4th International Conference on Financing for Development: A Report on Sustainable Development Goals and Global Challenges

Introduction

This week, global officials convened in Seville for the 4th International Conference on Financing for Development, a pivotal event in the development policy calendar. This conference builds upon the 2015 Addis Ababa conference, which set the international agenda for poverty reduction and improved living standards over the past decade. However, the current global context presents significant challenges, including reduced development spending by Western countries, slowed progress on Sustainable Development Goals (SDGs), unmet climate targets, and unsuccessful mobilization of private finance for developing countries.

Context and Challenges

1. Reduced Official Development Assistance (ODA): Western countries, including the United States and European nations, have sharply cut their development budgets, impacting funding for SDGs.
2. Slowed Progress on SDGs: Global efforts to meet the United Nations Sustainable Development Goals have fallen significantly short, exacerbated by the COVID-19 pandemic, conflicts, and climate change.
3. Climate Change Efforts: Current initiatives are far from meeting agreed climate targets, threatening sustainable development and environmental stability.
4. Private Sector Financing: Attempts to mobilize large-scale private finance for development have largely failed due to risk aversion and lack of attractive projects.
5. Rising Debt Levels: Developing countries face increasing external debt, with many allocating over 10% of their revenue to interest payments, limiting resources for development and climate action.

Reflection on the Addis Ababa Agenda and Its Outcomes

Ambitious Goals Set in 2015

• Commitment to scaling up ODA and ensuring sustainable debt management.
• Emphasis on domestic resource mobilization within developing countries.
• Integration of the private sector as a development partner.
• Promotion of trade as a driver of development.
• The “from billions to trillions” approach aimed to leverage public funding to attract private investment.

Unmet Expectations and Setbacks

• Increased ODA post-pandemic has now declined rapidly.
• Significant cuts in US and European development assistance budgets.
• Increased external debt from $7.5 trillion in 2015 to $11.4 trillion in 2023 among developing countries.
• Negative private financial flows to developing countries between 2022 and 2024.
• Declining tax revenues as a percentage of GDP in low- and middle-income countries.
• Rising protectionism threatening trade-based development.

Seville Conference Declaration and Its Implications for SDGs

The Seville conference declaration largely reaffirms the existing development agenda without introducing radical new commitments. Despite geopolitical tensions and the withdrawal of the United States from key negotiations, the recommitment to SDGs and development finance goals remains significant. The European Union’s statement emphasizes:

• Scaling up Official Development Assistance (ODA).
• Creating a more inclusive international financial architecture.
• Implementing fairer and more effective tax arrangements.
• Mobilizing private finance towards sustainable development.

Strategic Recommendations for Advancing the Sustainable Development Goals

European Leadership and Innovation

European countries are urged to adopt a new, focused, and innovative approach to development cooperation that addresses the evolving global order and financial constraints. The following six principles are recommended to guide European policymakers:

1. Prioritize Sustainable Solutions to Global Debt:
   • Enhance debt restructuring mechanisms beyond the G20 Common Framework.
   • Make developing countries’ debt more sustainable to free resources for SDGs.
2. Adopt a Long-Term Vision for Development Goals:
   • Align development cooperation with long-term strategic interests.
   • Support economic transformation and climate transitions in partner countries.
3. Implement a Comprehensive Approach to Industrial Transformation:
   • Focus on sectoral and political economy ecosystems, including supply chains and skills development.
   • Coordinate public-private partnerships to support sustainable industrial growth.
4. Innovate and Prioritize Funding:
   • Direct limited resources to high-impact areas.
   • Explore new funding streams such as levies on carbon-intensive global transport.
5. Enhance Coordination Among Donors:
   • Improve collaboration between EU countries, other donors, and international financial institutions.
   • Align efforts to maximize development finance effectiveness.
6. Focus on Left-Behind Countries:
   • Ensure ODA addresses the needs of the world’s poorest countries.
   • Prevent social breakdown and instability by maintaining solidarity-driven support.

