New Delhi: According to a recent United Nations report, finance concerns are central to the world’s sustainable development challenge, as large debt burdens and sky-high borrowing costs prevent developing nations from responding to the confluence of crises they face. Only a significant infusion of funds and a restructure of the international financial system can save the Sustainable Development Goals.
According to the 2024 Financing for Sustainable Development Report: Financing for Development at a Crossroads (FSDR 2024), urgent steps must be taken to mobilize financing on a large scale in order to close the development financing gap, which is now estimated at USD 4.2 trillion per year, up from USD 2.5 trillion prior to the COVID-19 pandemic. Meanwhile, rising geopolitical tensions, natural disasters, and a worldwide cost-of-living crisis have affected billions of people, hindering progress toward healthcare, education, and other development goals.
“This report is yet another proof of how far we still need to go and how fast we need to act to achieve the 2030 Agenda for Sustainable Development,” said UN Deputy Secretary-General Amina J. Mohammed. “We are at a crossroads, and time is running out. Leaders must go beyond mere rhetoric and keep their promises. Without adequate finance, the 2030 targets cannot be met.”
With only six years remaining to meet the SDGs, hard-won development gains are being reversed, particularly in the poorest countries. If current trends continue, the United Nations predicts that around 600 million people, more than half of whom are women, will stay in extreme poverty by 2030 and beyond.
“We’re experiencing a sustainable development crisis, to which inequalities, inflation, debt, conflicts, and climate disasters have all contributed,” said UN Under-Secretary-General for Economic and Social Affairs Li Junhua. “Resources are required to resolve this, and funding is available. Tax avoidance and evasion cost billions of dollars each year, while fossil fuel subsidies cost trillions. Globally, there is no scarcity of money; rather, there is a lack of drive and dedication.”
According to the study, debt burdens and increased borrowing prices have contributed significantly to the problem. According to estimates, debt service in the least developed nations will be USD 40 billion per year between 2023 and 2025, up more than 50% from USD 26 billion in 2022. Stronger and more frequent climate-related disasters account for more than half of the debt increase in vulnerable countries.
The poorest countries now spend 12% of their revenue on interest payments, four times what they did a decade earlier. Approximately 40% of the world’s population lives in nations where governments spend more on interest payments than on education or healthcare.
While investment in SDG sectors increased steadily in the early 2000s, key sources of development money have since slowed. For example, domestic revenue growth has slowed since 2010, particularly in LDCs and other low-income countries, owing to tax fraud and avoidance. Corporate income tax rates are reducing, with the global average dropping from 28.2 percent in 2000 to 21.1 percent in 2023 as a result of globalization and tax competitiveness.
Meanwhile, OECD countries’ official development assistance and climate financing pledges are not being met. While ODA grew to an all-time high of USD 211 billion in 2022, up from USD 185.9 billion in 2021, much of the increase came from aid to refugees living in donor nations, and the total sum is insufficient for development. Only four nations met the UN aid target of 0.7% of GNI in 2022.
The paper states that the international financial system established at the 1944 Bretton Woods Conference is no longer suitable for purpose. It proposes a new coherent structure that is better suited to respond to crises, increases investment in the SDGs, particularly through stronger multilateral development banks, and promotes global safety.
According to the paper, the UN Summit of the Future in September 2024 represents an important opportunity to change course. The Fourth International Conference on Financial for Development (FfD4) in June 2025 provides an important opportunity for governments to solve the development financial gap and contribute to the achievement of the SDGs.
FfD4 provides a chance for countries to bridge credibility gaps and restore trust in multilateralism. Close financial and investment shortages on a large scale and with urgency. Reform and modernize the obsolete international financial architecture, as well as adjust international trade, investment, and finance standards. Create and fund new development pathways to deliver on the SDGs and ensure that no one falls behind.
Deputy Secretary-General Mohammed emphasizes the importance of global cooperation, targeted financing, and political will for achieving the SDGs, highlighting the crucial once-in-80-year opportunity to reform financial architecture before 2030.
