Asha­ki Good­win

and Dr Gene Leon

The Fourth In­ter­na­tion­al Con­fer­ence on Fi­nanc­ing for De­vel­op­ment (FFD4) from June 30 to Ju­ly 3, in Spain, ar­rives at a mo­ment of reck­on­ing.

For high­ly vul­ner­a­ble and low–re­silience de­vel­op­ing coun­tries, it rep­re­sents a long–over­due op­por­tu­ni­ty to cor­rect sys­temic im­bal­ances in glob­al fi­nance that have left many na­tions trapped in cy­cles of debt, un­der­de­vel­op­ment, and cli­mate–in­duced cri­sis.

Coun­tries are re­port­ing growth in GDP while con­cur­rent­ly the plan­et has blown through six of nine plan­e­tary bound­aries need­ed for keep­ing the plan­et hab­it­able.

Around 700 mil­lion peo­ple live be­low the pover­ty lev­el, while Ox­fam notes the wealth of the rich­est one per cent grows ex­po­nen­tial­ly, cap­tur­ing over 6 per cent of all new wealth cre­at­ed. The vol­ume and pre­dictabil­i­ty of of­fi­cial de­vel­op­ment as­sis­tance (ODA) is be­ing re­duced, while vul­ner­a­ble coun­tries with few­er re­sources and lim­it­ed voice in glob­al de­ci­sion mak­ing are be­ing asked to adapt to a world they did lit­tle to cre­ate.

Mul­ti­lat­er­al­ism is erod­ing, while many be­lieve on­ly a joint mul­ti­lat­er­al ef­fort can solve our glob­al prob­lem. In­deed, the con­flu­ence of these out­comes ques­tions the ad­e­qua­cy of cur­rent fi­nan­cial and pol­i­cy norms.

Plan­e­tary eco­log­i­cal sta­bil­i­ty re­quires a sys­tems con­trol frame­work that pro­motes joint re­spon­si­bil­i­ty for the fu­ture of hu­man civil­i­sa­tion.

Yet, the in­ter­na­tion­al com­mu­ni­ty has not yet ac­knowl­edged a lim­it­ing asym­me­try in glob­al and na­tion­al af­fairs; while we ex­pe­ri­ence shocks at the sys­tem–wide lev­el, we re­spond to these shocks at a frag­ment­ed and cir­cum­scribed lev­el, con­strain­ing im­pact of poli­cies to a par­tial so­lu­tion.

FFD4 must con­front this by of­fer­ing a plat­form for a sys­tems–based so­cial con­tract on de­vel­op­ment fi­nance root­ed in eq­ui­ty, re­silience, and in­clu­sion.

For low–re­silience de­vel­op­ing economies, es­pe­cial­ly Small Is­land De­vel­op­ing States (SIDS), FFD4 must of­fer big­ger, bold­er, ac­tion­able promis­es. For these coun­tries, sus­tain­able growth and re­silience have been con­strained by struc­tur­al vul­ner­a­bil­i­ties, dis­pro­por­tion­ate ex­po­sure to cli­mate shocks, lim­it­ed ac­cess to tra­di­tion­al fi­nan­cial mar­kets, and in­ad­e­quate pri­or­i­ti­za­tion of spe­cif­ic chal­lenges with­in the glob­al fi­nan­cial sys­tem.

To ad­dress these is­sues, FFD4 needs to af­fect sub­stan­tial re­form of the glob­al fi­nan­cial ar­chi­tec­ture and prac­ti­cal com­mit­ments for en­hanc­ing re­silience. This re­quires a sys­tems so­lu­tion to a sys­tem–wide re­al­i­ty: do­ing more with what ex­ists (im­pact ef­fi­cien­cy of re­sources—piv­ot­ing from grey to low­er–cost, na­ture–pos­i­tive in­fra­struc­ture), aug­ment­ing re­sources (in­cor­po­rat­ing a new nat­ur­al as­set class), and en­hanc­ing op­er­a­tional func­tion­ing (im­prov­ing in­sti­tu­tion­al gov­er­nance and util­is­ing evolv­ing tech­nolo­gies to im­prove ef­fi­cien­cy per unit cost).

De­vel­op­ing coun­tries seek a gen­uine com­mit­ment to fi­nan­cial re­form that goes be­yond rhetoric and en­trenched in­ter­ests. Calls for re­struc­tur­ing debt man­age­ment mech­a­nisms and im­prov­ing ac­cess to con­ces­sion­al fi­nance must in­te­grate re­silience met­rics in­to fi­nanc­ing cri­te­ria.

