Mobilizing sufficient resources to achieve the goals of the 2030 Agenda for Sustainable Development continues to be a central challenge at a global level and also for Latin America and the Caribbean, especially in an international context in which regional and global growth dynamics, the increase in financial risks, and uncertainty do not favor financing for development.
So indicate more than 60 organizations led by the United Nations – including the International Monetary Fund (IMF), the World Bank, the World Trade Organization (WTO) and the Economic Commission for Latin America and the Caribbean (ECLAC) – in the Financing for Sustainable Development Report 2019, which was released recently.
The document, coordinated by the Financing for Sustainable Development Office of the UN Department of Economic and Social Affairs (DESA), poses the need to take notice and carry out concrete actions in light of the urgency of this problem. It indicates that while some positive signs can be seen – such as the strengthening of investment in some countries, interest in sustainable investing is growing, with 75% of individual investors showing interest in how their investments affect the world – greenhouse gas emissions grew 1.3% in 2017, investment is falling in many countries, and 30 developing nations are now at high risk or already in debt distress.
“Although the obstacles to mobilizing the large volume of resources needed to fulfill the 2030 Agenda are not negligible, there are opportunities that countries should explore and exploit to overcome current restrictions on sustainable financing. With this aim, governments can and should commit to multilateralism, the mitigation of the impact of climate change, and international governance that favors the Sustainable Development Goals,” ECLAC’s Executive Secretary, Alicia Bárcena, sustained.
In the case of Latin America and the Caribbean, a more complex international context for mobilizing resources is compounded by complicated fiscal scenarios and low national savings rates, which entails the need for integrated and sustained reforms in the area of public finances that seek to ensure the public sector’s solvency, protect investment, safeguard social gains, and expand tax resources.
These actions on fiscal matters must be complemented by an increase in private investment that allows for resuming high and stable economic growth rates. Investment behavior not only affects the tempo and rate of capital accumulation, it is also directly related to productivity dynamics.
According to the report, the financing for development panorama is characterized by changes related to the growing participation of new actors and sources of financing – which include philanthropy, non-governmental organizations (NGOs), climate funds, innovative financing mechanisms and South-South cooperation initiatives – which is playing a central role in the implementation of the 2030 Agenda.
In addition, private capital for developing countries, including those in Latin America and the Caribbean, has become an important source of financing, with a diversified set of instruments. In contrast, official development assistance (ODA) has been losing importance in middle-income countries such as those in the region. In the case of Latin America and the Caribbean, ODA represents just 0.2% of regional GDP.
The report underscores the major economic, social and environmental challenges that countries face in mobilizing resources, as well as opportunities and some initiatives for reforming governance at a global level, including the trading system, the tax architecture, capital markets, the social security network, and the mechanisms for restructuring sovereign debt. Governance at a global level must be based on multilateralism, which is the suitable means for strengthening cooperation among countries, it states.
In this sense, the United Nations report offers recommendations based on the Addis Ababa Action Agenda, including areas such as the domestic mobilization of resources, private financing and cooperation for development, which should form part of a unified financing strategy.
“In the case of Latin America and the Caribbean, ECLAC has proposed important initiatives for mobilizing resources, such as the strategy of debt relief for Caribbean developing island states, designed to increase fiscal space and promote growth while also addressing the effects of climate change. Others include broadening the tax base, improving revenue collection systems, and fighting the tax evasion and illicit financial flows that – in our region as well as other developing regions – exceed the amount of ODA, portfolio flows and foreign direct investment,” Alicia Bárcena added.
The Financing for Sustainable Development Report 2019 also proposes using innovative financing instruments so that countries can align their financing policies with national sustainable development strategies and priorities. Some of these include new technologies and financial technology (fintech). The report sustains that innovative financing mechanisms complement flows of international resources (ODA, foreign direct investment and remittances), mobilize additional resources for development, allow for overcoming market failures and institutional barriers, and favor collaboration with the private sector.
- Full document: Financing for Sustainable Development Report 2019.
- Video message by ECLAC’s Executive Secretary, Alicia Bárcena.
The report is a joint product of the Inter-agency Task Force on Financing for Development, which is comprised of more than 60 United Nations agencies and international organizations. The Financing for Sustainable Development Office of the UN Department of Economic and Social Affairs serves as the substantive editor and coordinator of the Task Force, in close cooperation the World Bank Group, the IMF, WTO, UNCTAD, and UNDP. The Task Force was mandated by the Addis Ababa Action Agenda and is chaired by Mr. Zhenmin LIU, Under-Secretary General for Economic and Social Affairs. The full copy of the report and the annex are available at: https://developmentfinance.un.org/
This report is the basis for discussions at the ECOSOC Forum on Financing for Development (15-18 April 2019), where Member States agree on the measures needed to mobilize sustainable financing. The SDG Investment Fair, which brings together government officials and investors, will also be held 15-16 April at the UN Headquarters. More information on both events is at: https://www.un.org/esa/ffd/ffdforum/