Financing for development – ahead of the Fourth International Conference on Financing for Development in Seville
The Committee on Development adopted an own-initiative report by Charles GOERENS (Renew, LU) on financing for development - ahead of the Fourth International Conference on Financing for Development in Seville.
Underfunding for the Sustainable Development Goals (SDGs) has become chronic. The global financing requirement, according to the United Nations, amounts to an additional $4 trillion per year. Official development assistance represents only a tiny percentage of the total amount required to achieve the SDGs.
Principles and objectives
Members believed that the international community must seize the opportunities offered by the Fourth International Conference on Financing for Development, to be held in Seville, to promote structural reform of the international financial architecture in order to democratise international development cooperation, as well as to demand fair and inclusive development cooperation policies that promote gender equality.
The report called on the Union and its Member States to step up their efforts in development cooperation, while reaffirming that the Union's development policy must be guided by the principles established in the United Nations 2030 Agenda for Sustainable Development, the Paris Agreement and the Addis Ababa Action Agenda and ensure the application of a human rights-based and human-centred approach.
Members called for strengthening the tools available to promote responsible financing and long-term debt sustainability. They urged the EU and its Member States to work together with their partners to achieve the goal of mobilising USD 1.3 trillion per year for global development cooperation by 2035, in line with the commitment made at COP 29.
The report advocates for innovative financing mechanisms, including market-based instruments, the contribution of sectors benefiting the most from globalisation, and the introduction of specific taxes, to finance global public goods, reduce inequalities between and within countries, contribute to climate objectives, and support regional sustainable development. It emphasised the importance of fostering enabling environments for civil society participation through development programmes.
Members stressed the importance of closing financing gaps in the provision of essential public services (including health, education, energy, water and sanitation), as well as the need for investment in agri-food systems, balanced partnerships and transparency in the management of funds. They called for development objectives to be systematically taken into account in all EU policies affecting developing countries.
Debt
In the face of rising debt among low-income countries, the report called for a UN framework convention on sovereign debt to ensure responsible and equitable financing and to prevent and resolve unsustainable debt situations. Members believe that, in many cases, only general debt relief and cancellation, free from economic policy conditions and agreed to by all creditors, can put a country back on a sustainable financing path, rather than deferring debt repayments. Any debt relief should be accompanied by internationally agreed principles on responsible borrowing and lending.
Reform of the international financial architecture
The report recommended increasing the financing power of multilateral development banks and broadening their mandates to address global challenges. It called for grants and highly preferential financing for the ecological transition and deems it necessary to secure new, additional, and predictable financing that is easily accessible to women, indigenous peoples, and the most vulnerable communities.
Members called for the implementation of an automatic, rules-based quota reallocation system within the International Monetary Fund (IMF) to better reflect changes in the global economic landscape and ensure fairer representation of emerging economies, low-income countries and least developed countries.
Private businesses and financing
The report highlighted the critical role of mobilising private finance in raising the remaining shortfalls to achieve the SDGs, and called for further action to facilitate private sector participation in development cooperation and to encourage businesses to invest in less developed countries. It reiterated the need to encourage investment in education and vocational training to prioritise sustainable job creation and contribute to achieving the SDGs. The Commission is invited to monitor and improve mechanisms to provide security for European investors.
Members called for the creation of a dedicated SDG investment facilitation mechanism, supported by the international community, to establish investment-ready, SDG-aligned projects in least developed countries. They advocated the creation of a global risk mitigation facility consolidated within existing UN frameworks to address the higher perceived risks and borrowing costs faced by low- and middle-income countries.
Tax cooperation
The report welcomed the two-pillar international tax agreement, while lamenting its limitations for developing countries. It called for accelerating its implementation, ensuring minimum taxation of multinationals, supporting the creation of a UN tax convention, ensuring that ultra-high-net-worth individuals are effectively taxed, combating illicit financial flows, and strengthening governance in the African mining sector.
ODA and financing development cooperation
The report highlighted that, despite the EU and its Member States remaining the largest global ODA provider, accounting for 42 % of global ODA in 2022 and 2023, the collective ODA/gross national income ratio has declined from 0.56 % in 2022 to 0.51 % in 2023, falling well short of the 0.7 % target. It called for urgent action to address the cumulative shortfall in meeting the 0.7 % target.