Re­al re­form in­cludes:

Chang­ing the cri­te­ria used by in­ter­na­tion­al fi­nan­cial in­sti­tu­tions to en­sure they ac­cu­rate­ly re­flect a coun­try’s vul­ner­a­bil­i­ties (longer in­vest­ment hori­zons, sys­tem- and out­come-based risk pro­fil­ing);

En­do­genis­ing de­vel­op­ment ca­pac­i­ty (re­duc­ing de­pen­den­cy and en­hanc­ing em­pow­er­ment through in­no­va­tion);

Re­vis­ing the foun­da­tions of debt sus­tain­abil­i­ty analy­sis to go be­yond GDP, quan­ti­fy eco­log­i­cal costs of in­vest­ments, and sep­a­rate mea­sures that ame­lio­rate the bur­den of lega­cy debt from mea­sures for new debt flows that in­cen­tivise eco­log­i­cal– and re­silience–pos­i­tive out­comes

The suc­cess of FFD4 will be mea­sured by how ef­fec­tive­ly it re­flects vul­ner­a­bil­i­ty and re­silience, pro­motes a frame­work in­cor­po­rat­ing the eco­log­i­cal–, eco­nom­ic–, and so­cial– nexus, and in­cen­tivis­es greater ac­cess to ad­e­quate and af­ford­able fi­nance.

The gap be­tween needs for adap­ta­tion and re­silience fi­nanc­ing and the avail­abil­i­ty of fi­nanc­ing is grow­ing. To adapt, FFD4 should es­tab­lish in­no­v­a­tive fi­nan­cial in­sti­tu­tions, such as the De­vel­op­ment Bank for Re­silient Pros­per­i­ty (the “Na­ture Bank”).

These in­sti­tu­tions must lever­age the val­u­a­tion of nat­ur­al as­sets and ap­ply in­no­v­a­tive fi­nanc­ing tools—state–con­tin­gent and per­for­mance–based in­stru­ments with­in cred­it–en­hance­ment and blend­ed fi­nance ap­proach­es—to scale new in­vest­ment for re­silience build­ing, fit–for–pur­pose mis­sion-ori­ent­ed in­fra­struc­ture, and es­sen­tial pub­lic ser­vices.

This re­quires re­vers­ing the en­trenched po­lit­i­cal and diplo­mat­ic in­tim­i­da­tion per­ceived by coun­tries in the Glob­al South. The un­spo­ken fear of eco­nom­ic or po­lit­i­cal back­lash for push­ing too as­sertive­ly sti­fles in­no­va­tion and dis­cour­ages the uni­fied ad­vo­ca­cy nec­es­sary for trans­for­ma­tion­al change.

The world needs prag­mat­ic, tai­lored so­lu­tions that in­cen­tivise re­silience and em­pow­er sus­tain­able de­vel­op­ment. What would this en­tail?

Clear, en­force­able com­mit­ments, such as mak­ing cli­mate–re­lat­ed pledges us­able as re­serve as­sets;

Ro­bust mon­i­tor­ing and ac­count­abil­i­ty frame­works lever­ag­ing trans­paren­cy of blockchain tech­nol­o­gy;

Re­form­ing the glob­al fi­nan­cial ar­chi­tec­ture by adopt­ing a par­a­digm shift from sur­vival mode to sus­tain­able pros­per­i­ty;

En­hanced co­or­di­na­tion among mul­ti­lat­er­al fi­nan­cial in­sti­tu­tions, na­tion­al gov­ern­ments, and the pri­vate sec­tor to en­sure a mis­sion–ori­ent­ed sys­tem fo­cus).

Such com­pre­hen­sive en­gage­ment will not on­ly mark mean­ing­ful progress but al­so re­store cred­i­bil­i­ty in in­ter­na­tion­al co­op­er­a­tion for de­vel­op­ment. Se­cur­ing com­mit­ments will re­quire bold lead­er­ship, in­no­v­a­tive think­ing, and gen­uine part­ner­ship.

The con­ver­gence of cli­mate change, geopo­lit­i­cal in­sta­bil­i­ty, and eco­nom­ic frag­men­ta­tion calls for trans­for­ma­tive, re­silience–cen­tred path­ways.

At this his­toric tip­ping point, FFD4 of­fers a rare op­por­tu­ni­ty to re­build trust, cor­rect sys­temic im­bal­ances, and cre­ate a fi­nan­cial sys­tem that is fair, re­spon­sive, and fit–for–pur­pose in an age of poly­cri­sis and ris­ing glob­al de­mands for jus­tice and eq­ui­ty.