Financing developing economies


As of early 2023, 52 low and middle income developing countries, representing more than 40% of the world's poorest people, are either in debt distress or at high risk of debt distress; 25 of these countries face external debt service repayments of more than 20% of their total income. 
These few figures illustrate the limits of the action plan adopted in September 2015 by the international community: the United Nations 2030 Agenda and its Sustainable Development Goals (SDGs). Halfway to the deadline in 2023, only 12% of the SDGs are on track. For half of them, progress is weak and insufficient. Even worse, the world has stalled or backtracked on more than 30% of these goals.

For the world's most vulnerable economies, the limited progress in implementing the Paris Climate Agreement and the 2030 Agenda seems, at least in part, increasingly linked to unmet financing needs, stemming from, among other causes, the inability of the international financial architecture to channel resources at the scale and speed needed in these geographies. The OECD estimates that the financing gap for the SDGs has grown from USD 2.5 trillion to at least USD 3.9 trillion per year, and that this gap could increase by USD 400 billion in the coming years.

The post-Second World War international financing system needs profound changes if its institutions are to deliver on an ambitious agenda: leading the fight against poverty while preserving global public goods such as climate and biodiversity.

More innovative mechanisms are needed to mobilise, align and shift finance to where it is most needed to accelerate progress, particularly in developing and emerging economies facing budget constraints. We also need to improve the effectiveness of existing instruments to achieve concrete results. 

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