The widening development financing gap, now estimated at USD 4.2 trillion annually, exacerbated by the impacts of the Covid-19 pandemic poses a formidable challenge to achieving the Sustainable Development Goals (SDGs), particularly in the world’s poorest nations, according to a new UN report released here.
The ‘2024 Financing for Sustainable Development Report: Financing for Development at a Crossroads (FSDR 2024)’ report underscored the urgent need for a massive surge of financing and a reform of the international financial architecture to rescue the SDGs.
It emphasized the critical importance of mobilizing financing at scale to close the development financing gap, which has ballooned from USD 2.5 trillion before the pandemic.
Furthermore, the report noted that rising geopolitical tensions, climate disasters, and a global cost-of-living crisis have compounded the challenges, impeding progress on crucial development targets such as healthcare and education.
UN Deputy Secretary-General Amina J. Mohammed stressed the urgency of the situation, emphasizing that without adequate financing, the 2030 targets cannot be met. With only six years remaining to achieve the SDGs, there is a risk of hard-won development gains being reversed, especially in the poorest countries, where almost 600 million people are projected to continue living in extreme poverty by 2030.
“This report is yet another proof of how far we still need to go and how fast we need to act to achieve the 2030 Agenda for Sustainable Development,” said UN Deputy Secretary-General Amina J. Mohammed.
“We are truly at a crossroads and time is running out. Leaders must go beyond mere rhetoric and deliver on their promises. Without adequate financing, the 2030 targets cannot be met.”
“We’re experiencing a sustainable development crisis, to which inequalities, inflation, debt, conflicts and climate disasters have all contributed,” added UN Under-Secretary-General for Economic and Social Affairs Li Junhua. “Resources are needed to address this, and the money is there. Billions of dollars are lost annually from tax avoidance and evasion, and fossil fuel subsidies are in the trillions. Globally, there is no shortage of money; rather, a shortage of will and commitment.”
According to the report, debt burdens and rising borrowing costs are large contributors to the crisis. Estimates are that in the least developed countries debt service will be USD 40 billion annually between 2023 and 2025, up more than 50 per cent from USD 26 billion in 2022. Stronger and more frequent climate related disasters account for more than half of the debt upsurge in vulnerable countries.
The poorest countries now spend 12 per cent of their revenues on interest payments — four times more than they spent a decade ago. Roughly 40 per cent of the global population live in countries where governments spend more on interest payments than on education or health.
While investment in SDG sectors had grown steadily in the early 2000s, major sources of development funding are now slowing down. Corporate income tax rates are falling, with global average tax rates down from 28.2 per cent in 2000 to 21.1 per cent in 2023, due to globalization and tax competition.
