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• In meeting these commitments, our report suggests that the level of concessionality of flows should be matched with the type of investment and level of development of a country. Basic public services would be sufficiently supported in those countries most in need, while assistance would still be available for infrastructure projects, climate financing, and other areas of need. The report underlines the importance of increasing the effectiveness of development cooperation, including for example by reducing the fragmentation of the aid landscape.
• The report explores the potential of innovative financing measures to contribute to sustainable development. It also explores South-South cooperation as a complement to traditional development financing.
International private finance • There is an important role for international private finance. Policies are needed to overcome obstacles to private investment, including by long-term institutional investors such as pension funds and sovereign wealth funds, while addressing risks associated with some types of private flows.
• Private capital flows should be managed in a way that encourages long-term investment. Public policies could encourage this. The report stresses the importance of managing volatile capital flows as well as the need for greater international coordination to better manage global liquidity.
• The Committee calls for private financing to be channeled towards long-term investment in sustainable development. It also recommends that investors meet core labor standards of the International xii Report of the Intergovernmental Committee of Experts on Sustainable Development Financing
The global partnership for sustainable development As a third and equally important pillar, the report suggests areas for advancement of the global partnership for sustainable development and for addressing systemic issues. This pertains to actions in the areas of global economic governance, trade and investment regimes that are fair and more supportive of sustainable development, a stable international financial system, regulatory reform, enhanced international cooperation on taxes and the fight against illicit flows, strengthened sovereign debt crisis prevention and resolution, regional cooperation, harmonized monitoring and accounting and more effective development cooperation.
To strengthen systemic coherence and global economic governance, the United Nations can serve as the global forum to bring the specialized international institutions and authorities together without challenging their respective mandates and governance processes. There is also a need within the UN system to reinforce the coherence of financing frameworks that developed out of two major strands of development debate — the Post-Monterrey and the Post-Rio+20 means of implementation. More broadly, there is a need to strengthen the integration and harmonization of existing United Nations international mechanisms, frameworks and instruments.
The report calls for strengthened tax cooperation through automatic exchange of information, country-based reporting, transfer pricing regulations, lists of tax havens and standards for non-economic reporting. To this end, a participatory and broad based dialogue on international cooperation in tax matters xiii Co-Chairs’ Summary should be strengthened. In the fight against illicit flows, both domestic actions aimed at minimizing the flow of funds to secrecy jurisdictions and international cooperation to increase financial transparency are called for.
Among other measures, the Committee also highlights the severe impact of sovereign debt crises on nations’ efforts to finance sustainable development as well as on stability of the international financial system. It calls for effective debt management to prevent crises, and stresses the need for the international community to continue efforts to enhance the existing architecture for sovereign debt restructuring.
Way forward We trust that the multitude of policy options presented in the following pages, the strategic approach that our work is based upon, and the recommendations for a strengthened global partnership for sustainable development will provide a basis for future discussions on financing sustainable development and will inform, together with the report of the Open Working Group, the intergovernmental negotiations for the post-2015 development agenda and the third International Conference on Financing for Development.
At the United Nations Conference on Sustainable Development (Rio+20), the international community agreed to undertake a major effort to promote sustainable development globally and in every nation, and free humanity from poverty and hunger. Member States also agreed to establish the Intergovernmental Committee of Experts on Sustainable Development Financing and tasked us with developing options for a sustainable development financing strategy to facilitate the mobilization of resources and their effective use in achieving sustainable development objectives.2 At Rio+20, Member States reaffirmed all the principles of the Rio Declaration on Environment and Development, including, inter alia, the principle of common but differentiated responsibilities, as set out in principle 7 thereof.
Our work has been rooted in the principles expressed in the Rio+20 outcome document and in the universal values expressed in the United Nations Millennium Declaration,3 noting that peaceful and inclusive societies, gender equality and human rights for all, including the right to development, are strong enablers for sustainable development. Eradicating poverty is the greatest global challenge facing the world today and an indispensable requirement for sustainable development.
The Monterrey Consensus of the International Conference on Financing for Development,4 held in 2002, provided a basis for our analysis, with its emphasis on the use of all forms of financing, including public, private, domestic and international in a holistic manner, as well as its recognition that each country has primary responsibility for its own development, while the global community is responsible for an enabling international environment. However, we also recognized the need to update this framework to meet the challenges of the post-2015 development agenda.
In this regard, we were mindful of the work of the Open Working Group on Sustainable Development Goals, and guided by the resolve of Member States that the post-2015 development agenda should reinforce the commitment of the international community to sustainable development based on a coherent approach that integrates its economic, social, and environmental dimensions.
This approach involves working towards a set of global goals, universal in nature and applicable to all countries, while taking account of differing national circumstances and respecting national policies and priorities.
Building on the modalities and spirit that led to the Rio Declaration and the Monterrey Consensus, we consulted widely with a range of stakeholders, This report is published as a document of the sixty-ninth session of the General Assembly (A/69/315). The official document contains minor editorial differences due to editing rules of the United Nations.
See Conference outcome document, General Assembly resolution 66/288, annex.
