The Financing for Development process is centered around supporting the follow-up to the agreements and commitments

reached during the three major international conferences on Financing for Development: in Monterrey, Mexico in 2002; in Doha,
Qatar in 2008; and in Addis Ababa, Ethiopia in 2015. The process also follows up on the financing for development-related
aspects of the outcomes of major United Nations conferences and summits in the economic and social fields, including the 2030
Agenda and the Sustainable Development Goals (SDGs).

The Addis Agenda provides a new global framework for financing sustainable development, which supports implementation of the
2030 Agenda, including the SDGs. The Agenda aligns all domestic and international resource flows, policies and international
agreements with economic, social and environmental priorities. It incorporates all the SDG means of implementation targets into
a comprehensive financing framework, and serves as a guide for further actions by governments, international organizations, the
business sector, civil society, and philanthropists.

The specific action areas of the Addis Agenda are:

 Domestic public resources;

 Domestic and international private business and finance;
 International development cooperation;
 International trade as an engine for development;
 Debt and debt sustainability;
 Addressing systemic issues;
 Science, technology, innovation and capacity building.

Integrated approach to the FfD follow-up

Integrated approach to the FfD follow-up

Member States mandated the Financing for Sustainable Development Office (FSDO) to promote and support an integrated,
cross-cutting and holistic approach to the Financing for Development follow-up. The Addis Agenda established an
annual ECOSOC Forum on Financing for Development (FfD Forum), an intergovernmental process with universal participation
mandated to discuss the follow-up and review of the financing for development outcomes and the means of implementation of the
2030 Agenda. The intergovernmentally agreed conclusions and recommendations of the FfD Forum also feed into the High-level
Political Forum on Sustainable Development (HLPF).
The Addis Agenda moreover called on the Secretary-General to convene an Inter-Agency Task Force on Financing for
Development with a mandate to:

 Report annually on progress in implementing the Addis Agenda and other Financing for Development outcomes and the
means of implementation of the 2030 Agenda on Sustainable Development, and
 Advise the intergovernmental follow-up process on progress, implementation gaps and recommendations for corrective
action, while taking into consideration the national and regional dimensions. The Task Force’s annual report is the major
substantive input to the ECOSOC Forum on Financing for Development follow-up and supports the deliberations of the
HLPF.

Related Forums
FSDO acts as the Secretariat for the biennial ECOSOC Development Cooperation Forum (DCF), a global multi-stakeholder
forum for action-oriented reviews of trends, progress and emerging issues in international development cooperation. The Addis
Agenda recognizes the DCF as the primary platform for discussion on the quality, impact and effectiveness of development
cooperation. The deliberations of the DCF are taken into account in the HLPF.

FSDO also provides Secretariat support to the UN Committee of Experts on International Cooperation in Tax Matters (UN Tax
Committee), and disseminates the guidelines issued by the Committee through a capacity development programme aimed at
strengthening the capacity of developing countries to develop more efficient and effective tax systems, with the ultimate aim to
increase the mobilization of resources for investment in sustainable development.

Global Investors for Sustainable Development Alliance

The Global Investors for Sustainable Development Alliance, a UN-supported coalition of 30 business leaders announced in
October 2019, works to provide decisive leadership in mobilizing resources for sustainable development and
identifying incentives for long-term sustainable investments. The Alliance will operate on a two-year timeline, from October 2019
through October 2021, focusing on solutions related to long-term SDG investment, identifying such investment
opportunities for developing countries, and enhancing the impact of private funding in development efforts. Read more here.

Main Messages from the 2020 FSDR:

The global context
•The global economic recession and financial turmoil from COVID-19 are derailing the Addis Agenda and the SDGs;

Collapsing trade and investment

Investors removed around USD $90 billion out of emerging markets as of March --the largest outflow ever recorded.

