Financing for Sustainable Development: Tackling Big Challenges
IMF Blog, April 18, 2019
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Bibliographic details
- Authors: Chris Lane
- Published: April 18, 2019
Overview
- Author: Chris Lane
- Date: April 18, 2019
- Core message: Without adequate financing, the Sustainable Development Goals (SDGs) will remain beyond reach. Achieving the SDGs requires decisive national strategies combining revenue mobilization, attracting private finance, and supporting financial sector development, backed by collective action and a new multilateralism.
Financing needs and macro context
- An IMF study estimated additional annual spending needs by 2030 of $2.6 trillion in low-income and emerging markets for the big-ticket SDGs delivering education, health, power, roads, water and sanitation to growing populations.
- Low-income and fragile states account for one-fifth of the total financing needs due to low starting points, rapid population growth, and often weak growth trajectories.
- Recent developments that complicate mobilizing financing:
- Global growth has likely peaked.
- Trade restrictions are intensifying.
- Some emerging markets are experiencing capital flow reversals.
- Debt risks are rising, with about thirty low-income countries at a high risk of debt distress or in debt distress.
Findings on national planning and gaps
- Financing is often the weakest part of national SDG plans:
- A recent study showed that over three-quarters of 107 national plans do not contain costings or financing details.
Key recommendations (highlights from the Financing for Sustainable Development Report)
- The report makes over 40 specific recommendations to UN member states to better align financing with investments in the SDGs. Four proposals meriting particular attention:
- Develop a financing framework
- Operationalize financing frameworks to ensure national SDG plans include costings and financing details.
- Illustrate how some countries developed plans identifying both public and private flows.
- Medium-term revenue strategies
- Build national consensus for medium-term revenue strategies to support reforms through the political cycle by linking additional revenues to effective and equitable public services.
- Indonesia example: an ambitious revenue strategy that aims to raise revenue from 10 to 15 percent of GDP over the medium term.
- Revenue strategies may be bolstered by global coordination on international corporate tax reform.
- Actions to support debt sustainability
- Provide a menu of actions to help countries spot vulnerabilities early and better manage their debt.
- Highlight that all debt crisis situations are different; discusses ongoing efforts and challenges for debt-restructuring in the Gambia, Republic of Congo, and Mozambique.
- Prepare for future crises
- Emphasize the importance of ensuring the adequacy and comprehensiveness of the global financial safety net, including through the ongoing review of IMF financing arrangements.
Policy implications and priorities
- While financing challenges are large, they are not overwhelming for most countries.
- Particularly strong efforts will be needed to move the needle in Africa and parts of the Middle East.
- National policies should support SDG investments; international cooperation is required to find solutions to new and emerging challenges.
- The Financing for Sustainable Development Report contributes to identifying necessary actions across national and multilateral policy areas.
Source: Financing for Sustainable Development: Tackling Big Challenges — Chris Lane, April 18, 2019.
Content in this bundle
- Staff Discussion Note
