Sustainable Development Goals ‘Remain Off Track’, Speaker Warns, as Second Committee Takes Up Macroeconomic Policy, Financing for Development
Faced with mounting debt, rising financial constraints, dwindling foreign investment and illicit financial flows, speakers in the Second Committee (Economic and Financial) urged international actors to address and reverse pernicious obstacles to achieving the Sustainable Development Goals (SDGs).
Paul Bekkers, President of the Trade and Development Board, introducing the reports of the board (documents A/79/15 Part 1 and A/79/15 Part 2), noted that the SDGs “remain off track”, with global growth projected to stay below 3 per cent. At the opening of the Second Committee earlier this week, Professor Jeffrey Sachs spoke of the need to achieve growth rates of 7 to 10 per cent in developing countries to achieve the SDGs. Yet, the level of stimulus and investment required for such growth can hardly be mobilized amid what some call a “development crisis”, with countries forced to make impossible choices of servicing debt over catering for basic needs like education and health.
Traditional enablers of growth are also weak, he said. Foreign direct investment (FDI) flows have declined by 10 per cent, adversely affecting developing countries’ capacity to invest in the SDGs or transform their economies. International trade contracted in 2023, compounded by disruptions in global supply chains, as well as geopolitical tensions and instability. At a time of increasingly alarming climate change, renewable energy investments received by Africa are limited to 2 per cent of total global flows.
Penelope Hawkins, of the Debt and Development Finance Branch of the United Nations Conference on Trade and Development (UNCTAD), presented the report on external debt sustainability and development (documents A/79/209 and Corrigendum 1). Noting an increased cost of debt servicing, she said interest spending accounted for 10 per cent or more of public revenues in 54 developing countries in 2023, up from 29 nations in 2010. “This is taking place in a volatile global context where market expectations of inflation and economic growth in advanced countries dominate access to financial capital,” she said.
The external debt stock of developing countries reached a record of $11.4 trillion in 2023, an annual increase of 3.4 per cent since 2022, she said. When China is excluded, this drops to $8.9 trillion, up 2.6 per cent from 2022. The external debt sustainability of developing countries (excluding China) — measured by the ratio of external debt service costs to exports — deteriorated in 2023 to 15.2 per cent in 2023 from 13.5 per cent in 2022 due to higher costs on new and variable interest debt, as well as lower export earnings amid subdued global trade and lower commodity prices.
Addressing solutions, she said debt-for-development swaps can be considered, but should not distract from the urgent need to address developing countries’ debt challenges. Two immediate actions are necessary: improving the Group of 20 Common Framework and reducing and suspending International Monetary Fund (IMF) surcharges for countries at high risk or in debt distress.
Anu Peltola, Director of UNCTAD’s Statistics Service , presented the Sustainable Development Goals Pulse report, emphasizing that “illicit finance is development denied”. Countries with high illicit flows spend 25 to 60 per cent less on education and health compared to others, while trade-related illicit flows can reach 5 to 30 per cent of total official goods trade. “These alone exceed Governments’ education spending by more than double and their health expenditure by five times,” she stressed.
Illicit financial flows fuel transnational organized crime, providing funding for criminal activities as they enter countries; when these flows exit, they drain essential services and development, especially impacting vulnerable populations, while facilitating money-laundering and hiding criminal proceeds abroad. She cited research from IMF and others, showing that preventing illicit financial flows is often far less costly than the extensive security measures required to restore safety and stability once lost.
In the ensuing discussion, speakers underscored the dire situations of developing and middle-income nations plagued by unsustainable debt, impacts of climate change, illicit financial flows and global inequity. They emphasized the importance of debt relief, fulfilment of official development assistance (ODA) commitments, climate finance and reform of the international financial architecture.
Nepal’s delegate, speaking on behalf of the Group of Least Developed Countries, said her bloc faces “multiple risks and challenges, including severe financial constraints, liquidity challenges and high debt-service burdens”. Their high debt levels impede the ability to invest in climate action and the 2030 Agenda for Sustainable Development, and because many of them depend on commodities, “they remain vulnerable to volatile commodity prices and external economic shocks”.
Development partners must fulfil their commitments to provide 0.15 to 0.20 per cent of their GNI as ODA, he stressed. Being on the climate front line, adequate finance, cutting-edge technology and robust capacity-building should be provided to support least developed countries.
