New Delhi Growth remains the best antidote to many economic and social challenges, finance minister Nirmala Sitharaman said at the Voice of the Global South Summit on Saturday while underscoring the urgency for concessional finance to developing countries facing a nearly $4 trillion annual financing gap in meeting SDGs (sustainable development goals).
Highlighting inadequate access to development finance, she said implementation of many SDGs in developing economies is “stagnating” and “even regressing” as the Global South is disproportionately affected by global uncertainty.
“Growth remains the best antidote to many economic and social challenges. Growth creates a positive feedback… where improved economic performance leads to greater financial opportunities and vice versa,” Sitharaman said in her opening remarks during the finance ministers’ virtual session of the third edition of the summit.
“Our priority should be a people-centric growth path that empowers the most vulnerable and marginalised to participate in the development journey,” 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, she said. “Growth, thus remains insufficient to drive progress in development and poverty reduction. To accelerate progress on SDGs, there is an urgent need to address the $4 trillion financing gap,” she added.
Our efforts also led to the G20 Sustainable Finance Technical Assistance Action Plan, which is now being implemented under the Brazilian presidency to build capacity for scaling up sustainable finance, tailored to the needs of the Global South, she said. “I seek your ideas on how we can further enhance South-South cooperation in scaling up financing from all sources,” she said.
The minister stressed the need for revamping Multilateral Development Banks (MDBs) as proposed during the G20 India presidency in 2023. “As Prime Minister Narendra Modi observed, the two previous summits have sent a clear message to the world that the Global South wants its autonomy, the Global South wants to be heard on global governance,” she said.
Speaking on concessional finance, she said low-income countries must remain the priority and middle-income countries should also get access to the dedicated concessional windows to address climate-related challenges. On private capital mobilisation, MDBs need to engage with credit rating agencies and explore how to better incentivise the flow of capital for development financing, she said.
“Elevated debt distress and high debt service costs have severely constrained the resources available for financing developmental needs, particularly in low-income countries. Estimates indicate that nearly half of the world ‘s population resides in countries where interest expenses exceed spending on education and health,” she said.