Latest news with #CompromisodeSevilla
Daily Maverick
15-07-2025
- Business
- Daily Maverick
Road ahead is steep but not insurmountable– SA's G20 can still deliver for debt and development
The global economy has slowed and become less supportive of developing countries. African countries may be forced to resort to international capital markets to fill the gap in their development financing needs. It is crunch time for South Africa to begin delivering on its ambitious G20 development finance agenda. The third of the four meetings this year of G20 finance ministers and central bank governors takes place on 17 and 18 July. A communiqué is expected to be issued, focusing on the development finance issues that South Africa prioritised at the beginning of its G20 presidency. The agenda includes politically and economically complicated topics such as sovereign debt and the cost of capital and climate finance, which are issues that are high on the global policy agenda. At the recent African Union Conference on Debt held in Togo in May, African leaders, among other matters, called for the reform of the G20 common framework and for a 'new debt doctrine'. The Compromiso de Sevilla, the outcome document from the recently concluded UN-sponsored Fourth International Conference on Financing for Development (FfD4), also acknowledged the need for a more development-oriented debt architecture. Unfortunately, the international economic environment in which South Africa needs to deliver on this agenda has become significantly more complex and challenging. The global economy has slowed and become less supportive of developing countries. The World Bank recently reduced its estimate of global growth from about 2.8% to 2.3% and forecast that average global growth in the first seven years of the 2020s would be the slowest of any decade since the 1960s. Its chief economist declared that ' outside of Asia, the developing world is becoming a development-free zone '. Some G20 participating states have become less supportive of developing countries. For example, the US and the UK, among other countries, have significantly cut their official development assistance, with the US going as far as eliminating USAid, its main aid agency. US President Donald Trump's administration also pulled out of FfD4 and has given mixed signals on his participation in the G20 summit in November. He has even opposed the theme for South Africa's G20 presidency – Solidarity, Equality, Sustainability. These developments aggravate Africa's development challenges. Currently, Africa has an annual financing gap of around $900-billion to $1.3-trillion for Agenda 2063 and the SDGs. While domestic resources should be the major source of each country's financing for these needs, they are unlikely to be enough in the short to medium term. Unfortunately, the amount of funding from official sources such as donor governments and the multilateral development banks (MDBs) will not be sufficient to plug this hole. Therefore, African countries may be forced to resort to international capital markets to fill the gap in their development financing needs. The financing these markets offer is expensive, involves exchange rate risks and is pro-cyclical. In addition, evidence suggests that African countries are charged much higher interest rates than countries in other regions with comparable credit ratings. The resulting 'African premium' costs African countries $74.5-billion per year in excess interest payments, according to a UNDP report. The reasons for this premium are still up for debate. It has been attributed to credit rating bias, lack of quality data, a lack of sound fiscal and public finance management by African governments, and to the fact that many African countries are new to international markets, having only started issuing international bonds between 2007 and 2020. Meanwhile, as African countries continue to deal with these tough conditions on the international capital markets, efforts to address their existing debt burden remain painfully slow. The current approach to sovereign debt restructuring uses the common framework developed by the G20 to deal with the obligations to all official and commercial creditors of low-income countries. Unfortunately, this framework has failed to deliver adequate outcomes for African countries. South Africa's G20 presidency provides the next opportunity to address this challenge. As South Africa commences the last half of its G20 Presidency, we suggest that it prioritise the following issues on the development finance agenda: South Africa must champion the Borrowers' Forum This forum, promoted in the outcome document from FfD4, would facilitate the exchange of ideas, information and peer learning among sovereign borrowers. If supported by a permanent secretariat, as proposed in the Report of the UNSG's Expert Group on Debt, the forum could become the repository of information about sovereign borrowing and the source of technical support and capacity building for debtor countries. South Africa should advocate for the G20 to actively support the creation of the forum as soon as possible. It should also work with the African Union and African G20 guest countries to take the first actions to operationalise a regional borrowers forum in Africa. Improving sovereign debt architecture South Africa, as co-chair of the Global Sovereign Debt Roundtable (GSDR), must use it as a tool to promote the improvement of the sovereign debt architecture. The FfD4 Compromiso calls for the creation of a working group to propose a set of principles for responsible sovereign borrowing and lending that can make sovereign debt transactions and the international debt architecture more effective, efficient and more supportive of optimal development outcomes. The GSDR was established as an informal G20-linked forum, chaired by the G20 presidency, the IMF and the World Bank. It brings together a diverse array of creditors, debtors and other stakeholders to discuss how to make the sovereign debt process work better for all stakeholders. South Africa should convene a meeting of the GSDR to begin discussing the framework for promoting responsible sovereign borrowing and lending, including the planning and management of such transactions and their outcomes. Panel of technical experts South Africa must advocate for the G20 to appoint a panel of technical experts to study the barriers to affordable, adequate and predictable flows of development finance to African sovereigns and make recommendations on what the G20 can do to remedy this situation. This can complement the work of the African Experts Panel, which has a broader mandate of 'exploring and defining strategies that advance Africa's collective developmental interests'. South Africa's G20 presidency should not be the end of this year's advocacy for a new and more developmentally responsible debt architecture. These actions should also be promoted at the World Social Summit and the COP30 in Brazil. DM Daniel D Bradlow is a part-time G20 Senior Fellow at the South African Institute of International Affairs (SAIIA), where his research focuses on the finance track of the G20 and related Think20 issues.
