G7 Finance Ministers and Central Bank Governors Meeting - Package of support for Low Income Countries, 19 March 2021

 

Remarks by Angel Gurría, Secretary-General, OECD

Paris, 19 March 2021

Dear Ministers, colleagues,

As a result of the pandemic, we estimate that the annual SDG financing gap in developing countries could increase by 70% - from USD 2.5 trillion pre-crisis per annum to USD 4.2 trillion in 2020. Moreover, financing the recovery is widely unequal as the fiscal response to COVID-19 was on average 7 times smaller in low-income countries than in advanced economies.

The G7 can lead the way in support of developing countries’ COVID recovery and SDG efforts. To fill the SDG-financing gap, we need to marshal finance from all other sources, and incentivize their alignment with the SDGs, using, for instance, the OECD–UNDP Framework for SDG-Aligned Finance, developed under the French G7 Presidency.

The progress on debt is a critical step forward but the effective implementation of the DSSI and of the Common Framework rests on greater transparency. The OECD is pleased to contribute with the Debt Transparency Initiative, a project aimed at operationalising the IIF Voluntary Principles for Debt Transparency and enhancing transparency in private sector lending.

The effort brings together multilateral institutions [OECD, IMF, WB, BIS, UN] with international banks and non-bank lenders to low-income countries could result in negotiations of lighter debt servicing to be fairer and more durable. We thank the UK government’s leadership in supporting and funding this work, and look forward to report on its progress.

Let me now turn to Official Development Aid: Advanced economies’ anti-COVID fiscal measures are counted in trillions, ODA in billions [to be precise USD152.8bn in 2019]. A modest 1% of these fiscal packages could add well over USD100bn to ODA, complementing other international efforts, such as a new general SDR allocation.

ODA has, in particular, a catalytic role to play in crowding in private finance for the achievement of the SDGs. But only 6% of the private capital mobilised by ODA in 2017-2018 went to Least Developed Countries (LDCs) and a mere 6% targeted social sectors. The Sustainable Finance Group of the G20 must rise up to the challenge and help rally private investment by bringing clarity into applicable standards and making sure these benefit the least developed countries.

Finally, domestic resources offer the most sustainable long-term source of SDG-financing. Their potential can only be fully harnessed if tax policy and administrations are upgraded. Through the BEPS Inclusive Framework and the Global Forum on Tax Transparency, the OECD is fully engaged. The Tax Inspectors Without Borders initiative alone already provided developing state coffers with an additional 900 million euros. Of that amount, just yesterday, with our support, Mongolia collected almost 300 million from a mining company.

I hope in 2030 and 2050 we can look back to 2021 and say yes, we were aware of the urgency of the situation. And we acted on it.

 

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