NEW DELHI: Finance Minister Nirmala Sitharaman emphasised on Saturday that inadequate access to developmental finance is a significant barrier preventing developing economies from achieving Sustainable Development Goals (SDGs).
She highlighted the urgent need to address the estimated $4 trillion annual financing gap.
Speaking virtually at the third Voice of Global South Summit, Sitharaman pointed out that recent reports show stagnation in the implementation of many SDGs in developing economies, with some indicators even deteriorating.
“The SDG financing gap is estimated at $4 trillion annually for developing countries,” she noted.
World Bank report
Sitharaman also observed that global uncertainties have adversely affected the Global South, citing a recent World Bank report that predicts one in four developing countries will be poorer by the end of this year compared to pre-pandemic levels.
“Growth remains insufficient to drive progress in development and poverty reduction. To accelerate progress on SDGs, addressing the $4 trillion financing gap is imperative,” she added.
Sitharaman highlighted India’s role during its G20 presidency in promoting the wider adoption of social impact and blended finance instruments, along with the development of monitoring frameworks and risk mitigation measures.
G20 Action Plan
These efforts led to the creation of the G20 Sustainable Finance Technical Assistance Action Plan, now being implemented under Brazil’s presidency, aimed at scaling up sustainable finance tailored to the needs of the Global South.
Sitharaman stressed that growth is the best solution to many economic and social challenges, creating a positive feedback loop where improved economic performance leads to greater financial opportunities.
“Our priority should be a people-centric growth path that empowers the most vulnerable and marginalised to participate in the development journey,” Sitharaman said.
Development banks
Addressing the need for reforms at multilateral development banks (MDBs), she called for a comprehensive revamp of these institutions to mobilise additional financial flows required by developing countries to meet their development needs and address global challenges.
She emphasised that fresh capital infusion should remain an option for MDB boards, alongside balance sheet optimisation and financial innovations.
Sitharaman also stressed the importance of meeting financing requests to MDBs with speed and agility, which will require operational reforms and the identification of new additional sources of finance.
Regarding concessional finance, she highlighted the need for dedicated concessional windows to be made available not only to low-income countries but also to middle-income countries to address climate challenges.
