A lost decade; development gains for the poor reversed

Covid 19 pandemic is dividing the world more sharply even as the development gains for millions in poor countries are reversed, the United Nations said in a report.

The Financing for Sustainable Development Report 2027 released on March 25, said the global economy experienced the worst recession in 90 years. It noted that an estimated 11 million jobs have been lost and about 120 million people have been plunged back into extreme poverty. The report warns that an immediate action can only prevent a lost decade for development for many countries.

UN Deputy Secretary-General Amina Mohammed said that the pandemic proved beyond all doubt that disasters do not respect national boundaries. “A diverging world is a catastrophe for all of us. It is both morally tight and in everyone’s economic self-interest to help developing countries overcome this crisis,” said Amina Mohammed.

Stating that 16 trillion dollar of funds helped to stave off the worst effects, the report points out that less than 20 per cent of the sum was spent in developing countries. Before the pandemic, about half of the least developed and other low-income countries were at high risk of or in debt distress. Now the pandemic has sent the debt levels soaring with falling tax revenues. The report warns that the situation in poorest countries is deeply troubling and could push the achievement of the Sustainable Development Goals another 10 years further into the future.

Liu Zhenmin, Under-Secretary-General of the Department of Economic and Social Affairs, which produced the report, pointed out that the growing gap between rich and poor countries is troublingly retrogressive. It required an immediate course correction, Zhenmin said. “Countries must be helped to not only stay afloat financially, but to invest in their own development. To rebuild better, both the public and private sectors must invest in human capital, social protection, and sustainable infrastructure and technology,” said the Under Secretary general.

Suggestions

• Provide ultra-long-term financing Cover 50 years to developing countries, at fixed interest rates
• Use public development banks as a tool for sustainable development investment
• Reorient capital markets toward aligning with sustainable development by removing short-term incentives along the investment chain and mitigating the risk of SDG-washing.
• Find global solution for taxation of the digital economy to combat corporate tax avoidance
• Reduce harmful tax competition;
• Use technology to combat illicit financial flows.
• Create global reporting framework to hold companies accountable for their social and environmental impact and incorporate climate risks into financial regulation.
• Review regulatory frameworks, such as antitrust regulations, to reduce the market power of large digital platforms.
• Modemize labour market and fiscal policies to reflect the reality of a changing global economy, including an increasingly digitalized world.