HUGE debts could hinder developing countries like the Philippines from financing the Sustainable Development Goals (SDGs), the United Nations said in its latest report.
In the 2019 Financing for Sustainable Development Report, the UN along with the International Monetary Fund (IMF), World Bank and the World Trade Organization (WTO) said public and private debt levels have increased, particularly in many middle-income countries.
Data provided by the report showed that the growth rate of nonfinancial corporate debt, loans and debt securities went up by over 100 percent in the Philippines between 2008 and 2015.
“The governments need to carefully monitor the growth of debt, including contingent liabilities and debt of their private sectors, through a risk-based approach. To address systemic risks posed by private borrowing, the governments should aim to adjust regulatory policy frameworks during periods of rising risks,” the report read.
Should countries resort to borrowing money to finance the SDGs, the UN, IMF, World Bank, and WTO these funds must be used “prudently and efficiently.” The use of these funds must also be done transparently. This means that the financial system must be “revamped” to include the use of innovations including tools that make debt use more transparent or accessible such as fintech.
“We have a major opportunity to overcome bottlenecks in sustainable financing in 2019,” said Liu Zhenmin, undersecretary general for Economic and Social Affairs and Chair of the Task Force that issued the report. “The responsibility rests with governments to recommit to multilateralism, and to take policy actions that will create a sustainable and prosperous future.”
UN Secretary-General António Guterres, in his foreword to the report, said the reason why many now doubt the multilateral system is because it has failed to deliver on its promises on “inclusive and sustainable growth for all.”
The report noted that achieving the global goals depends on supportive financial systems, and conducive global and national policy environments.
“Trust in the multilateral system itself is eroding, in part because we are not delivering inclusive and sustainable growth for all,” Guterres said. “Our shared challenge is to make the international trading and financial systems fit for purpose to advance sustainable development and promote fair globalization.”
The international agencies recommend concrete steps to overhaul the global institutional architecture and make the global economy and global finance more sustainable, including supporting a shift toward long-term investment horizons with sustainability risks central to investment decisions, and revisiting mechanisms for sovereign debt restructuring to respond to more complex debt instruments and a more diverse creditor landscape.
They added that revamping the multilateral trading system; addressing challenges to tax systems that inhibit countries from mobilizing adequate resources in an increasingly digitalized world economy; and addressing growing market concentration that extends across borders, with impacts on inequality are also important measures.
At the national level, the report puts forward a road map for countries to revamp their public and private financial systems to mobilize resources for sustainable investment. It introduces tools for countries to align financing policies with national sustainable development strategies and priorities.