‘We Are Running Out of Time’, Deputy Secretary-General Warns Financing Forum, Urging Global Response to Prevent Development Progress from Being Eroded
Following is UN Deputy Secretary-General Amina Mohammed’s statement, delivered on behalf of Secretary-General António Guterres, at the opening of the Economic and Social Council Financing for Development Forum, in New York today:
It is a pleasure to join you today at the Economic and Social Council Financing for Development Forum and deliver this message on behalf of the Secretary-General, who sends his warmest greetings to all.
The global economy is under severe stress. Many developing countries are reeling from the crippling effects of an uneven recovery from the COVID‑19 pandemic and the ticking time bomb of the climate crisis. Vaccine inequities continue. The war in Ukraine is now sending shockwaves through global food, energy and financial markets.
Many economies are at the brink of a downward spiral of insolvency, cuts in critical investments, economic contraction and rising unemployment. Decades of development progress are being eroded. The World Bank predicts that a quarter of a billion people could be pushed into extreme poverty this year. Up to 323 million people could face acute food insecurity. And the essential transition to clean and sustainable energy is at enormous risk.
There are early signs of a tsunami of potential debt crises, deprivation, discontent and civil unrest. No country, developed or developing, will be isolated from the socioeconomic impacts. The Sustainable Development Goals are in need of urgent rescue.
Financing for developing countries is an essential part of the solution. But so far, the global response has fallen far short. That is why the Secretary-General has established the Global Crisis Response Group on Food, Energy and Finance: to ensure high-level political leadership; and get ahead of the perfect storm of food security, energy, and financing challenges; and implement a coordinated and coherent global response.
The Global Crisis Response Group’s first report, together with the 2022 Financing for Sustainable Development Report issued last week, set out recommendations for immediate action. First, mobilizing finance quickly and flexibly, from all sources. The international community must fulfil its official development assistance commitments and support rapid access to long-term sustainable finance.
International financial institutions must prioritize flexibility and speed. Emergency financing mechanisms that can disburse funds rapidly and without unnecessary conditions must be put into service immediately.
Access limits to the International Monetary Fund’s (IMF) Rapid Credit Facility and Rapid Financing Instruments must also be increased, and the cumulative limit extended. Countries with strong external positions should channel their unused special drawing rights to others in need, including through the IMF’s Poverty Reduction and Growth Trust and the newly established Resilience and Sustainability Trust.
New rounds of capital injections are needed for multilateral development banks, including at the regional level. The multilateral banks should also take urgent measures to address the high sovereign borrowing costs faced by developing countries in the international markets, and the role of credit rating agencies. The Secretary-General has been calling for reform of the international financial architecture for some time. This system is failing to deliver for those who need it most.
Second, we need to address rising debt risks. The Group of 20 should reactivate the Debt Service Suspension Initiative for two years and reschedule maturity for two to five years. The Common Framework for Debt Treatments is in dire need of reform, to include transparency of timelines and clarity on what debt should be covered. It should include a debt service payment standstill; enforcement of comparability of treatment; and inclusion of private and non-Paris-club creditors.
Eligibility should be expanded to cover all countries that need help. New mechanisms to increase fiscal space, such as debt swaps, should also be explored. These measures will safeguard critical expenditure and free resources for immediate investment in the Sustainable Development Goals. Over the medium-term, efforts should be made to establish a more comprehensive sovereign debt restructuring mechanism, designed to deal with the longstanding problem of hold-out creditors.
Third, we need to invest in equitable access to COVID-19 vaccines and treatments, as many countries are still mired in an unpredictable pandemic. We need full funding for the COVID‑19 Tools ACT Accelerator and its COVAX Facility. Countries must step up and share technical expertise and intellectual property to end this pandemic and strengthen resilience for the future. All countries must continue to provide and expand social protection and invest in a job rich recovery.
Finally, we must urgently step-up climate finance, half of which must go to adaptation. This also requires aligning national budgets and tax systems with the Sustainable Development Goals and the Paris Agreement on climate change; addressing greenwashing; and rethinking incentives in the international financial system.
We need global solidarity, supported by strong political will, ambition and leadership. Developed countries should urgently fulfil their commitment to mobilize $100 billion annually for climate action in developing countries.
The international financial system has deep pockets. We have the capacity to make sure all countries can get through this crisis with their development prospects intact. It is precisely multilateral forums such as the Economic and Social Council Forum on Financing for Development that must provide strong momentum for action.
The Secretary-general and I urge you to be ambitious and muster the leadership and political will to resolve the substantial financing challenges we face, salvage hard-won development gains, and rescue the Sustainable Development Goals. We are, ladies and gentlemen, running out of time. Thank you.