Financing for Sustainable Development Report 2024

Posted 21 May 2024

4 min read

2024 Financing for Sustainable Development Report was recently released by the Inter-agency Task Force on Financing for Development.

It comprises over 60 United Nations agencies, programmes and offices, regional economic commissions and other relevant international institutions.
UN Department of Economic and Social Affairs (UNDESA) serves as its coordinator of the initiative.
It was convened by the United Nations (UN) Secretary General to follow up on the seven action areas of the Addis Ababa Action Agenda.

Progress towards SDGs: Countries are off track on 2030 Agenda for Sustainable Development, with around half of 140 SDG targets, deviating from the required path.
Financing gaps in sustainable development: Report estimates SDG financing and investment gaps at between USD 2.5 trillion and USD 4 trillion annually.
Finance divides: Developing countries are faced with significantly worse terms of access to both long-term and contingency financing, implying a finance gap, which is largest in Middle-Income Countries (MICs).
Weak enabling environment for SDGs: Currently, public subsidies and private investment in fossil fuels and brown activities are still very high.

It is centered around supporting the follow-up to the agreements and commitments on Financing for Development:
- in Monterrey, Mexico in 2002;
- in Doha, Qatar in 2008; and
- in Addis Ababa, Ethiopia in 2015.
Addis Ababa Action Agenda provides a new global framework for financing sustainable development.
- It aligns all financing flows and policies with economic, social and environmental priorities and ensures that financing is stable and sustainable.
- It identified seven action areas for financing sustainable development (see infographic).
- It mandates the Task Force to
  - report annually on progress in implementing the Addis Agenda and other Financing for Development outcomes and the means of implementation of the 2030 Sustainable Development Agenda.
  - advise the intergovernmental follow-up process on progress, implementation gaps and recommendations for corrective action.
- Addis Ababa Action Agenda was adopted at the Third International Conference on Financing for Development held in Addis Ababa, Ethiopia, in 2015.
Financing challenges are at the heart of the current sustainable development crisis.

Rise in Systemic Risks: E.g., Covid 19 pandemic, Rise in frequency of disasters etc.
- Climate crisis and more frequent and intense disasters raising stresses on public and private balance sheets.
  - Annual economic disaster damage estimated at $173 billion between 2020 and 2023, up from $108 billion during the first decade of the century.
Challenging Global Economic Environment: A sluggish world economy has led to subdued growth prospects with GDP growth rates in developing countries falling to just over 4% annually on average between 2021 and 2025.
Sovereign Debt burden: Many countries are faced with high risks of debt distress, with median debt service burden for LDCs rising from 3.1% of revenue in 2010 to 12% in 2023 –highest level since 2000.
- 40% of global population live in countries where governments spend more on interest payments than on education or health.
Rising geopolitical tensions: Geopolitical tensions, violence, conflict and war have contributed to challenging global macro-environment, risking severe fragmentation of global trading system (which could cost up to 7% of global GDP).

Enabling Environment: Countries’ efforts to create enabling environments for private investment must be aligned with the SDGs, setting the right incentives through fiscal and tax policies.
Strengthening Public Development Banks (PDBs): PDBs usually provide longer-term funding, and their development focus makes the financial durations of their lending better aligned with social and environmental sustainability.
Integrated Financing Approaches: More than 80 countries are now using Integrated National Financing Frameworks (INFFs) to develop national financing strategies and integrate planning and financing policy functions.
- The concept of INFFs was first introduced in the Addis Agenda.
Reforms in multilateral system: There is a need for reforms to enhance coherence between trade, investment and sustainable development.
- This includes World Trade Organization (WTO) reform, with a focus on dispute settlement, updating rules to reflect global economic changes, and continued efforts to update investment treaties.