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Working Papers
To achieve the SDG agenda, substantial investment is needed, posing a particular challenge for developing nations. Drawing on a comprehensive literature review, this paper estimates an annual financing gap of USD 4 trillion which amounts to almost 4 per cent of global GDP in 2022. A significant portion of this estimated gap is attributed to funding sustainable energy (SDG 7) and climate action (SDG 13). The gap has widened due to both inadequate investment in the past as well as escalating needs in the face of multiple global crises. We propose increasing domestic revenue and enhancing private sector involvement. Further, there exists an important role for Official Development…
Credit Rating Agencies and Sovereign Debt
by: Financing for Sustainable Development Office, UN DESA
March 2023
The COVID-19 pandemic has inflicted significant damage on global economic activity, exacerbated fiscal challenges worldwide, and impeded countries’ ability to respond to the pandemic and achieve the Sustainable Development Goals (SDGs). Many countries have experienced downgrades of their sovereign credit ratings, higher borrowing costs and intensified risks of debt distress...
by: Eduardo Fernandez-Arias
August 2022
Lack of fiscal space and the risk of sovereign debt distress remain key stumbling blocks to achieving Sustainable Development Goals (SDGs) in developing countries. Because the allocation of concessional funds and debt relief is essentially reserved to Low Income countries (LICs), official financing strategies and mechanisms to support developing countries provide insufficient support to non-LICs that may need and deserve special consideration concerning official financing. This paper discusses how official financial support allocation could consider countries’ vulnerabilities in critical dimensions, with special reference to Small Island Developing States (SIDS). It explores how a…
by: Stephany Griffith-Jones and Moritz Kraemer
The pandemic-induced global economic crisis has contributed to the re-emergence of sovereign default risk, especially for emerging and developing economies, and has directed attention to the impact of the institutions that are tasked with attempting to predict defaults: the international credit rating agencies. This paper describes four main challenges posed by credit rating agencies, especially from a developing and emerging economies perspective: potential bias in ratings, pro-cyclicality of ratings, governance issues and conflicts of interest, and incorporation of climate risk. It concludes with potential policy solutions addressed at ratings agencies, regulators, and policy makers.…
by: Bilge Erten
August 2012
This paper argues that the technical and political difficulties of using SDRs for development can be overcome. This requires an SDR-based reserve system and a fully SDR-funded IMF. The IMF would allocate SDRs counter-cyclically and treat them as deposits of countries, which could be used in lending to them. A substitution account is needed for a smooth transition from major reserve currencies to SDRs. To avoid the deficiency payments, a counterpart account – which would be credited when the substitution account is in surplus and debited when in deficit – is required. Alternatively, politically-feasible cost-sharing mechanisms could be designed.
World Economic and Social Survey 2012: In Search of New Development Finance
by: UN DESA
July 2012
The financial needs of developing countries have long outstripped the willingness and ability of donors to provide aid. Addressing this challenge, the survey proposes an international tax, combined with other innovative financing mechanisms, to raise more than $400 billion annually for development and global challenges such as fighting climate change.
This paper critically reviews the impact of globalization on sub-Saharan Africa (SSA) since the early 1980s. The large gains expected from opening up to international economic forces have, to date, been limited, and there have been significant adverse consequences. Foreign direct investment in SSA has been largely confined to resource—especially mineral—extraction, even as continuing capital flight has reduced financial resources available for productive investments. Premature trade liberalization has further undermined prospects for the economic development of SSA as productive capacities in many sectors are not sufficiently competitive to take advantage of any improvements in market access.
Macroeconomic and Growth Policies
by: Shari Spiegel
December 2006
This United Nations Policy Note on Macroeconomics and Growth provides practical guidance on how to operationalize alternative equitable and employment-generating macroeconomics and growth policies in National Development Strategies. This Policy Note has been developed in cooperation with UN agencies, and has been officially reviewed by distinguished academics/ development specialists such as Jose Antonio Ocampo, Jomo K.S. and Nobel Laureate Joseph Stiglitz.
GDP-Indexed Bonds: Making It Happen
by: Stephany Griffith-Jones and Krishnan Sharma
April 2006
There has been increasing interest in exploring fi nancial instruments that could limit the cyclical vulnerabilities of developing countries and reduce the likelihood of defaults and debt crises. GDP indexed bonds fall into this category and may also generate a wider range of benefi ts for issuer countries, investors and the global fi nancial system.
Up From Sin: A Portfolio Approach to Salvation
by: Randall Dodd and Shari Spiegel
March 2004
This study develops a proposal that has the potential to greatly improve the ability of developing countries to reduce their exposure to other countries' interest rate and exchange rate volatility and to lower their cost of raising capital abroad by borrowing in their own local currency. The key to achieving these goals is the creation of portfolio of emerging market local currency government debt securities that employs the risk management technique of diversification to generate a return-to-risk that competes favorably with other major capital market security indices.