On 22 and 23 June 2023, the Summit for a New Global Financing Pact took place in Paris, an international meeting aiming to contribute to a reform of the international financial architecture which was as urgent as it was necessary.

As the world faces unprecedented health, humanitarian, economic and geopolitical crises, funding to meet the essential needs of populations, particularly the most vulnerable, is in short supply. An estimated USD $3.9 trillion is necessary to overcome these challenges and achieve the SDGs in developing countries, 18 times the amount mobilized through Official Development Assistance in 2022. As a result, developing and emerging countries find themselves having to choose on a daily basis between investing in the fight against poverty and inequalities, education, health and repaying their debt. Meanwhile, the fight against, and adaptation to, climate change, which is disproportionately affecting the most vulnerable countries, cannot be adequately financed.

Faced with these overlapping crises, which highlight ever-increasing global inequalities, the solution identified at the Summit for a New Global Financing Pact consists in mobilizing new financing to expand fiscal space for developing countries. Several areas for reform have been identified, aimed at meeting past financial commitments, maximizing existing financing mechanisms and mobilizing new sources of financing for development and climate, as well as agreeing on debt management for those countries struggling the most. These commitments are set out in the Paris Pact for People and the Planet (4Ps) and its accompanying roadmap.

During the Paris Peace Forum in November 2023, the establishment of a secretariat and an implementation committee for the 4Ps within the OECD was announced, led by Macky Sall, the former President of Senegal. By April 2024, 51 countries had endorsed the 4Ps.

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 development and climate finance, leading political, financial and civil society experts and an extensive review of documents, official statements and analysis from specialist organizations. Updates on further progress and key milestones will be added regularly.

State of progress by issue

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
– Speeding up debt relief
– Mobilizing private financing

The table below summarizes the developments observed since June 2023 for all these commitments.

Table updated on April 15, 2024

Key findings

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 the 2024 Brazilian G20 Presidency, whose overarching aim is precisely to "build a just world on a sustainable planet".

Documents to download

Reforming the international financial architecture: where do we stand?