Scoop
03-07-2025
- Business
- Scoop
Fourth International Conference On Financing For Development Delivers Renewed Hope & Action For Sustainable Development
The Sevilla Commitment and Platform for Action advance concrete strategic steps to fulfill the promise of the Sustainable Development Goals and chart a path for a fairer shared future, reaffirming the role of global cooperation Sevilla, Spain, 3 July 2025 - The Fourth International Conference on Financing for Development concluded today in Sevilla, Spain, with 130 initiatives turning the Sevilla Commitment or Compromiso de Sevilla into action through concrete steps to boost investment in sustainable development, address the debt crisis afflicting many of the world's poorest countries, and give developing countries a stronger voice in the international financing architecture. 'The human consequences of rising debt burdens, escalating trade tensions and steep cuts to official development assistance have been brought into sharp relief this week,' the United Nations Deputy Secretary-General Amina Mohammed said in closing remarks. 'Yet, against this sobering backdrop, the Sevilla conference delivered a strong response—a unifying outcome document focused on solutions that reaffirms the Addis Ababa commitments made a decade ago, renews hope through the SDGs, and shows that multilateral cooperation still matters and still works. 'Let FFD4 be remembered as a conference where the world chose cooperation over fragmentation, unity over division and action over inertia.' 'Sevilla will be remembered not as a landing zone, but as a launchpad for action, to improve livelihoods across the world. Together, we have sent a strong message of commitment and trust in multilateralism that can yield tangible results to put sustainable development back on track,' said Carlos Cuerpo, Spain's Economy Minister, at the closing press conference. 'This Conference has proven that the United Nations is more than just a space for dialogue; it is a powerful platform for solutions that transform lives,' said Li Junhua, United Nations Under-Secretary-General for Economic and Social Affairs and Secretary-General of the Conference. 'In Sevilla, we have demonstrated our collective will to confront the most urgent and complex financing challenges of our time. The Compromiso de Sevilla stands as a testament to our sense of resolve, outlining the commitments, solutions, and actions to put us back on track to achieve the Sustainable Development Goals.' The Sevilla Commitment, adopted by consensus at the start of the Conference, lays out a path to close the $4 trillion annual SDG financing gap in developing countries. It is the first inter-governmentally agreed financing for development framework since 2015, and a rallying call to overhaul a system that is failing billions of people and pushing global goals further out of reach. At a time of rising debt, declining investment, shrinking aid and escalating trade tensions, sustainable development faces unprecedented headwinds. The consequences are stark: 3 billion people live in countries that spend more on interest payments than on health or education. With five years left to achieve the SDGs in increasingly uncertain times, the Sevilla Commitment charts a path on three fronts: Catalyzing investment at scale for sustainable development Addressing the debt and development crisis Reforming the international financial architecture Sevilla Platform for Action Under the Sevilla Platform for Action, 130 initiatives were launched over the course of four days of the Conference to begin implementing the Sevilla Commitment. Initiatives focused on boosting public and private investment for sustainable development, including actions to strengthen tax systems and domestic resource mobilization. New financing mechanisms were announced to tackle unsustainable debt burdens, and additional initiatives aimed to enhance crisis response and climate resilience, expand access to social protection and support local and digital economies, among others. Initiative highlights include: To address debt challenges: A Debt Swaps for Development Hub, led by Spain and the World Bank, to strengthen capacity and enhance collaboration to scale up debt swaps and lower debt service burdens; A