‘No Time to Lose’ for Closing Finance Divide, as Multifaceted Crisis Devastates World’s Poorest Countries, Secretary-General Tells Economic and Social Council Forum
Following are UN Secretary-General António Guterres’ remarks to the 2023 Economic and Social Council Forum on Financing for Development Follow-up, in New York today:
Before I deliver my opening statement, I would like to say a few words about what’s going on in Sudan.
I strongly condemn the outbreak of fighting that is taking place in Sudan, and appeal to the leaders of the Sudanese Armed Forces and the Rapid Support Forces to immediately cease hostilities, restore calm and begin a dialogue to resolve the crisis.
The situation has already led to horrendous loss of life, including many civilians. Any further escalation could be devastating for the country and the region. I urge all those with influence over the situation to use it in the cause of peace; to support efforts to end the violence, restore order and return to the path of transition.
The humanitarian situation in Sudan was already precarious and is now catastrophic. I condemn the deaths and injuries to civilians and humanitarian workers and the targeting and looting of premises. I remind all parties of the need to respect international law, including ensuring the safety and security of all United Nations and associated personnel and humanitarian aid workers.
I have spoken during the weekend with the two Sudanese leaders and I am actively engaging with the African Union, the Arab League and leaders across the region. I reaffirm that the United Nations stands with the people of Sudan at this very difficult time, with full support for their efforts to restore the democratic transition and build a peaceful, secure future.
Now I will deliver my statement.
The world is in crisis — a multidimensional crisis that is turbocharging inequalities, with a devastating impact on the poorest and most vulnerable. The 2030 Agenda and the Sustainable Development Goals are turning into a mirage of what might have been, as communities and Governments struggle to meet immediate needs. The scars of the COVID-19 pandemic run deep in developing countries that suffered terrible losses in lives and livelihoods.
The war in Ukraine is contributing to a global cost of living crisis. Climate disasters are becoming more frequent, deadly and expensive. One in three countries is at high risk of a fiscal crisis. And more than 40 per cent of people in extreme poverty live in countries afflicted by severe debt problems.
These trends are deeply damaging to the poorest people and communities — but not to the richest. One recent report on inequality found that, since the pandemic, the richest 1 per cent of people around the world have captured nearly twice as much new wealth as the rest of the world combined.
Inequalities within some countries are regressing towards early twentieth century levels — to a time before women were allowed to vote and before widespread acceptance of the concept of social protection. This shames us all.
The 2023 Financing for Sustainable Development Report reveals a yawning finance divide that will quickly turn into a development deficit for many countries — and a crisis in global trust and solidarity. Inequality is already leading to social unrest at the local and national level, and rising tensions and risks at the global level. Delay will only make these problems worse, as the climate crisis gathers pace and inequalities continue to grow. We have no time to lose.
This is the background to my proposal to Group of 20 (G20) countries for an Sustainable Development Goal (SDG) Stimulus to scale up affordable long-term financing for all countries in need, by at least $500 billion a year. The SDG Stimulus has three main areas for action.
First, it aims to boost liquidity for investments in the transformations we need to achieve the SDGs: renewable energy, sustainable food systems, and the fourth industrial revolution. All sources of financing must be scaled up, and multilateral development banks have an important role to play.
Multilateral development banks should be able to transform their business models and accept a new approach to risk. This includes massively leveraging their funds to attract greater flows of private finance into developing countries at reasonable costs. As their shareholders, I urge you to do everything in your power to increase their capital bases, support a more efficient use of their balance sheets, and bring about better lending terms to substantially increase their investments.
We must also broaden eligibility criteria for concessional finance so that it is available to vulnerable middle-income countries in need, as well as the least developed economies. Rich countries should meet their official development assistance (ODA) commitments.
Second, the SDG Stimulus aims to tackle the high cost of debt and rising risks of debt distress. I have called for an ambitious debt relief initiative that enables countries in distress to exchange short-term debt for longer-term instruments at lower interest rates.
We also need mechanisms to incentivize private creditors to participate alongside official creditors in debt restructurings. We need to move innovative ideas — like debt-for-SDG swaps and disaster clauses that suspend payments in times of crisis — from the drawing board to the boardroom.
The United Nations, as the only organization with universal membership, is ready to facilitate inclusive dialogue on sovereign debt, bringing together the discussions that are happening in different forums.
Third, contingency financing must be expanded. Last year, the International Monetary Fund (IMF) allocated $650 billion in Special Drawing Rights — the main global mechanism to boost liquidity during crises. Based on current quotas, developed countries received 26 times more than least developed countries, and 13 times more than all the countries of Africa combined. Something is fundamentally wrong with the rules and governance system that produced this outcome.
Special Drawing Rights should be channelled to countries that need them, including through multilateral development banks. The African Development Bank’s proposal is a welcome step. I also call for a [Special Drawing Rights] contingency mechanism to ensure that in future crises, they are issued promptly and automatically.
The SDG Stimulus can make an immediate difference to developing countries and the trajectory of the 2030 Agenda, and I count on your strong support.
In the longer term, we will not solve today’s challenges by relying on the financial system that helped to cause them. The global financial architecture was created for a world that no longer exists. It cannot address the challenges faced today by developing countries. Let’s be honest: it has failed countries at their moment of greatest need.
It is now widely recognized that we need an economic system that is coherent and coordinated, and reflects today’s global economic reality. A system that supports stable economic conditions; and helps countries to invest in the SDGs. Groups including the G20, the G7 and the Bridgetown Initiative are discussing reforms. As custodian of the SDGs and Paris Agreement, the United Nations brings together diverse views and expertise across all dimensions of sustainable development and financing.
The Economic and Social Council Forum on Financing for Development and the high-level political forum are important platforms to chart a new course. They must pave the way for the decisions to be taken at the SDG Summit in September, and the Summit of the Future next year. I urge all countries to play their part at this crucial moment.
We need engagement and support from all corners of the world to renew the international financial architecture and make it able to face the challenges of today and tomorrow.