FAQs: What Can be Expected from the 4th International Conference on Financing for Development?

By Tim Hirschel-Burns

The highly anticipated Fourth International Conference on Financing for Development (FFD4) will take place from June 30 to July 3 in Seville, Spain.

Achieving the UN 2030 Sustainable Development Goals (SDGs) requires funding that is in short supply in developing countries, and the FFD process is designed to help facilitate a global response to these challenges.

With such conferences happening infrequently—the last was in 2015—here are answers to frequently asked questions to help prepare for FFD4.

1. What is the Financing for Development Conference?

A key task for FFD Conferences is to set the global agenda for financing development in a way that is then carried out across the development ecosystem. Past FFD Conferences took place in Monterrey, Mexico in 2002; Doha, Qatar in 2008; and Addis Ababa, Ethiopia in 2015. Each conference leads to an outcome document agreed by UN members, and this year’s outcome document will cover seven action areas: domestic public resources; domestic and international private business and finance; international development cooperation; international trade; debt and debt sustainability; systemic issues; and science, technology, innovation and capacity building.

A key dynamic animating FFD Conferences is the relationship between the UN and other institutions. While the UN expresses the will of the international community and holds responsibility for the SDGs, it generally lacks implementation power for financing development, with action instead running through national governments and international institutions such as the International Monetary Fund (IMF) and multilateral development banks (MDBs) like the World Bank. Outcome documents are also not legally binding.

2. What is the legacy of the last FFD Conference?

FFD3 produced the Addis Ababa Action Agenda. The Addis Ababa Action Agenda captured the global consensus on how the global development finance architecture would support the achievement of the SDGs. Despite some positive elements, the Action Agenda’s track record is underwhelming. Many calls have gone unanswered and will be repeated in the text at FFD4. Further, two core components of the Agenda included increasing developing countries’ tax revenue and the mobilization of private finance, neither of which have been scaled up since 2015. Indeed, the World Bank’s chief economist said last year that the “billions to trillions” strategy the institutions launched alongside FFD3—the idea that billions in public money could catalyze trillions in private investment—instead “proved to be a fantasy.”

More broadly, the atmosphere for financing development has darkened since 2015. With the agreement of the SDGs and the Paris Agreement, 2015 marked a relative high point for multilateralism. Conflicts in Ukraine and the Middle East, the disparities in access to COVID-19 vaccines between developed and developing countries, and the Trump administration’s skepticism towards the UN have all increased tensions. The hike in interest rates, the buildup in developing countries’ debt and cuts to foreign aid have made financing development far more difficult than it was in 2015—trends that have imperiled those 2015 commitments, with 83 percent of the SDGs off-track and climate action lagging behind what is needed to meet the Paris Agreement.

3. What is the status of negotiations for FFD4?

On June 17, the outcome document—the third iteration since the launch of the process last year—was adopted by UN members through consensus. Prior to the adoption, the United States criticized the document and withdrew from the FFD process, announcing that it would not attend the conference. While some countries announced disassociations from certain provisions, the United States was the only UN member not to agree to the document. On the whole, members’ statements stressed that coming to an agreement had been difficult, but the successful agreement demonstrates their shared commitment to multilateral cooperation and sustainable development.

4. What is in the outcome document?

The outcome document, officially dubbed the Compromiso de Sevilla, covers a wide range of topics. One common theme is that, in a moment of declining aid budgets, there was agreement on strategies to make spending more effective. Improving governments’ revenue collection capacity, increasing collaboration between multilateral and national development banks, and increasing local currency financing have all emerged as areas of broad agreement.

The outcome document stresses the importance of international financial architecture reform, providing developing countries with adequate fiscal space and tackling unsustainable debt. It contains many provisions to advance these goals, though language was often diluted from firm commitments to encouragements over the course of the negotiations. The much-debated proposal to initiate an intergovernmental process on debt at the UN made it into the final draft, though some countries, including the European Union, disassociated themselves from this paragraph. The outcome document also encourages reforms to the IMF and World Bank’s Debt Sustainability Assessments (DSAs), commits to establish a platform for borrowing countries to coordinate, and encourages the G20 Common Framework to consider suspending debt service during negotiations, clarify comparability of treatment and expanding to include middle-income countries.

MDBs play a prominent role in the document, which encourages increasing MDB lending with a view to tripling it by 2035. It also encourages the rechanneling of Special Drawing Rights (SDRs) to MDBs and invites the IMF to create an SDR “playbook” to facilitate the use of SDRs during future shocks. The outcome document calls for increasing the voice and representation of developing countries in global economic governance, including by inviting the IMF to consider increasing basic votes.

5. What would success at FFD4 look like?

Now that the outcome document has been approved, there is a solid sense of where the conference will land. FFD4 has prevented a sudden death for, and even provided a modest boost to, multilateral cooperation to achieve the SDGs, but it has yet to rule out a terminal decline. Apart from a United States that stands alone, UN members remain committed to collective action to advance global development.

The outcome document contains the foundations of a pathway to the SDGs, but it has not laid the bricks—and with just five years left until 2030, achieving the SDGs requires a rapid acceleration of the bricklaying. Many of the most important avenues to closing the SDG financing gap finance were left without firm commitments. However, taking up the outcome document’s encouragements to triple MDB finance, approve an SDR playbook that expands the utilization of a financing tool that does not place any strain on government budgets, and reforming DSAs and the G20 Common Framework would give the SDGs an enormous boost. Bold, concrete commitments to the Sevilla Platform for Action launched by Spain would also show appetite for meaningful action to implement the outcome document.

Ultimately, the success of FFD4 will only be visible in time. Many of the promising provisions of the outcome document still need to be implemented in other institutions. If FFD successfully restores trust in multilateralism and sparks meaningful reforms across the development ecosystem, it will be remembered as a key inflection point in the international community’s pursuit of a livable and prosperous future.

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