Debt-for-Development Swap Programme by Italy that will convert 230 million Euros of debt obligations of African countries into investments in development projects; A Debt 'Pause Clause' Alliance where a coalition of countries and Multilateral Development Banks (Canada, France, Spain, UK, the Inter-American Development Bank, European Investment Bank, African Development Bank Group, Asian Development Bank and Development Bank of Latin America and the Caribbean) commit to including 'pause clauses' in their lending, to suspend debt service payments during crises; A Sevilla Forum on Debt to help countries learn from one another and coordinate their approaches in debt management and restructuring, with a UN entity serving as its secretariat, with support from Spain. To catalyze investment with development impact: To raise new revenue, a Coalition for Global Solidarity Levies, led by France, Kenya and Barbados, supported by Benin, Somalia, Zambia and Spain, to tax premium-class flying and private jets in a bid to raise funds for climate action and sustainable development; A blended finance platform, SCALED, to scale up blended financing, led by a coalition of countries (Germany, Canada, France, UK, Denmark, and South Africa) and financial institutions (including Allianz, AXA SA, Caisse de dépôt et placement du Québec, and Zurich Insurance Group) to support efforts to create effective and replicable, scalable blended finance instruments and funds with development impact; To increase local currency lending, FX EDGE, a new Multilateral Development Bank toolbox for FX-risk management instruments, led by the Inter-American Development Bank, and Delta, a liquidity platform by the European Bank for Reconstruction and Development to help development finance institutions provide local currency lending; An Effective Taxation of High-Net-Worth Individuals initiative, led by Brazil and Spain, to ensure high-net-worth individuals pay their fair share. A Technical Assistance Hub by public development banks, led by the Finance in Common Secretariat and the International Development Finance Club, and a pooled Multilateral Development Bank Technical Assistance Platform for project preparation, led by the Asian Infrastructure Investment Bank. To support architecture reform at national and global levels: A new generation of country-owned platforms with country-led financing strategies, led by a coalition of countries (including South Africa and Egypt), the Integrated National Financing Framework Facility and development banks, in support of national plans and strategies. A coalition led by the UK and the Bridgetown Initiative to scale-up pre-arranged financing from 2 per cent to 20 per cent of total disaster financing by 2035. International Business Forum At the International Business Forum, taking place in parallel to the Conference, global business leaders issued a strong call to action to unlock private capital for sustainable development, outlining five priority areas for impact investment in a Communiqué launched alongside the Sevilla Commitment. For the first time, major business groups and investor alliances coordinated efforts through the FFD4 Business Steering Committee, underscoring private sector commitment. The Forum showcased practical ways to shift capital toward the SDGs, particularly in developing countries, through high level policy dialogues, sessions on innovations, best practices, and focused roundtables. In addition, over $5 billion in projects were pitched by developing countries to investors and development financiers at the SDG Investment Fair. About the Conference Building on the foundations laid by the Monterrey Consensus (2002), Doha Declaration (2008), and Addis Ababa Action Agenda (2015), as well as the Pact for the Future adopted at the UN last September, the Fourth International Conference on Financing for Development (FFD4), took place in Sevilla, Spain, from 30 June to 3 July 2025. The Conference brought together over 15,000 participants, including nearly 50 Heads of State and Government, and featured more than 470 side and special events, alongside flagship sessions such as the International Business Forum, SDG Investment Fair, and a series of announcements under the Sevilla Platform for Action.
