Elements paper for the outcome document of the Fourth International Conference on Financing for Development
A global financing framework (including cross-cutting issues)
The Addis Ababa Action Agenda (Addis Agenda) remains the central guiding framework for financing sustainable development and aligning financing flows with the Sustainable Development Goals (SDGs). Notable progress has been made towards implementation of the Addis Agenda. Initiatives to increase domestic resource mobilization, engage the private sector, and align international support with national financing priorities have helped mobilize additional resources. Ongoing reforms and new financing mechanisms represent renewed efforts to fulfil the Addis Agenda.
Yet, efforts have not been sufficient. The current international financial architecture falls short in mobilising the long-term financing necessary to address multiple challenges. New and emerging issues require innovative financing solutions and reforms. Initiatives and efforts at the United Nations, international financial institutions and by Member States to scale up financing for development and reform the international financial architecture have generated momentum. Ambition must now be matched with concrete commitments and actions.
1. FfD4 - a renewed global financing framework
a) FfD4 will reinforce and build on previous FfD outcomes, without backtracking on those commitments, and strengthen existing efforts and ongoing reforms by various stakeholders.
b) A renewed global financing framework must:
be underpinned by commitment to multilateralism and collective action, o align with national priorities, such as through Integrated National Financing Frameworks,
address the diverse needs of countries in special situations and those with specific challenges, and
support multi-stakeholder collaboration and engagement.
c) Effective mobilization and use of resources must be enabled by freedom, human rights, and national sovereignty, good governance, rule of law, peace and security, combating corruption at all levels and in all its forms, and effective, accountable and inclusive democratic institutions.
d) The renewed global financing framework must address cross-cutting priorities, including eradicating poverty and hunger, ensuring gender equality and women’s and girl’s empowerment, combatting climate change, reducing disaster risk, promoting inclusive and sustainable industrialization, advancing good governance and anti-corruption measures, and investing in sustainable and resilient infrastructure.
2. Achieving the Sustainable Development Goals
a) FfD4 should address implementation gaps of the Addis Agenda as an integral part of the 2030 Agenda. The economic, social and environmental dimensions of sustainable development and all 17 SDGs are interdependent, inextricably linked and should be treated equally.
b) The renewed global financing framework must consist of concrete policies and actions that address the gaps in the implementation of the Addis Agenda and reflect new and emerging challenges, rebuild trust in multilateralism, and accelerate our collective efforts to realise the promise of the 2030 Agenda.
Domestic public resources
1. Strengthening fiscal systems and aligning them with the SDGs Despite notable tax revenue increases in developing countries in the first decade of the century, there have been stagnation and setbacks in recent years, reflecting a range of factors including low growth, inadequate domestic tax policy reforms, and capacity constraints. Many tax systems do not take gender and climate considerations into account. On the expenditure side, public spending is often hampered by opacity and inefficiency, and is not sufficiently aligned with the SDGs. Efforts to mobilize domestic resources through strengthened governance, progressive tax policies, transparent budgeting and capacity development will enhance fiscal systems and strengthen the social contract between governments and the people benefiting from public goods and services, such as healthcare and education.
a) Commit to a whole-of-government approach to strengthening tax systems, transparency and accountability in public financial management systems.
b) Encourage progressivity throughout tax systems and commit to enhance capacity building related to progressive tax systems.
c) Enhance international cooperation for domestic resource mobilization and strengthened tax policy and administration. Support developing countries to raise their tax-to-GDP ratios so that each country should have a tax-to-GDP ratio of above 15%.
d) Promote budget transparency, accountability and efficiency by using performance indicators and aligning budgets with the SDGs, including through INFFs.
e) Implement transparent procurement systems and encourage countries to strengthen, resource and professionalize Supreme Audit Institutions and parliamentary oversight function, especially the public accounts committees.
f) Increase transparency and improve oversight and management of tax expenditures and subsidies and agree on minimum standards for tax expenditure reporting.
g) Provide developing countries with capacity-building and policy support tailored to their specific needs to formalize the informal economy and improve the administration of domestic taxation.
h) Encourage digitalization of tax administrations, including commitments to provide developing countries with technical support and investments in IT-systems and artificial intelligence.
i) Commit to enacting or strengthening taxes targeting high-net-worth individuals, including through international cooperation, with countries choosing the best policy mix for their economies.
j) Promote gender-responsive budgeting and gender-responsive taxation through standards to incorporate gender considerations during policy design and implementation, along with capacity development.
k) Identify and implement global solidarity levies / innovative taxes in the form of a Maritime and Private Air Passenger Fuel Levy, Fossil Fuel Windfall Profits Levy, Fossil Fuel Levy, or Carbon Damages Levy to finance the SDGs.
l) Promote the inclusion of environmental and climate considerations in fiscal programming in line with national circumstances. Options include green budgeting, taxation, fiscal rules, tax incentives and subsidies, carbon pricing mechanisms, and taxes on environmental contamination.
m) Phase out harmful and inefficient subsidies and tax incentives, including eliminating fossil fuel subsidies and subsidies that intensify the disruption of ecosystems.
n) Enhance subnational finance by strengthening the capacities and technical knowledge of local authorities, helping them to diversify sources of income, and promote stable and transparent intergovernmental financial transfer systems and equalization mechanisms.
o) Encourage national and local governments to prioritize and strengthen their policies, strategies, and practices to implement effective infrastructure asset management over assets’ lifecycles. Download the full Elements Paper.