To address sustainable development goals, there is an urgent need to address USD 4 tn financing gap: FM Nirmala Sitharaman
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o accelerate progress on Sustainable Development Goals (SDGs) and address the pressing challenges faced by developing economies, Finance Minister Nirmala Sitharaman emphasized the urgent need to bridge the USD 4 trillion financing gap, at the 3rd Voice of Global South Summit on Saturday.
Sitharaman said, "To accelerate progress on SDGs, there is an urgent need to address the USD 4 trillion financing gap."
Addressing an audience of international delegates and global leaders, Sitharaman highlighted the critical issues facing developing economies and proposed collaborative strategies to bridge the financing gap essential for achieving Sustainable Development Goals (SDGs).
She said, "The World Bank's June 2024 report states that by the end of this year, one in four developing economies will be poorer than they were before the pandemic. Growth thus remains insufficient to drive progress in development and poverty reduction."
The Finance Minister pointed out that the implementation of many SDGs in developing economies has stagnated, with some indicators even regressing.
"Recent reports reveal that the implementation of many SDGs in developing economies is stagnating, with some indicators even regressing. The SDG financing gap is estimated at 4 trillion us dollars annually for developing countries. The Global South is disproportionately affected by global uncertainties," Sitharaman said.
Research shows that developing countries require approximately USD 6 trillion by 2030 to meet just half of their existing climate targets.
"Developing countries continue to face significant shortfalls in climate financing. Research indicates that developing countries require approximately 6 trillion US dollars by 2030 to achieve just half of the existing nationally determined contribution targets," Sitharaman noted.
She called for pragmatic actions and suggestions to address this issue and accelerate financial inclusion.
Sitharaman emphasized the importance of financial inclusion, citing that around 1.4 billion adults worldwide remain financially excluded, with half residing in emerging markets and developing economies. India's approach to last-mile financial inclusion has demonstrated its potential to significantly impact the achievement of at least seven SDGs.
"G20 leaders in 2023 endorsed policy recommendations for advancing financial inclusion and productivity gains through digital public infrastructure," she said.
India's commitment to global financial inclusion was highlighted by the announcement of a social impact fund to accelerate digital public infrastructure (DPI) implementation in the Global South.
Sitharaman said, "The current level of financing falls far short of the climate adaptation needs of developing countries expected to reach USD 500 billion by 2050, 5 to 10 times greater than the current funding levels."
She revealed, "In 2023, India committed 2 million US dollars towards the African Development Financial Inclusion Facility. Recently, India has further committed a grant of about USUSD 6 million for a five-year period, which will support activities related to the African Development Financial Inclusion Facility, along with capacity building, knowledge sharing, infrastructure development, and technical assistance in the preparation of feasibility studies among others it is encouraging to see that Jordan, Rwanda, the Philippines, Indonesia, Ghana, and Colombia have advanced their financial inclusion efforts.."
She acknowledged the progress made by countries such as Jordan, Rwanda, the Philippines, Indonesia, Ghana, and Colombia in advancing financial inclusion. Sitharaman encouraged further collaboration and shared best practices to maximize collective impact.
"Growth remains the best antidote to many economic and social challenges. Growth creates a positive feedback, loop where improved economic performance leads to greater financial opportunities and vice versa", she urged.
Drawing attention to the increasing influence of the Global South in international negotiations, Sitharaman referenced the G20 New Delhi Leaders Declaration and the BRICS Leaders Johannesburg Declaration.
"The inclusion of the African Union as a permanent member of the G20 and the addition of six emerging markets and developing economies to the BRICS group has improved the representation, bringing much-needed attention to the unique challenges of the Global South," she said.
The Finance Minister stressed the need to maintain this momentum and further enhance South-South cooperation.
"India remains committed to ensuring that the Global South takes on a larger role in shaping global development governance," she affirmed.
Sitharaman also outlined high-priority aspects of the Multilateral Development Banks (MDB) reform agenda, including speed and agility in financing requests, fresh capital infusion, and increased private capital mobilization.
Highlighting the challenges of elevated debt distress and high debt service costs, Sitharaman emphasized the need for effective debt relief and liquidity support mechanisms.
"Nearly half of the world's population resides in countries where interest expenses exceed spending on education and health," Sitharaman said.
✔️ To address sustainable development goals, there is an urgent need to address USD 4 tn financing gap: FM Nirmala Sitharaman
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