Broad consensus, paltry results: The UN Forum on Financing for Development 2021
The UN Forum on Financing for Development (FfD) 2021 was the first FfD forum held as planned since the outbreak of the COVID-19 crisis. Accordingly, the expectations were high. Development finance is currently facing a triple challenge: to mitigate the humanitarian crisis, funds for an acute crisis response are needed – for example, to finance universal access to vaccines through the COVAX-facility, or for social protection measures. To mitigate the further divergence between countries, resources must be made available for economic stimulus programmes in the Global South that match those of the Global North. To prevent the failure of the Agenda 2030, the Sustainable Development Goal (SDG) financing gap that already existed before the COVID-19 crisis and has widened as a result of the crisis must be filled. The UN FfD Forum 2021 was a pivotal moment on the international policy calendar to take the necessary steps.
The agenda included the full range of issues that are the subject of the UN’s FfD process: from taxes to debt, and from private investment and official development assistance (ODA) to the systemic issues of the international financial and trade architecture. The Financing Sustainable Development Report, published in advance, had provided negotiating parties with a wealth of policy recommendations. These built in part on the Menu of Options developed by the UN’s special initiative “Financing for Development in the Era of COVID-19 and Beyond”, which has been running in parallel for nearly a year. The informal Friends of Monterrey retreat in the immediate run-up to the Forum served to prepare consensus-building, outside of the rigid UN protocol. No FfD Forum in a long time has been so well prepared.
The zero draft of the final document contained some significant decisions, even if critical observers did not consider them enough to match current needs in times of severe crisis. While the negotiations were ongoing, decisions were taken on aspects such as the extension of the current G20 debt moratorium and the allocation of Special Drawing Rights by the International Monetary Fund (IMF), but at the IMF-World Bank Spring Meetings.
Numerous other proposals to strengthen the UN system –especially in the areas of debt and taxation, which were priorities for the Global South – were negotiated fiercely, but got massively diluted and weakened during the negotiations. The EU’s priorities, which were predominantly at the interface of finance with climate and the environment, fared similarly. The fact that all decisions in the FfD process must be adopted by unanimous consensus proved to be problematic. Behind the scenes of the non-transparent virtual negotiations, at least one diplomat always blocked more concrete progress.
As a result, the Forum agreed on a comprehensive final document that initiates many significant innovations but makes few tangible decisions on them. This places a heavy burden on the follow-up process. An increasing number of actors are now calling for the convening of a new UN World Summit on Financing for Development as a decision-making moment in the spotlight, and of even greater political weight.