The current gap in global development financing is significant, with an annual estimated investment requirement of $2.5 trillion. Beyond the global agreements that countries sign up to, such as the Sustainable Development Goals (SDGs) or the Paris Climate Agreement, most developing countries are acutely aware of the very practical challenges they face putting their development goals into action and getting the funding to enable those investments to proceed. Not only governments, but also populations, and in particular the younger generations, are demanding action, but the level of investment needed to achieve the SDGs far surpasses government budgets, tax revenues and development-related aid.
The financing of the SDGs will require a move from project funding to financing. In this context, mobilized private capital, from domestic and international sources, will need to complement an efficient allocation of public finance. It will also require a steady pipeline of projects that help countries meet their sustainable development objectives. National governments face trade-offs as they consider how best to: (1) allocate their own resources to support sustainable development; (2) use the development finance architecture and related cooperative platforms to fund and finance these projects; and (3) tap into and marshal private sources for sustainable development.
This paper seeks to lay out background considerations related to these issues, describing recent progress in the world of development finance, identifying key gaps, and outlining a short list of actions and potential solutions to be taken up by the Global Future Council on Development Finance. The goal is also to solicit feedback from the development finance community and encourage engagement by various stakeholders in advancing solutions.