Sevilla Platform for Action

The conference introduced the Sevilla Platform for Action, which promotes coalitions of countries and stakeholders to advance specific development objectives. This platform represents an innovative mechanism to overcome geopolitical challenges and foster progress on SDGs through targeted initiatives.

Conclusion

The 4th International Conference on Financing for Development in Seville underscores the urgent need to revitalize global efforts towards achieving the Sustainable Development Goals amid complex geopolitical and financial challenges. European countries, as key development partners, have a critical role in leading innovative, coordinated, and long-term strategies that prioritize sustainable development, debt relief, and inclusive growth. Failure to move beyond the status quo risks missing a vital opportunity to support global stability, prosperity, and the well-being of millions worldwide.

Note: The European Council on Foreign Relations does not take collective positions. This report reflects the views of its individual authors.

1. Sustainable Development Goals (SDGs) Addressed or Connected to the Issues Highlighted in the Article

1. SDG 1: No Poverty
   • The article discusses international cooperation aimed at fighting poverty and improving living standards.
2. SDG 8: Decent Work and Economic Growth
   • References to economic transformation, domestic resource mobilisation, and trade as engines of development.
3. SDG 10: Reduced Inequalities
   • Issues of debt sustainability and the financial challenges faced by developing countries are highlighted.
4. SDG 13: Climate Action
   • Efforts to limit climate change are mentioned as far off agreed targets, and climate transitions are discussed.
5. SDG 17: Partnerships for the Goals
   • The conference focuses on international cooperation, financing for development, and mobilising private finance.

2. Specific Targets Under Those SDGs Identified Based on the Article’s Content

1. SDG 1 – No Poverty
   • Target 1.2: Reduce at least by half the proportion of men, women and children living in poverty.
   • Target 1.a: Ensure significant mobilization of resources to end poverty.
2. SDG 8 – Decent Work and Economic Growth
   • Target 8.3: Promote development-oriented policies that support productive activities and decent job creation.
   • Target 8.10: Strengthen the capacity of domestic financial institutions to encourage and expand access to banking and financial services.
3. SDG 10 – Reduced Inequalities
   • Target 10.5: Improve the regulation and monitoring of global financial markets and institutions.
   • Target 10.c: Reduce to less than 3% the transaction costs of migrant remittances.
4. SDG 13 – Climate Action
   • Target 13.2: Integrate climate change measures into national policies, strategies and planning.
5. SDG 17 – Partnerships for the Goals
   • Target 17.3: Mobilize additional financial resources for developing countries from multiple sources.
   • Target 17.9: Enhance international support for implementing effective and targeted capacity-building.
   • Target 17.17: Encourage and promote effective public, public-private and civil society partnerships.

3. Indicators Mentioned or Implied in the Article to Measure Progress Towards the Identified Targets

1. Official Development Assistance (ODA) Levels
   • Indicator: Net official development assistance as a percentage of gross national income (GNI).
   • Article mentions ODA trends, including increases after the pandemic and recent cuts.
2. External Debt Levels of Developing Countries
   • Indicator: External debt stocks as a percentage of GNI or total revenue.
   • The article cites the increase from $7.5 trillion in 2015 to $11.4 trillion in 2023 and the percentage of revenue spent on interest payments.
3. Tax Revenue as Percentage of GDP
   • Indicator: Tax revenue (as a percentage of GDP) in low- and middle-income countries.
   • Article notes a decline since 2015, relevant to domestic resource mobilisation targets.
4. Private Financial Flows to Developing Countries
   • Indicator: Net private financial flows (inflows minus outflows) to developing countries.
   • Article mentions private financial flows turning negative between 2022 and 2024.
5. Progress on Climate Change Targets
   • Indicator: National policies and strategies integrating climate change measures.
   • Article states efforts to limit climate change are far off agreed targets.

4. Table: SDGs, Targets and Indicators

Source: ecfr.eu