Finance Minister Nirmala Sitharaman on August 17 said that there is an urgent need to close the $4-trillion financing gap to accelerate progress on Sustainable Development Goals (SDGs).
She was speaking at the Finance Ministers’ Session of the third Voice of the Global South Summit.
Sitharaman was referring to a new UNCTAD report that said that developing countries actually face a staggering $4-trillion gap in sustainable development investments.
According to UNCTAD, the amount of foreign direct investment in clean energy attracted by developing countries in 2022 stood at $544 billion – well below needs.
UNCTAD also stressed the importance of debt relief for developing economies, to provide them with the fiscal space needed for clean energy spending and to help lower country risk ratings, a prerequisite for attracting private investment.
Sitharaman said that it is "critical that financing requests made to Multilateral Development Banks (MDBs) are met with speed and agility. This will require reforms both at operational levels as well as identifying new additional sources of finance".
Her comments come at a time when the financing for SDGs are under the scanner, with rising pressure on MDBs such as the World Bank and IMF to change processes to help meet these objectives.
The 17 Sustainable Development Goals, adopted in 2015 by the members of the United Nations, address a variety of global challenges ranging from no poverty and hunger to sustainable cities and communities. These are expected to be met by 2030.
MDBs need to engage with credit ratings agencies to better incentivise flow of private capital for development financing, Sitharaman said.
The Finance Minister highlighted that elevated debt levels of the developing world has limited the resources available for financing developmental needs, particularly in low-income countries.
She sought ideas from the Global South on how to better processes for debt relief and liquidity support for low and middle income nations.
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