•But even before the pandemic;

ODA fell 4.3%; ODA to LDCs fell 2.1% in 2018

1/5 countries were likely to see per capita incomes stagnate or decline in 2020.
Rising vulnerabilities in non-bank financial institutions
Particularly worrisome is the prospect of a new debt crisis

COVID-19 has enormous fiscal impacts...and

44% of LDCs and other LICs were already at high risk of or in debt distress

25% of public revenue was used for debt payments in frontier economies

In Africa alone, 6 additional oil-exporters, as well as tourist dependent countries, are at high risk of shocks and debt distress

Global debt will rise further..

Highly-leveraged corporations are vulnerable to shocks –COVID-19 could turn into a protracted crisis

Public debt will rise further in response to COVID-19

Immediate actions and medium-term policy solutions required

A globally coordinated stimulus package, including reversing the decline in aid and increased concessional finance.
Prevent a debt crisis:
•Immediately suspending debt payments from poor countries;
•Beyond the crisis, reassess debt sustainability/revisit existing mechanisms
Stabilize financial markets by continuing to inject liquidity:
•In the medium-term, explore regulatory frameworks to limit over-borrowing for non-productive investments, such as repaying
shareholders.
Partnering with the private sector:
•In the short term, roll over debt to SMEs and individuals;
•In the medium-term, promote sustainable investment: e.g. Mandatory disclosures; minimum standards for investment products; advisors
required to ask about sustainability preferences
Additional policy solutions
Building back better for sustainable development:
•Public and private investment in sustainable development including in resilient infrastructure;
•Strengthened social protection systems;
•Investment in crisis prevention, risk reduction and planning;
•Eliminate trade barriers and restrictions that affect supply chains.
Digital technologies present tremendous potential for the SDGs, but COVID-19 has highlighted its challenges and risks.
•Public policies should be adjusted to accelerate progress, address exclusion and risks of discrimination, and ensure benefits for the society
at large, including decent jobs.

Thematic chapter: Financing sustainable development in an era of transformative digital technologies

Digital technologies have unique properties that enable inclusion and efficiency…
It is much cheaper to gather, process and search for information
Digital goods and services have almost zero transportation costs
Digital goods can be reproduced at zero cost

and create opportunities across the Addis Ababa Action Agenda:

financial markets: access to financial services;
public financial management: efficiencies in public financial management
development pathways: access to global markets and international trade

... but they also create inequities, new risks and uncertainty!
Automation and AI threaten jobs and can increase wage inequality
Algorithms inherit historic biases that exacerbate discrimination (credit screening)
“Winner take most” and market concentration across sectors and borders.
Thematic chapter: Financing sustainable development in an era of transformative digital technologies
Countries must prepare for and invest in digital technologies, always putting people first:
Take a strategic approach to digital technologies and finance!

Invest in basic building blocks (infrastructure and skills)!

Overcome silo-style regulation!

Enforce competition to harness the power of big tech and support innovation!

Incentivize use of digital technologies that support labour-enhancing development pathways!

Step up global collaboration!

Thematic chapter: Financing sustainable development in an era of transformative digital technologies
PUTTING PEOPLE AND DECENT JOBS FIRST
Domestic public resources
COVID-19 will have enormous fiscal impacts

Expanding health spending to address the public health crisis

Falling tax revenues

Even before the pandemic, progress in tax mobilization was insufficient to match the ambition of the 2030 Agenda

Technology can support the fiscal system

53developing countries increased tax revenues from 2017-2018, while 46countries registered a decline

Around 60 per cent of tax returns are e-filed in middle-income countries, while the figure is less than 40 per cent in low-income countries

New tax norms related to digitalisation need to be better adapted for developing countries
New proposals are extremely complex, may be inappropriate for developing countries
A new tax architecture also needs effective inclusion in tax norm setting & greater investment in tax capacity building from development
partners

To help combat illicit financial flows, new technology, such as AI, can enable better identification of suspicious activity

Expenditure frameworks should be aligned to the SDGs, such as:

