• UN Member States have reached agreement on the outcome document for the Fourth International Conference on Financing for Development (FfD4), to be formally adopted at an upcoming summit in Sevilla, Spain.

• Member States at UN Headquarters endorsed the finalised outcome document, known as the ‘Compromiso de Sevilla’ (the Seville Commitment), following months of intensive intergovernmental negotiations.

• It is intended as the cornerstone of a renewed global framework for financing sustainable development, particularly amid a widening $4 trillion annual financing gap faced by developing countries.

• The United States pulled out of the conference process during final negotiations over the outcome document, saying that it couldn’t get on board with the draft. 

Fourth International Conference on Financing for Development

• The Sevilla conference, to be held from June 30 to July 3 will mark the fourth major UN conference on financing for development, following Monterrey (2002), Doha (2008) and Addis Ababa (2015).

• The Fourth International Conference on Financing for Development (FFD4) provides a unique opportunity to reform financing at all levels, including to support reform of the international financial architecture and addressing financing challenges preventing the urgently needed investment push for the SDGs.

• With only 17 per cent of the SDG targets on track, the Conference aims to drive action to unlock greater volumes of capital at a lower cost and reform the international financial architecture, ensuring it better serves the needs of developing countries and supports the achievement of the 2030 Agenda.

• With trade barriers growing and official development assistance decreasing annually, a business-as-usual approach to financing for development is unsustainable. 

• The upcoming conference in Sevilla provides an opportunity to change course, to mobilise finance at scale and reform the rules of the system to put people’s needs at the centre.

• The conference will bring together countries, civil society representatives and financial experts to discuss new approaches to financing for development.

• The Summit is called a “once-in-a-decade opportunity” to rethink how the world pays for sustainable development.

What is financing for development?

• According to the United Nations, the world needs an extra $4 trillion every year to tackle some of the world’s biggest challenges — ending poverty and hunger, fighting climate change, and reducing inequality. 

• These are part of 17 goals agreed by nearly every country, called the Sustainable Development Goals (SDGs). The plan is to hit these targets by 2030.

• However, there isn’t enough consistent funding to make real progress.

• Through collective efforts to mobilise financing for sustainable development and realise an international financial architecture that serves the needs of all countries, the world can tackle poverty, inequality, hunger, education, the climate crisis, and all 17 SDGs. 

• Investing in sustainable development is not a sectoral endeavor. An investment in one area creates ripple effects throughout the entire economy, creating positive impacts at all levels

• Every $1 spent on girls' education can generate a $2.80 return – equivalent to billions of dollars in extra GDP.

• Every $1 invested in water and sanitation saves $4.30 in healthcare costs.

• $1 per person per year in fighting non-communicable diseases can prevent close to 7 million deaths by 2030.

• Every $1 invested in disaster risk reduction saves up to $15 in post-disaster recovery.

• Investing in sustainable development reduces conflict, stabilizes economies and prevents costly humanitarian crises.

• Then, the main question is how does the world pay for a fairer and more balanced system of aid, trade and development.

• Its answer has been to create a system which mobilises the entire international financial architecture — taxes, subsidies, trade, financial and monetary policies — towards the development agenda.

• The architecture aspires to be as inclusive as possible, engaging a wide array of funding sources empowering countries to become more self-sufficient so their citizens can lead healthy, productive, prosperous and peaceful lives.

• Among these sources of financing are multilateral development banks that provide financial and technical support to developing countries. Revised international and national trade and tax policies also work to jump-start developing economies.

• And, official development assistance (ODA) creates a channel through which aid from developed countries can flow directly to developing countries.

• In the current financing system, developing countries continue to pay exorbitant amounts to service their debt while also facing borrowing costs which can be as much as two or four times higher than their developed counterparts.

• These costs tend to rise especially during or directly after times of crisis, creating a feedback loop through which developing countries cannot afford to develop the very structures which would enable them to pay these costs.

• From rising debt and falling investment to shrinking aid and missed development goals, the current system is failing the people it is meant to serve. 

• As many as 60 crore people could still be living in extreme poverty by 2030 if we don’t change course and it will take many more decades to reach the SDGs.

• Billions of people will continue to live in countries which must prioritise debt payments over development.

• That means less money for schools, hospitals, clean water, and jobs — the basics that people need to thrive.

• The international financial system must evolve to meet modern challenges and ensure fair global cooperation.

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