2 General Assembly resolution 55/2.
3 Report of the International Conference on Financing for Development, Monterrey, Mexico, 4 18-22 March 2002 (United Nations publication, Sales No. E.02.II.A.7), chap. 1, resolution 1, annex.
2 Report of the Intergovernmental Committee of Experts on Sustainable Development Financing including civil society, the business sector, and other major groups. This outreach was integral to our work and included multi-stakeholder consultations, regional meetings, and calls for contributions on our website. We are grateful for all the inputs we received.
We began our analysis by assessing sustainable development financing needs, current financing flows and potential sources of financing. We found that needs are huge and the challenges in meeting them are enormous — but surmountable. Indeed, global public and private savings would be sufficient to meet the needs. Yet it is clear that current financing and investment patterns will not deliver sustainable development. In particular, expected returns on investments associated with sustainable development are often not as attractive as other opportunities, especially in the near term. At the same time, there are many competing demands on public resources, and governments have not been able to mobilize adequate public financing to undertake necessary investments that profit-seeking investors eschew.
The solution includes better aligning private incentives with public goals and creating a policy framework that encourages for-profit investment in these areas, while also mobilizing public resources for essential sustainable development activities. The quality of finance also matters. Efforts to reduce corruption and to adopt more economically and socially effective public sector policies are thus important. Policies and incentives should also aim to better match investor preference with investment needs, so that, for example, long-term sustainable development needs are not financed with short-term funds.
Our work concludes that there is no one simple policy solution. Instead, a basket of policy measures will be necessary, encompassing a toolkit of policy options, regulations, institutions, programmes and instruments, from which Governments can choose appropriate policy combinations. We recommend a cohesive approach, with national financing strategies as an integral part of national sustainable development strategies. While the design and implementation of policies will be at the national level, achieving sustainable development will require international support and cooperation. Our approach is based on the principle of country ownership, supported by a strengthened global partnership for sustainable development. We find that a concerted effort that draws on all actors and mobilizes all resources in an integrated manner, while maximizing their impact, will allow us to finance the investments necessary to achieve sustainable development for all.
We begin the analytical section of our report with a discussion of financing needs and recent trends in financing flows. We then present a “strategic approach” derived from an analysis of the flow of funds from sources to uses. The bulk of our report (section IV) considers policy options to strengthen the four basic categories of financial resource mobilization available for financing sustainable development, namely, domestic public, domestic private, international public and international private finance, with an additional focus on means for blending official and private resources and collaboration between various actors. Throughout this section, we emphasize the interplay of the different types of financing and their potential synergies. In section V, we address international policy imperatives for a strong international economic environment and its governance, fully aware that fractures in the global economic architecture will undermine the global project to deliver sustainable development. It concludes with a discussion of options for the way forward.
II. The global context A. A changing global context Since the adoption of the Millennium Declaration in 2000, many developing countries have experienced significantly faster economic growth than developed economies. For example, between 2005 and 2012, gross domestic product (GDP) grew by 1.2 per cent annually in developed countries, and 6.1 per cent in developing countries5 (at constant prices), with the gap between GDP per capita of developed and developing countries narrowing (see Figure I). In this context, global poverty decreased significantly, and the world reached the poverty reduction target of Millennium Development Goal 1 five years ahead of schedule.
Several other Millennium Development Goal targets have also been met ahead of time, including access to improved drinking water, gender parity in primary education and political participation of women, while some others are on track to be met, such as the targets on fighting malaria and tuberculosis.6 Despite these achievements, there are differences between and within countries, and much unfinished business remains to realize all of the Millennium Development Goals. Close to one billion people continue to live in extreme poverty. Many live marginally above the poverty line and are vulnerable to falling back into poverty when faced with adverse shocks. This vulnerability is often associated with gender, disability, ethnicity, indigenity and geographic location.
Additional development challenges include growing unemployment, particularly among youths, as well as challenges associated with growth of cities.
Insufficient progress is related to several factors, including disparities in growth rates across regions and rising inequalities. While the narrowing of the GDP per capita gap between developed and developing countries reflects impressive gains in East Asia as well as emerging and developing Europe, some countries have not yet recovered from weak growth in the 1980s and 1990s, despite improvements since 2000. Indeed, the gap between GDP per capita of Latin America, sub-Saharan Africa, and the Middle East and North Africa and that of the developed countries is greater today than it was more than 30 years ago (see Figure I). Productivity growth in some developing and emerging economies remains too slow to significantly reduce the gap with developed countries.7 At the same time, income inequalities within many countries have increased, and social inequalities and inequalities of opportunity also remain high. There are exceptions, though; for example, income inequality has fallen in At constant prices; see World Economic Situation and Prospects 2014 (United Nations 5 publication, Sales No. E.14.II.C.2).
See The Millennium Development Goals Report 2014 (United Nations, New York, 2014).
6 Organization for Economic Cooperation and Development (OECD), Perspectives on 7 Global Development 2014: Boosting Productivity to Meet the Middle-Income Challenge (Paris, OECD Publishing, 2014).
4 Report of the Intergovernmental Committee of Experts on Sustainable Development Financing
on the effective use of resources. Estimates of financing needs thus vary widely.