Finance Minister Nirmala Sitharaman stated on Saturday that inadequate access to development finance is hindering progress on Sustainable Development Goals (SDGs) in developing economies, highlighting a $4 trillion annual financing gap. Speaking virtually at the third Voice of Global South Summit, Sitharaman noted that many SDGs in developing countries are either stagnating or regressing. Sitharaman pointed out that global uncertainties are adversely impacting the Global South, citing a World Bank report predicting that one in four developing countries will be poorer by the end of this year compared to pre-pandemic levels.
She stressed the need for urgent action to close the $4 trillion financing gap to accelerate progress on SDGs. During India’s G20 presidency, the group advocated for broader use of social impact instruments, blended finance tools, and other financial innovations to address this gap. Sitharaman also mentioned the G20 Sustainable Finance Technical Assistance Action Plan, now being implemented under Brazil’s presidency, which aims to build capacity for scaling up sustainable finance in the Global South. Sitharaman called for comprehensive reforms of multilateral development banks (MDBs) so that they can mobilize financial flows for developing countries. He proposed measures such as injecting new capital and optimizing the balance sheet. He also emphasized the need for dedicated financial windows for middle-income countries to tackle climate-related challenges and prepare low-income countries. To raise private capital for development, Sitharaman urged MDBs to join credit rating agencies and explore incentives.