UN forum helps set agenda for 2025 financing for development conference

The United Nations officially kicked off talks leading up to a milestone event that aims to transform the global financial architecture to address a litany of development funding challenges amid a backdrop of geopolitical uncertainty, widening inequality, and growing poverty. The Fourth International Conference on Financing for Development — to be held in Spain next year from June 30 to July 3 — seeks to address financial barriers to achieving global sustainable development and climate goals. A lack of financing ties together crises and obstacles and “many developing countries are simply unable to make the investments they need in sustainable development, and the systems and services their people require,” U.N. Secretary-General António Guterres said at the recent Financing for Development Forum in New York. Almost half the global population lives in countries where the government spends more on interest payments than on education or health, and annual debt service payments in the poorest countries are 50% higher than they were three years ago. The most recent U.N. financing report finds that there is now a $4 trillion annual financing gap to achieve the SDGs, up from $2.5 trillion prior to the COVID-19 pandemic. When these countries “turn to the global financial system for help, they find that it is unable to provide a global safety net to shield them from shocks. They find a system incapable of helping them forge stability or sustainability. They find a system that they had no hand in creating, no voice in shaping — and that remains unresponsive to their needs,” Guterres said. The current structure was established in part through an agreement at the 1944 Bretton Woods Conference that helped shape the global economic order and created the World Bank and International Monetary Fund. Efforts are underway to reform those institutions and the broader system to address current global challenges, including climate change. Spain’s 2025 conference will be a venue to further push proposals related to reforming the global financial architecture — the systems and rules that govern the economy — on issues of debt, taxation, and aid, among other issues. The city location of the event has not yet been announced. The forum will be an opportunity to tackle in a “systemic way” a structure that has not been changed significantly since the end of the Second World War, said Shari Spiegel, acting director of the Financing for Sustainable Development Office in the U.N. Department of Economic and Social Affairs. “Enormous changes are happening in the system,” she said. “But, nonetheless, it’s not keeping pace with these challenges and there really needs to be a rethinking of much of the system, building on what’s happening and pulling together these different strands that are happening in different places.” Many of the key issues discussed the last time the event was held, in Addis Ababa, Ethiopia, in 2015 — more private sector involvement, domestic resource mobilization, and global tax laws — haven’t come to fruition as hoped and crises have added complexity. “The system wasn't in place and set up properly to make this actually happen,” Spiegel said. One sticking point in Ethiopia — which almost derailed the final agreement — related to countries in the global south wanting more say regarding global tax, rather than laws being decided by the Organisation for Economic Co-operation and Development wealthy countries. There has been progress there in recent years. The U.N. General Assembly voted in 2023 for the organization to develop a global tax framework, despite objections from the United Kingdom, United States, and European nations. An ad hoc committee is currently negotiating terms for a U.N. Framework Convention on International Tax Cooperation. How the private sector and private capital can more effectively flow to low-income countries to address climate and development challenges will also be on the agenda in Spain. Mobilization was a key discussion during the recent U.N. forum and April’s World Bank-International Monetary Fund Spring meetings. Among other issues likely to be tackled in Spain are international trade and the connections between finance, trade and investments, debt, and financial flow from the private sector. Discussion is expected to go beyond managing debt defaults and restructurings to address costly finance. Although it is too expensive for many countries to borrow, they need investment to grow. So building a system that creates opportunities for borrowing at reasonable rates to unlock growth must be addressed, Spiegel said. An investment surge is necessary, Guterres said, calling for capital increases at multilateral development banks and for countries to meet their commitment of spending 0.7% of gross national income on aid. MDBs must make better use of their resources, adjust business models, and seek “bold action” on debt, he said. “Financing is the fuel of development. Yet many developing countries are running on empty,” Guterres said. While these issues will be brought to the conference, the goal is to deepen the focus on implementation and how to bring new ideas and proposals to fruition, said Spiegel and Mariangela Parra-Lancourt, head of the strategic engagement and policy integration branch in the Financing for Sustainable Development Office, where one of her key roles is supporting the intergovernmental process on the road to FFD. Other global decision-making bodies have been hamstrung politically in recent years as a result of tensions over the war in Ukraine and other challenges. Spiegel and Parra-Lancourt said they hope geopolitics doesn’t get in the way in Spain, though they acknowledged there is always a risk. They pointed to the unanimous agreement on the outcome document from last week’s financing forum as a positive signal. “In the past, even in the Addis Ababa action agenda, there was enough in that document that was important to countries to focus on what can get done and not let those other issues derail the discussions. So we very much hope that is the same,” Spiegel said. “We see the commitment to discuss thorny issues” and move forward.