1/3 of tax transparency peer review recommendations related to the need to improve country’s implementation of beneficial ownership
transparency

Strategic procurement
Gender responsive budgeting
Disaster risk reduction a& resilience
Private business and finance

Weak private investment, but sustainability issues are receiving greater consideration:

Weakening outlook for private investment over the last decade -amplified by the COVID-19 crisis (investment fell 24.5% during Jan-Feb in
China);
ii. Low investment growth in traditional assets and infrastructure prior to the crisis; higher growth in digital technology;
iii. Weak foreign direct investment (FDI), but a shift to developing countries; and
iv. Greater interest in sustainability, with a focus on climate-related risks

 Weak private investment, but sustainability issues are receiving greater consideration:

Policymakers should strengthen the business enabling environment by targeting investment constraints.
115 economies undertook 294 business regulatory reforms but there remains space for improvement (e.g., women cannot run a business
the same way as men in 115 countries)

Fit-for-purpose financial instruments could increase investment in developing countries if properly structured and leveraged where
appropriate.
International vehicles can be used to better manage currency, disaster and political risks through diversification across countries
Private business and finance must incorporate greater sustainability.

This requires:
I. Adjusting corporate governance, aligning internal incentives (such as remuneration criteria for CEOs), and addressing persisting short-
termism in capital markets;
ii. Mandatory disclosures by large companies on a minimum set of harmonized environmental and social indicators;
iii. Minimum standards for investment products to be marketed as “sustainable;
iv. Investment advisors asking their clients about their sustainability preferences
International development cooperation

Need for increased concessional finance and reversing the decline in official development assistance (ODA):
 ODA to developing countries fell by4.3%,
 ODA to least developed countries fell by2.2%
Covid-19 also underscores the importance of preparedness
Including efficient, predictable and quick-dispensing ex-ante instruments, with incentives for risk reduction
South-South Cooperation continues to expand in scope, volume and geographical reach
Documenting its added value and impact could further support the Sustainable Development Goals
Development financial institutions can learn from innovations to raise resources

E.g. merging concessional windows and synthetic securitization

Innovations in public finance instruments are changing the landscape of development cooperation, but are not a panacea
Traditional ODA remains important –innovations can make aid more effective and leverage private finance
Examples instruments include: securitization, catastrophe risk pooling, and green bonds
Switch from a search for bankability to a search for impact in blended finance
Don't aim to maximize leverage ratios! --LDCs will have lower leverage, different structures
Blended finance should be driven by country needs
Capacity development support critical
Countries graduating to higher income status may need support
Pre-graduation planning critical
Allow for reverse graduation processes due to major shocks (such as COVID-19)
Exceptional and temporary support measures vital e.g. World Bank’s small state exception
Need to link plans, strategies and resources & align interventions to country priorities –country-owned Integrated National Financing
Frameworks can help
International trade as an engine for development
http://developmentfinance.un.org
Countries need to curb the imposition of new trade-restrictive measures and reducing the accumulated stock of restrictions
Trade coverage of import-restrictive measures amounts to US$ 747 billion—almost ten times larger than that recorded two years ago.

Preliminary data for 2019 suggests that the value of world trade contracted by 3%; the COVID-19 crisis will have a significant impact on
trade, particularly trade in services.

The global trading system under the WTO need to be preserved, strengthened and made more reactive to the 21st century geo-economic
realities

Immediate actions are required to address the challenges faced by LDCs, smooth the transition for those graduating from the LDC category
and accelerate economic diversification
39 LDCs are considered as commodity dependent (i.e. exports of primary commodities account for more than 60% of merchandise export
revenue)

E-commerce allows businesses, big and small, to reach a broader network of buyers and participate in global value chains
Wide variations in e-commerce readiness and the rise of dominant players enhance the risk of benefits from e-commerce being unequally
distributed

Trade finance gaps can be reduced by helping local banks leverage technology to digitalize paper-intensive products and streamline
verification processes