provide the most accurate picture possible of the efforts still to be made, Focus 2030 is carrying out an independent review of the progress made on the various commitments. This work relies on interviews with experts in the fields of development and climate finance, key figures from the worlds of politics, finance and civil society, and desk research examining official documents, statements and analyses from specialized organizations. It is updated on a regular basis.
The commitments identified in the Summit roadmap and in the 4Ps are assessed according to their level of progress (significant progress, encouraging but insufficient progress, minor progress, no progress or regression) and disaggregated into five areas of action:
– Reforming international financial institutions
– Optimizing existing financing
– Mobilizing additional funding
– Accelerating debt servicing
– Mobilizing private financing
The table below summarizes the developments observed since June 2023 for all these commitments.
While reforming the international financial architecture has remained at the top of the international agenda for more than a year, despite the multiple crises underway, the progress observed remains too slow to deliver on the promise of the 2030 Agenda and the 2015 Paris Climate Agreement.
Notable advances include a certain willingness on the part of multilateral development banks and international financial institutions to reform their operating methods and tools, and a positive dynamic with regard to governance reforms to ensure a more accurate representation of developing countries in these organizations.
Nevertheless, many challenges remain. Although political leaders seem to agree on the need to act effectively and rapidly, decisions are not following suit: on debt servicing, the implementation of international taxes, the mobilization of the private sector or the provision of more resources, progress is not keeping pace with the unprecedented contraction in the fiscal space of the most vulnerable countries.
A number of indicators are particularly worrying in view of the urgency of the situation: a recapitalization of the World Bank appears to be far from being conceivable by many political leaders, official development assistance is stagnating or even declining in several countries, and a strong political will is lacking to mobilize more financing via international taxation and the introduction of global levies.
All hopes appear to be placed in the hands of the private sector, which cannot shoulder the entire burden on its own, and whose sectors and countries of investment can hardly be directed towards "non-bankable" social policies such as education and healthcare. It is therefore important not to substitute a sufficient allocation of concessional resources to developing countries for subsidies to the private sector, the effectiveness of which is not guaranteed.
If we are to keep the promise of the 2030 Agenda and the Paris Agreement, it is vital that we intensify our efforts and respond to the concerns of the most vulnerable countries, particularly at future international meetings, such as COP28, to be held in Dubai from November 30 to December 12, 2023, and Brazil’s presidency of the G20 in 2024, whose overarching aim is precisely to "build a just world on a sustainable planet".