Bangkok Post
02-07-2025
- Business
- Bangkok Post
Resetting development finance
At the Fourth International Conference on Financing for Development this week in Seville, delegates are calling for urgent action to fix a system that has stopped working. Prior to the third such gathering a decade ago, in Ethiopia, we had witnessed unprecedented advances towards reducing poverty, increasing school enrolment, and providing clean water worldwide. Today, however, progress is not only slowing but potentially stagnating -- or, worse, reversing. Global growth this year is expected to slow to its lowest rate (outside of a crisis) since 2008. The outlook is especially problematic for developing countries that are already growing well below historical averages, and for those 35 countries, mostly in Africa, that are already in or at high risk of debt distress. One out of every three countries now spends more repaying creditors than on health or education. As debt payments crowd out money needed for development, these countries' futures are being jeopardised. Meanwhile, the global gap between the richest and the poorest continues to grow, with Oxfam estimating that the new wealth of the top 1% surged by more than US$33.9 trillion since 2015 -- enough to end poverty 22 times over. The situation won't change unless there are greater flows of finance to developing countries. Moreover, quality matters as much as the quantity: There has been far too much finance of the kind that leads to financial distress, and far too little of the kind that promotes sustained growth. We believe that finance for development is too important not to involve every stakeholder. As the late Pope Francis emphasised, doing so is a moral obligation. That is the message of the Vatican's new Jubilee Report on debt, reflecting the work of a global commission of experts -- which one of us (Stiglitz) chaired. But fixing development finance is also a matter of self-interest for most advanced economies. After all, poverty and inequality give rise to social tension, diseases, and conflicts, with spillovers that do not respect national boundaries. Moreover, a lack of finance in developing countries implies a lack of investment in climate-change mitigation, a global public good that is necessary for everyone's future prosperity. With the world so divided, and so afflicted by the exercise of raw power and by short-term thinking, the Seville conference should be seen as an opportunity to renew multilateralism for the common good. But it will need to be more than just an exercise in speech-making about the hope of a better future. Such rhetoric must be translated into tangible progress, and there are some signs that this could happen. The outcome document, the "Compromiso de Sevilla", forged at the United Nations in New York, gives us confidence that this gathering will lay the foundation for a new debt and financial architecture. Specifically, Spain has launched the Sevilla Platform for Action, providing a comprehensive framework for coalitions of the willing to advance ambitious, but feasible, initiatives that will drive material progress in addressing challenges related to sustainable development. For example, we should see the launch of a Global Hub for Debt Swaps to generate more fiscal space for investment in sustainable growth; a Debt Pause Clause Alliance, to ease pressure on vulnerable countries' budgets when they are squeezed by extraordinary events; a broad push to re-channel International Monetary Fund special drawing rights (SDRs) -- the IMF's global reserve asset, held mostly by wealthy countries -- towards more effective uses; steps to strengthen the voices of debtor countries through a borrower-country platform; and the start of an intergovernmental process on debt restructuring at the UN, following principles that were already agreed by an overwhelming majority of member states a decade ago. These steps represent just the start. In time, the Seville conference could be remembered not as a landing zone, but as a launchpad for further action. But for that to happen, we must continue to push for more ambitious, yet feasible, solutions. For example, creating a Jubilee Fund with $100 billion (3.25 trillion baht) worth of untapped SDRs for debt buybacks would provide the most vulnerable countries with resources that they desperately need to promote sustainable growth. Equally, one can imagine broader frameworks for debt-for-nature and debt-for-development swaps, as well as new and fairer green trade and investment agreements that enhance domestic resources and facilitate developing countries' participation in the global effort to address climate change. Seville represents an opportunity to look at finance and send a message of commitment to multilateralism. We remain optimistic, because we believe in the power of pragmatism. By focusing on workable solutions that go beyond the text of whatever agreement emerges, we can finally put development back on track. ©2025 Project Syndicate 1995–2025
Scoop
02-07-2025
- Business
- Scoop
Drowning In Debt: New Forum In Sevilla Offers Borrowers Chance To Rebalance The Books
