With a view to better analysing concrete challenges to address SDG financing in developing economies, this Study coordinated by IDDRI and prepared in cooperation with the Stockholm Environment Institute (SEI) and the German Institute of Development and Sustainability (IDOS) focuses on the global picture and examines the state of play, recent initiatives, and prospects for financing the SDGs in Ghana, Indonesia, Mexico, and Senegal. It seeks to answer the following question: how and under what conditions can partner countries further align their development plans and policies with the 2030 Agenda and the SDGs to better finance their objectives?
Alignment and effective SDG financing are possible when four main conditions are met.
- Avoiding SDG-incompatible finance. For many countries–notably OECD and BRICS countries– achieving the 2030 Agenda is just as much about financing more as it is about financing less and in a more sustainable way. Examples include less financing for approaches that compromise specific SDGs (e.g., fossil fuel subsidies) and making difficult policy decisions that require short-term costs to achieve long-term sustainability gains.
- Combining long-term financing with longterm planning. Development financing strategies provide public and private investors with clarity and predictability, and make it possible for those key actors to better grasp the sequence of investments across relief, recovery, and long-term structural transformation. Planning efforts should also seek to avoid lock-in situations and path dependencies where short-term recovery expenditure could hamper long-term goals of reducing inequalities or advancing environmental protection, and even increase vulnerabilities.
- Better understanding the cost and benefits of SDG financing at country level. A clear understanding of allocation and spending on public services and public investments that contribute to the SDGs can help identify funding shortfalls. Double-counting investment needs in particular should be avoided while synergies between different types of investment should be prioritized.
- Aligning SDG financing instruments with countries’ needs and priorities. SDG budgeting tools can be the cornerstone of strengthening financing for the SDGs in countries and establish more coherent links between the SDGs and development strategies, as well as their implementation. However, as case studies in Africa, Asia and Central America, these tools only prove relevant if they do not add complexity to the administration but are well integrated into and supportive of existing national or local processes and strategies. And international partners should fully align with such national strategies.