OPEC Fund Annual Report 2023

02 | THE OUTLOOK – DEVELOPMENT FINANCE ARCHITECTURE

The multilateral development banks have been called upon to increase their lending capacity and strengthen their risk assessment

This would help go some way towards bridging the financing gap: at the UN’s SDG Summit in September 2023, the United Nations Conference on Trade and Development (UNCTAD) estimated that total sustainable development investment costs range from US$5.4 trillion to US$6.4 trillion annually from 2023 to 2030. Another important way that MDBs aim to increase available development resources is the use of “blended finance”, a mechanism that allows them to lend along- side the private sector. By sharing risk, MDBs are able to leverage private capital as well as their own, thereby scaling-up the funding that can be provided. The UN’s May 2023 policy brief offers several recom- mendations. To reform and strengthen global economic governance, it calls for transforming the governance of international financial institutions. To deliver debt relief and lower the cost of sovereign borrowing, it recommends reducing debt risks and enhancing sov- ereign debt markets to support the SDGs. It calls for enhancing debt crisis resolution through a two-step process: a debt workout mechanism to support the G20 common framework and, in the medium term, a sovereign debt authority. While some of these aims are likely to take form in the medium term (such as governance reforms), interest in others (such as a sovereign debt authority) will probably fade because wealthy nations are unlikely to willingly cede sovereignty of debt that is owed to them to multi lateral organizations. This suggests that the reform of the global development financial architecture will remain a work in progress for some years to come.

8 https://sdgs.un.org/sites/default/files/2023-08/our-common-agenda-poli- cy-brief-international-finance-architecture-en.pdf 9 https://sdgs.un.org/sites/default/files/2023-08/our-common-agenda-poli- cy-brief-international-finance-architecture-en.pdf 10 https://www.dt.mef.gov.it/modules/documenti_it/rapporti_finanziari_inter- nazionali/rapporti_finanziari_internazionali/CAF-Review-Report.pdf 11 https://g20sfwg.org/