G20 countries urged to agree on US$500bn annual stimulus

By Bongiwe Zwane-Maseko

With the failure of the global financial system to effectively cushion the impacts of current global crises on the Global South, the Covid-19 pandemic, the war in Ukraine, and the ongoing climate emergency, the UN today called for the urgent need for a significant increase of finance for sustainable development.

“Today’s poly-crises are compounding shocks on developing countries – in large part because of an unfair global financial system that is short-term, crisis-prone, and that further exacerbates inequalities,” warned UN Secretary-General António Guterres on the occasion of the launch of the SDG Stimulus released on Tuesday.

“We need to massively scale up affordable long-term financing by aligning all financing flows to the SDGs and improving the terms of lending of multilateral development banks,” stressed the Secretary-General.

“The high cost of debt and increasing risks of debt distress demand decisive action to make at least 500 billion dollars available annually to developing countries and con-vert short-term lending into long-term debt at lower interest rates.”

He said halfway to the 2030 Agenda deadline, progress on the Sustainable Development Goals (SDGs) –is not where it needs to be.

“To reverse course and make steady progress on the Goals, the SDG Stimulus outlines the need for the international community to come together to mobilize investments for the SDGs –but, in so doing, create a new international financial architecture that would ensure that finance is automatically invested to support just, inclusive and equitable transitions for all countries. The current global financial system – originally created to provide a global safety net during shocks –is one in which most of the world’s poorest countries saw their debt service payments skyrocket by 35 per cent in 2022,” he said.

Guterres said the “great finance divide” continues to proliferate, leaving the Global South more susceptible to shocks. He said developing countries do not have the resources they urgently need to invest in recovery, climate action and the SDGs, making them poised to fall even further behind when the next crisis strikes – and even less likely to benefit from future transitions, including the green transition.