Forging a More Ambitious Development Finance System
To achieve the United Nation’s Sustainable Development Goals (SDGs), Paris Agreement climate goals, and address the biggest challenges of our time, the global community faces a sizeable financing gap. With the onset of the Covid-19 pandemic, the Organization for Economic Co-operation and Development estimates that the annual financing gap for achieving the SDGs now exceeds $3.7 trillion. Since then, compounding health, food, fuel, and economic crises, along with rising global interest rates, are further straining countries’ financial resources.
A more ambitious development and climate finance system – comprised of aid, multilateral development banks (MDBs), private capital, domestic resources, and philanthropic capital – is needed to close the financing gap and facilitate the achievement of local, national, and global goals.
people who have been pushed into poverty as a result of the pandemic
estimated by IMF, is needed by low-income countries through 2025 to recover from the pandemic and return to their pre-crisis convergence path with advanced economies
in annual investments through 2025 to attain net zero emissions
At The Rockefeller Foundation, we aim to foster a development finance system that channels funding at the scale, quality, and pace necessary to manage crises, achieve sustainable development the SDGs, and fight climate change.
The Rockefeller Foundation’s Global Economic Resilience team works with thought leaders to develop new policy solutions, convenes decisionmakers to build consensus, and supports advocacy movements to deliver key reforms. We focus on areas of the global financial architecture that have the highest potential for mobilizing substantially more public and private financing for the purpose of achieving the SDGs and Paris Agreement goals.
Until recently, developing countries’ GDPs had grown considerably faster than those of advanced countries. This led to convergence between wealthy and poor nations that enabled the spread of peace and democracy. Yet, multiple compounding crises including the Covid-19 pandemic and the war in Ukraine has reversed progress toward the SDGs and slowed the pace of urgent climate action. Unfortunately, the global development model is not meeting the moment — failing to rebuild resilience while the climate crisis undermines it.
We support the evolution of the global financial system in a way that rebalances resources consistent with climate-related goals and sustainable development.
- New fund will help to expand capacity of development banks around the world to scale up lending in low- and middle-income countries in line with the new G20 Capital Adequacy Review Commission recommendations.
- Multilateral Development Banks (MDBs) have a critical role to play in providing affordable financing to support economic recovery and to help achieving SDGs in a post-pandemic context. MDBs’ scope to leverage shareholders’ capital contributions to provide such financing is determined by their capital adequacy frameworks (CAFs).
- Financing a big investment push in emerging markets and developing economies for sustainable, resilient and inclusive recovery and growth.
- As the world seeks an end to the Covid-19 pandemic and to start a recovery that averts the next pandemic, we must reimagine that decades-old global economic order and unlock the full potential of its institutions. Just as World War II established these organizations, this crisis now requires us to urgently reimagine them and put them to better use.
- The ravages of Covid-19 are well known. Just as the entire world shared in the spread and pain of the pandemic, we must now share in orchestrating its end, and a transition to a just, equitable, and sustainable recovery. This will require an immediate burst of revitalized multilateralism and creativity utilizing the financing tools and institutions readily at hand.
- The Rockefeller Foundation thanks the International Monetary Fund’s Board of Governors for its approval yesterday of a general allocation of $650 billion in Special Drawing Rights (SDRs). Right now, too few countries have the necessary liquidity to respond to the health and economic crises created by the Covid-19 pandemic.
- The wealthiest nations have the vaccines to give their people a chance against Covid-19, while the poorest do not. Nations in the Global North have the means to stave off economic calamity and social disruption with massive stimulus packages, while hundreds of millions of people in the Global South have been driven into extreme poverty.
- The Covid Charter calls for donor governments, Multilateral Development Banks (MDBs) and International Financial Institutions (IFIs) to mobilize development finance at pace and scale needed for humanity to meet these goals, and catalyze trillions in private capital toward addressing crises, supporting human development and fighting climate change.
Climate change requires a new financial architecture for us all.Mia MottleyPrime Minister of Barbados
Reimagining the Role of Multilateral Development BanksWe must reimagine the decades-old global economic order and unlock the full potential of its institutions. Just as World War II established these organizations, this crisis now requires us to urgently reimagine them and put them to better use. This roadmap identifies actionable recommendations and short-term priorities that would allow the multilateral development banks (MDBs) to increase their lending powers without diminishing their financial standing or their credit ratings.Download PDF