Addressing similar concerns, the representative of Chad, speaking for the Group of African States, noted that the annual financing deficit for the continent is estimated at over $1.2 trillion, compounded by illicit financial flows, unsustainable debt burdens and an international financial architecture that fails to fully include Africa’s perspective in global economic governance. Calling for comprehensive reforms to the international financial architecture, he noted that reform to the global credit-rating system and IMF lending policies could secure $169.4 billion annually — approximately 42 per cent of the continent’s financing gap.
Echoing those sentiments, the representative of Uganda, speaking for the “Group of 77” and China, emphasized that achieving the SDGs requires “new, additional, adequate and sustainable and predictable financing”. Immediate actions must be taken to reform the international financial architecture to “broaden and strengthen the voice, participation and representation of developing countries in international economic decision-making, norm-setting and global economic governance”; promote access to concessional financing and long-term financing for all developing countries; and improve the global sovereign debt architecture.
Also on climate and debt, Samoa’s delegate, speaking for the Alliance of Small Island States, said economic growth in her group slowed from 4.5 per cent to an estimated 2.3 per cent in 2023. Economic prospects remain negative owing to the increasing impacts of climate change and fluctuations in oil prices, which affect both tourism flows and consumer prices.
The external debt sustainability situation in the bloc deteriorated in 2023, surging by over 50 per cent and public and publicly guaranteed debt service by 33.4 per cent, she said. Consequently, the ratio of external debt service to exports and the ratio of public and publicly guaranteed debt service to Government revenues rose significantly to 20.3 per cent and 17.1 per cent, respectively.
Grenada’s delegate, speaking for the Caribbean Community (CARICOM), highlighted “that our very existence is dependent on our ability to withstand shocks and natural disasters”. The mobilization of climate financing and investments must support the prioritized needs identified by small island developing States.
However, continued global tightening of monetary policies and sharp increases in the magnitude and volatility of capital flows has adversely impacted Member States’ access to finance, debt sustainability and financial stability, he said. CARICOM continues to advance proposals aimed at “providing small island developing States and developing countries with a fighting chance” to achieve sustainable development, he said.
Focusing on needed investment, Mongolia’s delegate, speaking for the Group of Landlocked Developing Countries, voiced concern over the fall in FDI to developing States in 2023. “Our countries face a unique set of structural challenges due to their geographic isolation, lack of territorial access to the sea, remoteness from major markets and inadequate infrastructure,” he stated. Further, they rely on lengthy trade routes through neighbouring countries and require considerable infrastructure financing needs. Upgrading transport infrastructure to the level of the world average will require an investment of $510 billion.
The representative of Mauritania, speaking for the League of Arab States, noted that a deterioration of the environment, conflicts and displacement, including in Gaza and Lebanon, have diminished resources and damaged infrastructure. Moreover, unsustainable debt, unilateral coercive measures and illicit financial flows have increased global economic pressures, depriving societies of investments and resources needed for sustainable development.
Speaking for the Group of Friends in Defense of the Charter of the United Nations, Venezuela’s delegate likewise said the global economic crisis is exacerbating existing vulnerabilities, especially in developing countries. Volatile commodity markets have increased poverty and inequality, highlighting the need to re-establish the international economic order. He called for investments in infrastructure and access to technology, which can positively contribute to ensuring economic recovery.
Addressing corruption, Norway’s delegate noted that the international community is severely off track to achieve the SDGs, with many countries spending more on debt servicing than on education and healthcare, and large amounts of funds lost to corruption. She called for tax revenues to be directed towards delivering sustainable development, while combating secrecy and corruption, curbing illicit financial flows and preventing tax evasion. While noting that “Norway has consistently met its commitment of providing more than 0.7 per cent of gross national income as ODA”, she cited the urgent need to address systemic issues, inequality, debt crises and accountable governance.
On a brighter note, Indonesia’s representative, speaking for the Association of Southeast Asian Nations (ASEAN), said the group’s economic growth remains robust, having expanded by 4.1 per cent in 2023 and grown by 4.6 per cent this year. With a 4.7 per cent projected growth in 2025, it is “expected to be driven by a solid improvement in both domestic and external demand, with prospects outpacing the global outlook”. Therefore, his bloc is determined to deepen its economic integration, enhance its connectivity and propel its digital transformation thereby, “building a more resilient future” for its members.
Also presenting reports today were Miho Shirotori, Head of Trading Systems, Services, and Creative Economy, Division on International Trade and Commodities of UNCTAD; Shari Spiegel, Director of the Financing for Sustainable Development Office of the Department of Economic and Social Affairs; and Nan Li Collins, Director of the Division on Investment and Enterprise of UNCTAD.