World leaders, policymakers, economists, activists, and civil society representatives gathered at the Summit on a New Global Financing Pact in Paris last week with the aim of addressing the financing gap for sustainable development and reforming the international financial system.
This is a massively important agenda given lower income countries need $2.4 trillion annually to combat the climate crisis and achieve the sustainable development objectives (SDGs). Raising this money will be no easy feat, especially considering more than half of lower income countries are currently at high risk or in debt distress, high income countries are not meeting their official development assistance (ODA) commitments,, and tax evasion and avoidance by multinational corporations and wealthy individuals results in more money leaving the continent of Africa than it receives in aid or foreign direct investment.
High ambitions but insufficient progress
The Paris Summit sought to bring together representatives from lower and higher income countries to increase international solidarity and mobilise funding for climate and sustainable development. The objectives of the Summit were to:
- Rebuild trust in collective action by meeting existing targets and commitments;
- Drive a new vision and common agenda around reforming the financial architecture;
- Deliver a first set of pioneer solutions, including new commitments that could mobilise more financing for climate and development objectives;
- Build and sustain momentum, scaling up the impact of the Paris Summit during other key moments throughout the year.
Looking back, the Summit did help to raise awareness and build momentum towards reforming the international system. Many leaders from lower income countries, including Kenyan President Ruto, used the Summit to call attention to new, potentially transformative proposals. There were also a few welcome commitments and updates – including increased commitments to recycle Special Drawing Rights (SDRs) from France (to 40%), Belgium (15%) and Switzerland (6.7%), and an increase in the capacity of the IMF’s Resilience and Sustainability Trust to increase the likelihood that these committed SDRs actually reach lower income countries.
However, despite some steps in the right direction, it’s clear as the dust settles that the Summit’s outcomes fell short of its ambitious objectives.
Alignment with Save the Children's Key Principles
In advance of the Summit, Save the Children laid out the key principles that should have underpinned the Paris process if it was to stand a chance of delivering for children’s rights around the world and unlocking critical finance to halt the climate and inequality crisis. Now that the Summit has wrapped up, let’s recap how well it delivered on these principles:
1. Ensure children and countries most affected by crises have a say and agency in the design and implementation of financing solutions.
Unfortunately, the Summit failed to provide adequate space for meaningful participation by children, civil society, and representatives from countries most affected by crises.
Civil society representatives were invited late to join the working groups in the run up to the Summit, missing crucial agenda-setting moments. Additionally, some civil society representatives report that they were restricted to observing discussions rather than actively participating.
Further, the last-minute invitations to leaders and accreditation for civil society representatives – delivered only weeks before the Summit – hindered the ability of many individuals from lower income countries, who require visas and extensive planning, to attend.
2. Deliver on existing promises and prioritise the critical role of public finance.
One of the stated aims of the Paris Summit was to rebuild trust between the Global North and South by delivering on existing commitments. But instead of taking this time to acknowledge the failure of the Global North to meet its commitments over the past several years, leaders at the Paris Summit used this time to:
- Distort progress, for example by claiming success on the commitment to recycle $100 billion SDRs to lower income countries. In reality, this includes the $21 billion US commitment, which is tied up in the US congress and may never actually be authorised.
- Celebrate meeting long overdue commitments, such as finally reaching the $100 billion annual climate finance commitment, which is three years late, is contested, i and has not been independently verified.
- Ignore the commitments that still haven’t been met, for example the commitment of many high-income countries to spend 0.7% of gross national income on development assistance. Only 5 countries met this commitment in 2022.
We can’t rebuild trust between the Global North and the Global South if more affluent countries aren’t honest about their failures and responsibility to act.
Further, instead of prioritising the role of public finance – with significant new commitments around ODA, grant-based climate finance, and SDR recycling – the Summit focused on mobilising the private sector, including discussions around carbon markets and blended finance opportunities. Whilst private sector mobilisation will be an important component of a just and green transition, it cannot overshadow the unique and critical role of public finance.
3. Move beyond the low hanging fruit.
We hoped the Summit would go beyond the low hanging fruit and drive momentum towards tackling the underlying causes of the challenges at hand.
Achieving genuine progress requires bold and transformative measures that challenge the status quo and reshape the way we approach financing sustainable development. Without addressing systemic issues, we risk perpetuating the same ineffective approaches that have hindered progress in the past.
Instead of progressing transformative change - such as building consensus around the need for a UN Tax Convention, a permanent and independent multilateral sovereign debt workout mechanism, or agreement on a global tax on polluters – the announcements at the Summit barely scratched the surface. For example, Climate Resilient Debt Clauses – which provide pauses in debt payments during climate shocks - received position traction. But whilst these clauses might provide some relief for countries in the middle of a climate emergency, they do little to solve existing debt burdens or the structural inefficiencies that impede timely debt relief. Addressing these issues requires legislative action to involve private creditors in debt negotiations, reform to the Common Framework, and advancements towards a multilateral sovereign debt workout mechanism.
Turning warm words into action
In summary, despite some progress, the Summit could and should have achieved more. If we hope to fill the $2.4 trillion financing gap for climate and the SDGs we need to transform the global financial architecture. As world leaders reconvene during key events later this year – including UNGA and the SDG Summit and high-level dialogue on Financing for Development, the World Bank Annual Meetings and COP 28 - we must see warm words turned into concrete action. These decisions must be taken in open, transparent and multilateral spaces with meaningful participation from children and young people. Given the scale of the financing gap and the depth of the global climate and inequality crisis, we cannot afford to wait.