2 July 2025 The Borrowers' Forum is being hailed as a milestone in efforts to reform the international debt architecture, supported by the UN and emerging as a key part of the Sevilla Commitment outcome document. 'This is not just talk - this is execution,' said Egypt's Minister of Planning and Economic Development, Dr Rania Al-Mashat. ' The Borrowers' Forum is a real plan, driven by countries, to create a shared voice and strategy in confronting debt challenges.' Rebeca Grynspan, Secretary-General of UN Trade and Development (UNCTAD), said developing nations often face creditors as a united bloc while negotiating alone. 'Voice is not just the ability to speak — it's the power to shape outcomes. Today, 3.4 billion people live in countries that pay more in debt service than they do on health or education.' The forum – one of 11 recommendations by the UN Secretary-General's Expert Group on Debt – will allow countries to share experiences, receive technical and legal advice, promote responsible lending and borrowing standards, and build collective negotiating strength. Its launch addresses long-standing calls from the Global South for more inclusive decision-making in a debt system dominated by creditor interests. 'Silent but urgent' Zambia's Foreign Minister, Mulambo Haimbe, told journalists the initiative would foster 'long-term partnerships, mutual respect and shared responsibility' and expressed his country's willingness to host an early meeting. Spain's Finance Minister Carlos Cuerpo described the current debt crisis as 'silent but urgent,' and called the Forum a 'Sevilla moment' to match the Paris Club of creditors, created nearly 70 years ago. UN Special Envoy on financing the 2030 Agenda Mahmoud Mohieldin said the forum was a direct response to a system that has kept debtor countries isolated for too long. ' This is about voice, about fairness – and about preventing the next debt crisis before it begins.' The launch comes at a time of rising debt distress across the developing world. The commitment – known in Spanish as the Compromiso de Sevilla – adopted by consensus at the conference, includes a cluster of commitments on sovereign debt reform. Alongside support for borrower-led initiatives, it calls for enhanced debt transparency, improved coordination among creditors, and the exploration of a multilateral legal framework for debt restructuring. It also endorses country-led debt sustainability strategies, debt payment suspension clauses for climate-vulnerable nations, and greater support for debt-for-nature and debt-for-climate swaps – albeit with stronger safeguards and evidence of impact. Frustration over 'missed opportunity' to tackle debt crisis Civil society groups on Wednesday sharply criticised the adopted outcome in Sevilla, calling it a missed opportunity to deliver meaningful reform of a global debt system that is crippling many developing nations. Speaking at a press briefing inside the conference, Jason Braganza of the African Forum and Network on Debt and Development (AFRODAD) said the final outcome document adopted on day one – the Sevilla Agreement – fell far short of what was needed. ' This document did not start with much ambition and still managed to be watered down,' he said. 'Nearly half of African countries are facing a debt crisis. Instead of investing in health, education and clean water, they're paying creditors.' Mr. Braganza praised the leadership of the African Group and the Alliance of Small Island States, which fought for a UN Framework Convention on sovereign debt. 'False solutions' Although that ambition was not fully realised, he welcomed a small breakthrough in the form of a new intergovernmental process that could lay the groundwork for future reform. Civil society leaders also warned of the dangers of so-called 'debt-for-climate swaps', with Mr. Braganza calling them 'false solutions' that fail to provide genuine fiscal space for developing nations. Tove Ryding of the European Network on Debt and Development (Eurodad) echoed those concerns, saying: 'We are told there's no money to fight poverty or climate change — but there is. The problem is economic injustice. And the outcome of this conference reflects business as usual.' She highlighted the progress made on a new UN Tax Convention as proof that determined countries can bring about real change, adding: 'If only we had a tax dollar for every time we were told this day would never come.' Commitment bears fruit for public health To help close gaps in access to public services and policies, and to address healthcare cuts that could cost thousands of lives, Spain on Wednesday launched the Global Health Action Initiative aimed at revitalising the entire global health ecosystem. The initiative, which will channel €315 million into the global health system between 2025 and 2027, is supported by leading multilateral health organisations and more than 10 countries. Raising prices, saving lives Later at the conference, the UN health agency unveiled a new drive to help countries tackle chronic disease and raise vital funds by increasing taxes on tobacco, alcohol, and sugary drinks. The 3 by 35 Initiative urges governments to boost the real prices of these products by at least 50 per cent by 2035. ' Health taxes are one of the most efficient tools we have,' said Dr. Jeremy Farrar, WHO Assistant Director-General. ' They cut the consumption of harmful products and create revenue governments can reinvest in health care, education, and social protection.' Noncommunicable diseases like heart disease, cancer, and diabetes now account for more than three-quarters of all deaths worldwide. WHO says a one-time 50 per cent price rise could prevent 50 million premature deaths over the next 50 years, while generating $1 trillion in public revenue. Between 2012 and 2022, nearly 140 countries raised tobacco taxes, proving such change is both possible and effective.
The Independent
02-07-2025
- Business
- The Independent
Critics question UK's foreign aid commitment at UN conference
The UK is being accused of hypocrisy for its low-level participation and significant aid budget cuts at the fourth Financing for Development Conference (FfD4) in Seville. Critics say that the UK sending only a government minister, Baroness Chapman, while 50 world leaders attended, signals a lack of commitment to global development finance. The UK's foreign aid budget has been cut from 0.5 per cent to 0.3 per cent of Gross National Income, expected to reduce aid by £6.2 billion by 2025, drawing widespread condemnation. Development organisations argue these cuts undermine the UK's credibility and ability to address critical issues like debt, climate change, and humanitarian crises in developing nations. Despite the criticism, the conference's final agreement, the "Compromiso de Sevilla", includes positive language on international tax cooperation and an intergovernmental process on debt.
