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To know about our work on the EU’s long-term budget, engage our expertise or share your thoughts, contact Karim Karaki. For media enquiries, please contact Isabell Wutz or Virginia Mucchi.

Karim Karaki

San Bilal

Jonathan Hunter

Virginia Mucchi

Isabell Wutz

What is at stake?

The conference cannot be expected to reverse developmental backsliding – FfD4 and its predecessors are not designed to produce key binding decisions – but it is unique in joining topics typically approached in silos: for example, investment and debt. It will also steer global aspirations and expectations for the decade to come.

Most importantly, FfD4 is not only an opportunity to try and fix the system, but also to create and strengthen partnerships. It is in this context that Europe has the most opportunity to distinguish itself on key issues, including fair representation in multilateral institutions like the World Bank, reforms on fair and transparent financial regulation, and addressing the stifling global debt crisis.

Not doing so has a cost: it risks negatively impacting and further alienating partners that are essential to EU ambitions. Yet without defining clear objectives and an ambitious, unified strategy, the EU will struggle to form its alliances. So far this is missing.

ECDPM will be using the run-up to FfD4 to argue that Europe needs to define strategic objectives to strengthen alliances, address systemic issues and power imbalances and prioritise coherence, implementation and accountability. By demonstrating leadership to reinforce credibility, working closely with the African Group and promoting the role of private finance, the EU will be able to align development goals with its geostrategic objectives.

When is the Financing for Development 4 (FfD4) conference?

The major challenges to FfD4

The situation is precarious:

A growing finance gap: development needs far outstrip the supply of available development finance despite slight increases in aid as a result of conflicts, instability, debt, effects of climate change and more. 

It is getting worse: development efforts are often failing to develop, with progress towards many sustainable development goals like zero hunger reversed.

The ability of emerging markets, developing economies (EMDEs) and donor countries to pay has reduced: this has a dramatic impact on the capacities to finance development needs. In Europe, besides fiscal constraint, development cooperation competes with other priorities such as defense, strategic autonomy and migration.

Frustration from recipient countries is high due to previous failed commitments and seemingly waning interest from richer countries. As a result, the forum risks falling into irrelevancy as states disengage.

US disengagement: The halt of USAID represents both a loss of confidence in the efficacy of development aid, as well as a rejection of development funding as a whole. US disengagement in FfD4 will also impact the level of ambitions of the outcome document. Yet, the world needs to go on, whether the US is supportive or not - and this is where regions like the EU can play a role.

The FfD4 negotiations as they developed

Summarising the main points of the zero draft:

• A renewed global financing framework for sustainable development addressing the urgent need for a large-scale investment push. 
• Strengthening domestic fiscal systems and aligning them with sustainable development objectives, with international cooperation on tax and corruption.
• Engage private finance by promoting transparent and stable investment climates, and aligning private sector activities with sustainable development objectives. 
• International development cooperation to reduce fragmentation, enhance the impact and quality of South-South and triangular cooperation, and strengthen the role of multilateral development banks. 
• International trade: a universal, rules-based, non-discriminatory, transparent, open, fair, predictable, multilateral trading system with the WTO at its core. 
• Strengthen debt management and transparency, with principles on responsible sovereign lending and borrowing.
• Systemic issues need to be addressed in the international financial architecture, including global economic governance, the global financial safety net, and international financial regulation.
• Science, technology, and innovation are prioritised, with capacity building for sustainable development, bridging digital divides and promoting access for women, youth, and children.
• Data, Monitoring and Follow-up: it requests a concise set of financing indicators to measure progress and implementation.
• Meeting the needs of countries in Special Situations, e.g. African countries and small island states.

Key changes in the first draft (March 10):

• Overall, most concrete deliverables from the zero draft were retained, and some new ones added, but progress on making general political commitments actionable remains limited. The SDG financing gap is now explicitly stated as $4 trillion per year.
• The preamble was rewritten with a focus on reversing ODA reductions, more emphasis on South-South Cooperation and MDBs.
• Private Finance language was often "watered down", such as shifting from sustainability disclosure legislation to standards. 
• The Debt and Debt Sustainability chapter was edited to better reflect World Bank and IMF perspectives.

Since the first draft:

• Climate finance has emerged as a major point of contention, with a demand for additional financial commitments from developed nations for climate adaptation and mitigation, separate from existing ODA.
• Debt restructuring and relief remains a critical battleground, with some advocating for a greater role for the UN, which has been met with reservations from some developed countries who prefer to keep such discussions within existing forums like the G20 and the Paris Club.
• The role and governance of international financial institutions like the World Bank and the International Monetary Fund (IMF) are also under scrutiny. Developing countries are advocating for a greater voice and representation in the decision-making processes of these institutions, reflecting a desire to reshape the global financial architecture to be more equitable and responsive to their needs
• Civil society organizations have criticised what they perceive as a lack of ambition in addressing systemic issues and have called for greater transparency and accountability in the negotiations.

