Calling for Creative, Practical Financing Solutions, Secretary-General Tells High-Level Dialogue ‘We Must Turn This Moment of Crisis’ into Opportunity

Following are UN Secretary-General António Guterres’ remarks at the General Assembly High-Level Dialogue on Financing for Development, in New York today:

Of all the issues we will discuss this week, finance may be the most crucial, because financing for development is the fuel that drives progress on the 2030 Agenda and the Paris Agreement [for climate change]. Today, that fuel is running out and the sustainable development engine is stuttering, stalling and backfiring.

As we mark the halfway point of the Sustainable Development Goals, progress on our most fundamental priorities — poverty and hunger — has gone into reverse for the first time in decades.  The COVID-19 pandemic and the climate crisis are having a devastating and lasting impact on developing economies.

Russia’s invasion of Ukraine exacerbated volatility and increased prices for food, energy and finance.  A global cost-of-living crisis is affecting billions of people.  Governments are drowning in debt.  Soaring interest rates are squeezing developing countries dry.

Official development assistance and climate finance commitments are not being met.  There is a stark and growing divide between countries that can access financing at reasonable terms and those that cannot and are being left even further behind.

The figures tell their own story.  Let me provide three.  The SDG financing gap has become a chasm, estimated at $3.9 trillion a year.  Developing countries face borrowing costs up to eight times higher than those of European countries in particular, and this is a debt trap.

And one in three countries around the world is now at high risk of a fiscal crisis.  Over 40 per cent of people living in extreme poverty are in countries with severe debt challenges.

There have been some good-faith efforts to help developing economies survive this financing crisis, including the G20 [Group of 20] Debt Service Suspension Initiative and the distribution of special drawing rights by the International Monetary Fund (IMF).  But, they are not enough.

It is clear that the systemic problems of financing for sustainable development require a systemic solution:  reforms of the global financial architecture.  That architecture was created at a time when many of today’s developing countries were still under colonial rule.  It is deeply skewed in favour of the developed world.

And it has not kept pace with the growth of the global economy.  The paid-in capital of the World Bank for example as a percentage of global GDP is one fifth what it was in 1960.

I reiterate my call for a new Bretton Woods moment when countries come together to agree on a global financial architecture that reflects today’s economic realities and power relations.  I count on your support for these proposed reforms, through the Summit of the Future and beyond.

But, while these structural reforms are essential, they will take time — and time is short.  The 2030 Agenda may fall beyond our reach before they bear fruit.  I am therefore calling on Governments to take immediate steps to rescue the SDGs.

My proposed SDG Stimulus would release at least $500 billion per year in affordable long-term financing for investments in sustainable development and climate action.  Increasing the capital base of multilateral development banks and changing their business model would enable Governments to scale up development and climate investments significantly.

Recapitalization and stronger engagement with credit rated agencies would enable the banks to transform their approach to risk, improving their lending terms and leveraging massive amounts of private finance at reasonable cost to developing countries.

Governments could create an effective debt workout mechanism to support payment suspensions, include private creditors, and extend to middle-income countries.  They can also increase contingency financing when countries run into trouble.  I am calling for the rechannelling of an additional $100 billion of special drawing rights, primarily through the multilateral development banks, and for other innovative methods to help countries in need.

Developed countries must make good on their finance commitments to developing countries, including on climate.  They must meet the $100 billion promise, significantly increase adaptation finance, replenish the Green Climate Fund and operationalize the Loss and Damage Fund by COP28 [twenty-eighth Conference of the Parties to the United Nations Framework Convention on Climate Change ].  And all countries must align national budgets with the SDGs, and address tax abatement and illicit financial flows.

Discussions on reform on the financing architecture are taking place from Bridgetown to Paris to Delhi.  I welcome the G20’s support for the SDG Stimulus, strengthening Multilateral Development Banks, and increasing finance for development and climate action.

The SDG Summit Declaration is a ringing endorsement of strong financing measures to rescue the Sustainable Development Goals.  Now we must move from words to urgent action, because the SDGs — a promise to the people of the world — cannot wait.  A two-track world of haves and have-nots is already driving a crisis in global trust.

I urge you to use this high-level dialogue as a platform for constructive engagement, with a focus on creative and practical financing solutions that can be taken forward in the next months and years.  Together, we must turn this moment of crisis into a moment of opportunity, find joint financing solutions to rebuild global solidarity, and create new momentum for sustainable development and climate action. And I thank you.