The report – Building Blocks from the Crisis: The UN’s SDG Stimulus Plan – was issued ahead of the G20 meeting of finance ministers and central bank governors in Bangalore, India, which begins on Friday.
UNDP has called for action to protect developing countries from the impact of today’s intersecting crises while ensuring funding is targeted to support a just, inclusive and just global transition.
Transform global finance
“The building blocks for transforming the global financial system are already being discussed at the G20 – multilateral development bank reform, debt restructuring and liquidity injections – but the rift between developed and developing countries is escalating rapidly, We must walk the talk” called Achim Steiner, the UNDP administrator.
The Policy Brief identified 52 low- and middle-income developing countries that are either in a debt crisis or at high risk of a debt crisis. Together they make up more than 40 percent of the world’s poorest people.
A 30 percent cut in public external debt by 2021 could help save up to $148 billion in debt service payments over eight years, according to the report.
High debt burden
UNDP said 25 developing countries are currently making external debt service payments more than 20 percent of total sales – the highest number of countries in more than two decades – affecting spending on essential services, including measures to adapt and respond to climate change.
“The countries most burdened by debt and lack of access to finance are also affected shaken by several other crises; They are among the most affected by the economic impact of the COVID-19Poverty and the accelerating climate catastrophe,” said Mr. Steiner.
“The time has come to address the widening gap between rich and poor countriesto change the multilateral landscape and create a debt architecture fit for purpose in our complex, interconnected and post-COVID world,” he added.
SDG recovery plan
The policy letter revealed how “significant fiscal space” can be unlocked by expanding access to lower-cost and long-term financing — two of the focus areas included in the Stimulus plan of the UN Secretary-General for the Sustainable Development Goals (SDGs), launched last week.
The 17 SDGs provide a blueprint for a fairer, more equitable and “green” future and have a deadline of 2030.
George Gray Molina, UNDP chief economist, argued that developing countries simply cannot fund progress on targets or climate commitments by borrowing up to 14 percent while paying more than 20 percent of the revenue to service the debt.
“The billions of dollars in savings identified by UNDP can only be realized if we collectively agree that it is time to relax development and climate finance,” he said.
The brief also showed how an additional $120 billion in savings could be generated by “refinancing” the debt of middle-income countries at official creditor rates.
It also highlighted the potential for lowering the cost of borrowing for investments aligned with the SDGs and the SDGs Paris Agreement on climate change.
