PARIS, France – A recent report from the OECD reveals that the chasm between development financing needs and available resources could escalate to USD 6.4 trillion by 2030 unless a significant reform of the financing system occurs.
The Global Outlook on Financing Sustainable Development 2025: Towards a More Resilient and Inclusive Architecture indicates that while total external financing to developing nations reached USD 5.24 trillion in 2022, this amount falls significantly short of the USD 9.24 trillion required annually to fulfill the 2030 Agenda.
From 2015 to 2022, financing needs surged by 36 percent, largely driven by climate change and geopolitical uncertainties. In contrast, resources provided only grew by 22 percent during this period, resulting in a staggering 60 percent financing gap. If major reforms to the international financial architecture are not reached this year, the report forecasts that the financing gap could widen to USD 6.4 trillion by 2030.
“The development financing gap is manageable. The real challenge is to mobilize resources on a large scale and direct financial assets into transformative investments like clean energy and sustainable infrastructure,” stated an OECD representative.
The report, issued prior to the upcoming Conference on Financing for Development in Seville, emphasizes the need to refresh the financing framework for post-2025 to better allocate global capital, balancing ambition with practicality in addressing sustainable development goals. It highlights that inclusive governance and policy coherence are vital for overcoming obstacles, as inconsistencies in decision-making and resource distribution hinder global collaboration and trust.
Despite a recovery from the COVID-19 pandemic, financing for sustainable development remains inadequate to meet escalating requirements. The report notes that official development assistance (ODA) reached an all-time high of USD 223.3 billion in 2023 among OECD members, but further commitments are essential to adequately support partner countries, particularly in clean energy investment.
Remittances continue to be the leading source of external financial flows to developing countries, showing over a 30 percent increase since 2015, totaling USD 476 billion in 2023. However, transfer fees remain double the Sustainable Development Goals (SDGs) target of 3 percent, costing households sending and receiving these funds approximately USD 16 billion annually.
Effective domestic resource mobilization is crucial for state functionality, yet low-income countries reported a tax-to-GDP ratio of just 11.44 percent in 2022, below the recommended 15 percent threshold.
In addition, debt burdens in developing nations are escalating. Between 2015 and 2024, the number of countries experiencing debt distress increased from 16 to 24, with those at high risk rising from three to 11.
As the economic divide between affluent and impoverished nations grows, the report advocates for renewed action to revamp the development financing system, ensuring funds align more effectively with sustainable development initiatives. Currently, there are USD 461 trillion in global financial assets, enough to cover the gap 115 times over. However, the misallocation of these resources—such as the USD 1.53 trillion subsidized for fossil fuels in 2022—must be redirected to meet the 2030 Agenda.
To boost accountability and transparency in resource allocation, the report also calls for the enhancement of the global financing for development monitoring system, aiming to rebuild trust among nations.
The Global Outlook lays the groundwork for discussions at the Fourth International Conference on Financing for Development in Seville, where countries will negotiate reforms to the global financing architecture to assist in implementing the SDGs.
