UN Financing for Development Forum 2023: The road towards global economic solutions

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At the end of April, the annual four-day United Nations Forum on Financing for Development (FfD) took place in New York. Amidst multiple intersecting crises, escalating global debt problems, increasing inequalities, billion-dollar shortfalls in financing for development and environmental action, as well as a new wave of austerity, the UN FfD process has a vital role to play. And there are a number of important reasons why this process is uniquely placed to provide truly global solutions to global economic problems. 

Firstly, it is a place that looks at financing from a systemic point of view. Rather than being locked in a narrative of “donors” and “receivers”, it looks at the underlying drivers of economic inequalities - such as debt crises and international tax dodging. 

Secondly, it is the only place where issues of global economic governance are addressed in a truly inclusive forum. Unlike the numerous “clubs” (such as the Paris club), exclusive groups (such as G7 and G20), frameworks (such as the OECD’s so-called Inclusive Framework) and Forums (such as the OECD’s so-called Global Forum), the FfD process is a place where all countries, including developing countries, are at the table and participating on an equal footing. In addition to country representatives the process is open to observers, including civil society. 

The importance of the FfD process is also increasing in light of the recent decision to consider convening a meeting of heads of state and governments - an FfD Summit - in 2025. With this in mind, a large group of civil society organisations were present at the forum stressing the need for systemic reforms of the international financial architecture, as well as calling for the development of a new UN Convention on Tax and a multilateral legal framework for sovereign debt resolution. And we’re finally seeing some encouraging support and progress for such structural reforms. 

Truly global solutions to the global debt problems

The Member States’ and country groups’ interventions in this year’s FfD Forum made clear the concern amongst most of them about the increasing debt problems. As civil society stated, “Debt is killing the SDGs and any chance of dealing with the climate emergency”, and there is no functioning framework to deliver timely and fair solutions to the debt crisis. The UN Secretary General stressed that: “the UN, as the only organisation with universal membership, is ready to facilitate inclusive dialogue on sovereign debt, bringing together the discussions that are happening in different forums”. Several global south countries and country groups expressed their support for debt architecture reform or even explicitly called for the establishment of a multilateral sovereign debt resolution mechanism. Meanwhile, countries from the global north and representatives of international financial institutions, such as the IMF, kept insisting on reforming the Common Framework for Debt Treatments and relying on G20 solutions to tackle the debt crisis. 

Debt is killing the SDGs and any chance of dealing with the climate emergency.

As a result, the outcome document, while recognising the need for “improved international debt mechanisms”, does not explicitly call for initiating a process under UN auspices to discuss debt architecture reform and points to the G20, IMF and World Bank, and the recently created Global Sovereign Debt Roundtable, as the forums where debt problems should be addressed. Civil society representatives made clear that the solution to the debt crisis won’t come from creditor dominated forums, and needs to be discussed and decided through a member state-led process, under UN auspices with all, borrowers and creditors at the table. Beyond the outcome document, the statements by different member states and country groups at the FfD forum indicated a growing and encouraging support to start talking and working in this direction, starting with a broader coordination amongst borrowing countries. 

A UN Tax Body and Convention

On an even more positive note, recent developments on tax created a positive buzz in the corridors and side-events throughout the forum. The reason for that is obvious: after decades of tense and heated discussions, both within and beyond the UN FfD process, the world’s governments have finally reached an agreement to start an intergovernmental UN process on tax. 

This issue, which has been pushed by developing countries since the FfD process was initiated over two decades ago, became the last and most toxic outstanding issue during the latest Financing for Development Summit in Addis Ababa in 2015. Back then, resistance from some OECD countries unfortunately prevented an agreement from being reached. However, developing countries have continued to stress the urgency of solving the problems in the global tax system in a truly inclusive forum, and raised strong concerns about international tax dodging, which is costing governments around the world hundreds of billions of dollars in lost tax income every year. 

At the end of 2022, the formal decision to set up an intergovernmental UN tax process finally came in the form of a resolution that was tabled by the Africa Group and adopted by consensus by the UN General Assembly. Furthermore, the Africa Group has called for the upcoming UN Tax process to deliver a Convention on Tax, and a growing number of countries have started supporting this call. A large global coalition of civil society organisations is also strongly supporting the idea of negotiating a UN Convention on Tax, and together with the Global Alliance for Tax Justice, Eurodad has produced a full proposal for what such a convention could look like. 

At the end of the 2023 FfD Forum, the governments adopted an outcome document, and on the issue of tax, they stated: “We look forward to the beginning of intergovernmental discussions at United Nations Headquarters in New York on ways to strengthen the inclusiveness and effectiveness of international tax cooperation”. It is safe to say that this positive sentiment is very much shared by the large group of civil society organisations around the world which has been following this issue with great dedication.

The role of private finance

On a less positive note, there continues to be a worrying obsession of some countries, particularly in the global north, with leveraging, blending and de-risking private finance for development. Far from being a panacea, this focus on private financing brings many risks, as civil society organisations raised in the Forum. These include the risk of increasing  the already unsustainable debt of developing countries. As a representative of Eurodad stressed in an intervention at the Forum - private finance is never for free, on the contrary, “almost every dollar in private financing ends up extracting more money from the Global South”. 

For instance, the surge towards financial instruments such as SDG bonds, without any detailed analysis of impact, and an overwhelming emphasis on investor needs, was extremely disappointing. The call for ‘SDGs as a new asset class’ in the discussions distorts their very purpose and meaning, setting a dangerous precedent for private finance as an end in itself. 

There seems to be no disagreement amongst member states on the point that private finance has an important role to play in financing development. However, as civil society organisations continue to stress, the first steps should be to ensure that multinational corporations and wealthy individuals stop hiding their profits in tax havens and start paying their fair share of tax, and that private creditors participate fully in a global resolution to escalating debt problems. 

Position: Co -Founder of ENGAGE,a new social venture for the promotion of volunteerism and service and Ideator of Sharing4Good

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