The final document is released (June 19):

The final outcome document introduces several new and strengthened commitments:

• Domestic public resources (DRM): Significant new measures include considering or increasing taxes on tobacco and alcohol and encouraging the use of AI in tax administration. A clear call is made for development partners to "collectively at least double this support to developing countries by 2030," targeting countries aiming for at least 15% tax-to-GDP ratios. The commitment to domestic beneficial ownership registries is strengthened, with exploration of a "global beneficial ownership registry." Confiscated assets are to be "used transparently," and support for establishing National Development Banks (NDBs) is affirmed.
• Domestic and international private business and finance: The document expands innovative instruments to include "sukuk" and commits to developing comprehensive risk management and insurance markets for vulnerable groups, including specific solutions for smallholder farmers, women farmers, cooperatives, and MSMEs. It highlights "pre-arranged financing" for faster response and recovery and mentions providing "incentives, guarantees and insurance" to attract FDI. Foundations and philanthropies are recognized as catalytic capital sources, and the role of Official Export Credit Agencies (ECAs) is recognized. A new action aims to eliminate "gender-based price differentiation." Credit Rating Agencies (CRAs) are encouraged to acknowledge sustainability disclosure standards.
• International development cooperation and effectiveness: committing to exploring "increasing the share of grants in ODA" and aims to "potentially tripl[e]" MDB annual lending capacity. It encourages contributing to SDR-based hybrid-capital channeling solutions by the African Development Bank and Inter-American Development Bank "ideally by the end of 2025." The document welcomes the IDA 21 replenishment and looks forward to a "robust and successful replenishment of the African Development Fund." Concrete measures include "reducing tax exemptions on government-to-government aid on a voluntary basis." It also lists key climate and biodiversity funds and welcomes the establishment of the Global Biodiversity Framework Fund and the Cali Fund.
• International trade as an engine for development: The use of local currencies in cross-border payments is acknowledged. A specific target is set to "double by 2031 from 2018 levels" aid for trade support for LDCs, with at least 50% allocated to trade-related infrastructure. The scope of trade finance facilities is expanded to include "disability-owned businesses," and the importance of "enhanced traceability, transparency and accountability along the mineral value chain" is stressed.
• Debt and debt sustainability: The World Bank is explicitly named as the host for a single global central debt data registry. The document proposes establishing a "platform for borrower countries" with a UN entity as its secretariat. Debt swaps are explicitly linked to "SDGs including for climate and nature." The establishment of the Africa Credit Rating Agency is welcomed, and a new section addresses the "high debt premium of borrowing countries, especially in Africa." CRAs are called upon to "positively reflect the long-term debt sustainability benefits of voluntary debt restructurings."
• International financial architecture and systemic issues: The document encourages the IMF to consider "increasing basic votes" and supports enhancing geographical representation in IMF senior management, "particularly for developing countries, including in the potential future creation of an additional IMF Deputy Managing Director." There's a strong commitment to support developing countries in ensuring "predictable, adequate and uninterrupted funding... of social protection" during crises. It commits to supporting the "operationalization of the African Financing Stability Mechanism" and establishes a "recurring special high-level meeting on credit ratings under the auspices of ECOSOC." Notably, previous commitments to incorporate climate transition plans and stress testing into financial regulation were removed.
• Science, technology, innovation (STI) and capacity building: promoting "cultural and academic exchanges for students in STEM fields" and commits to promoting "equitable and inclusive access to and development of artificial intelligence," with adequate financing for developing countries. It advocates for "open finance schemes" and expands digital literacy programs to explicitly target "children, youth, women and girls, persons with disabilities and people in vulnerable situations."
• Data, monitoring and follow-up: The document emphasizes detailed data disaggregation by "income, sex, age, race, ethnicity, migratory status, disability, geographic location and other characteristics." UNCTAD's role as the custodian for reporting on South-South Cooperation is explicitly supported. MDBs are given a new role to support LDCs in strengthening national data systems. The process for developing measures of progress beyond GDP is detailed, and the ECOSOC FfD Forum will adopt a biennial review cycle. Stronger emphasis is placed on "enhanced regional follow-up processes." The commitment to holding a review conference in 2030 was softened to "consider, by 2029, the need to hold a follow-up conference."

Our work on FfD3

ECDPM has been working on financing for development for over a decade. Find our work on the previous conference: