UN Pushes for Reforms in Three Key Areas to meet SDGs

General Studies Paper -3

Context: The United Nations Secretary-General Antonio Guterres called for urgent action in three key areas to help finance the achievement of the UN-mandated Sustainable Development Goals (SDG) by 2030.

Background

• With the world facing compounding crises such as economic instability, conflicts, and trade disruptions, progress on the SDGs is lagging.
• Developing nations are spending over $1.4 trillion annually on debt servicing, limiting their ability to invest in development.
• Hence the UN has outlined three core areas needing urgent action: debt reforms, international financial institutions, and diversification of finance sources.

Key Areas of Reform

• Debt Reforms:
  • G20’s Common Framework for Debt Treatments must be accelerated and expanded to include middle-income countries in distress.
  • Credit rating agencies need to revise ratings methodologies that drive up borrowing costs for developing countries.
  • The IMF and World Bank must reform debt sustainability assessments to account for SDG-linked investments and climate vulnerabilities.
• Strengthening International Financial Institutions:
  • Multilateral Development Banks (MDBs) need recapitalization and should stretch their balance sheets to increase lending capacity.
  • MDBs must focus on mobilizing private finance at affordable rates for developing countries.
• Diversifying Finance Sources:
  • Countries should mobilise domestic resources to strengthen the health, education and infrastructure sectors.
  • They should also try to increase blended finance options in collaboration with the private sector.
  • Governments must also find ways to effectively fight corruption to prevent misappropriation of critical funds.

Way Ahead

• There is a need to Push for an inclusive global tax system to ensure fair application of international tax norms.
• Also developed countries must honour their Official Development Assistance commitments.
• Global platforms, like the COP30 Climate Conference in Brazil, will explore innovative climate finance solutions with a target to mobilize $1.3 trillion annually by 2035.