Sitharaman urges global financial reforms at FFD4 summit

Mint

a day ago

New Delhi: Finance minister Nirmala Sitharaman called for urgent reforms to the global financial architecture, along with scaled-up climate finance and sovereign debt restructuring, especially for vulnerable economies and the Global South.
Speaking at the 4th International Conference on Financing for Development (FFD4) on Tuesday in Seville, Spain, Sitharaman said a decisive and transformative global response is needed as progress on the United Nation's sustainable development goals (SDGs) remains off track.
The SDGs, agreed to by all governments, include non-binding sustainable development targets such as removing poverty and hunger, and ensuring good health, quality education, and gender equality by 2030.
Sitharaman also noted that the financing gap for developing countries has widened beyond $4 trillion annually.
'The need for urgent and transformative action is clear,' she said. 'India emphasizes the importance of a comprehensive, equitable and development-oriented global financing framework, one that respects country circumstances, preserves policy space, and delivers on the promise of sustainable development for all,' she added.
The UN estimates a $4 trillion annual shortfall in global development financing, severely limiting the capacity of countries to invest in education, healthcare, renewable energy, and social protection, undermining inclusive and sustainable growth.
Addressing the FFD4, which focuses on emerging global challenges and implementation of the SDGs, Sitharaman also cautioned against the misuse of lending by multilateral development banks (MDBs).
MDBs such as the World Bank and the International Monetary Fund play a central role in global finance, especially in financing developing economies.
'MDB lending must be aligned with long-term development goals and backed by robust monitoring frameworks to ensure that funds are used as intended,' she said, adding, 'We support international cooperation to modernize tax systems and curb illicit financial flows.'
Sitharaman also underscored that national efforts alone could not ensure robust and inclusive growth, and called for a more supportive international environment to help developing countries pursue their development goals.
'We support the call for a reversal in the decline of ODA and urge developed countries to enhance climate finance that is predictable, accessible and concessional, particularly for adaptation in vulnerable countries,' she added. ODA, or official development assistance, is crucial for achieving the sustainable development goals.
India's finance minister also said sovereign debt was increasingly becoming a structural impediment to inclusive and sustainable growth for many developing economies.
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Sitharaman also highlighted the role of the Global Sovereign Debt Roundtable—launched during India's G20 presidency (from December 2022 to November 2023)—in advancing debt transparency and promoting consistency in restructuring processes.
'Going forward, effective implementation of the G20 Common Framework coupled with preventative debt management, is essential,' she said.
According to the World Bank, the Global Sovereign Debt Roundtable brings together debtor countries and creditors to build understanding among key stakeholders on debt sustainability and debt restructuring challenges, and ways to address them. The G20 Common Framework is aimed at providing a structured approach to treating debt.
Sitharaman added that India supports reforms to the international financial architecture to enhance inclusivity and equity, including reforms related to the millennium development goals (MDGs) and fairer credit rating systems. The MDGs are aimed at addressing issues such as global poverty, hunger, disease, illiteracy, environmental degradation, and gender inequality.