In a concerted effort to address the pressing financial challenges facing developing nations, finance and foreign ministers from around the world convened in Addis Ababa this week, calling for sweeping reforms to the international financial architecture. The meeting, part of the First Preparatory Committee for the Fourth International Conference on Financing for Development, focused on bridging the financing gaps essential for achieving the Sustainable Development Goals (SDGs) and urged the global community to channel substantial investments towards sustainable development in Africa and beyond.
Nearly a decade after the adoption of the Addis Ababa Action Agenda, the United Nations reaffirmed its commitment to enhancing sustainable financing strategies. Secretary-General António Guterres underscored the urgent need for reform in a video message, highlighting the daunting challenges posed by soaring debt burdens and high capital costs that hinder developing countries’ capacities to finance their development agendas.
“The Fourth International Conference on Financing for Development provides a unique opportunity to tackle these challenges head-on,” Guterres stated. He emphasized the need for ambitious reforms to deliver affordable long-term financing and to adapt an international financial system he characterized as “outdated, dysfunctional, and unfair.”
The ongoing repercussions of recent global crises, including the COVID-19 pandemic, geopolitical tensions, and economic volatility, have significantly widened the SDG financing gap, which now amounts to a staggering USD 4 trillion annually for developing countries. This funding shortfall, coupled with escalating debt issues, has exacerbated poverty and inequality, jeopardizing global progress towards the 2015 targets.
“This meeting provided an opportunity to assess the necessary steps we must take to fill the financing gaps and meet the development needs of all people around the world,” remarked Li Junhua, Under-Secretary-General of the United Nations Department of Economic and Social Affairs (UN DESA) and Secretary-General of the FfD4 conference. He urged a departure from conventional methods, advocating for a significant reshaping of the international financial system to ensure investment is directed where it is most needed.
During the meeting, ministers and international experts proposed reforms aimed at enhancing global tax regulations and establishing new mechanisms to address sovereign debt crises, including frameworks for managing instances of sovereign debt default.
“The international financial architecture created nearly 80 years ago needs reform to respond effectively to the pressing challenges faced by African nations,” stated Claver Gatete, Executive Secretary of the United Nations Economic Commission for Africa. “African countries are asserting leadership and calling for changes to global tax and financial systems that support their sustainable development ambitions.”
The Preparatory Committee meeting was attended by representatives from at least 103 countries, including policymakers, multilateral development banks, United Nations entities, the private sector, and non-governmental organizations. Almost 800 participants engaged in discussions covering a broad spectrum of financing issues, such as debt, taxation, trade, private investments, development cooperation, and technology.
This five-day meeting marks the first of four preparatory sessions leading up to the Fourth International Conference on Financing for Development (FfD4), scheduled to take place in Sevilla, Spain, in 2025. The UN General Assembly has mandated these preparatory meetings to facilitate enduring reforms of the international financial system.
Future sessions of the Preparatory Committee are slated for New York in December 2024, with additional meetings scheduled for February and April 2025. As part of the preparatory process, a multi-stakeholder hearing will also be held in New York in October 2024, furthering the global dialogue on enhancing sustainable financing mechanisms for developing countries.
