ActionAid warns the fate of millions ‘hangs in the balance’ as governments fail to deliver at finance summit.
The final document of the Fourth UN Financing for Development (FFD4) conference, adopted in New York, fails the litmus test and does not address existential challenges for communities living in poverty, under the weight of the debt crisis, says ActionAid.
The text is a far cry from the commitment and political will needed to tackle the worsening debt crisis, rising inequality, runaway climate crisis, and poverty in the Global South.
The disappointingly watered-down text fell short of expectations for the establishment of a UN debt workout mechanism and a bold shift to global economic governance under the United Nations. This outcome persisted despite the Global South's concerted efforts to achieve a UN debt workout and greater commitment from rich countries.
Arthur Larok, Secretary General of ActionAid, said, “While it is encouraging the document was adopted with consensus, it is heartbreaking that rich countries are once again pulling the rug out from under the feet of countries in Africa, Asia, and Latin America who are facing a debt crisis.”
“The watering down of commitments on the UN debt workout mechanism is a direct denial of justice. It means more children out of school, more families without access to healthcare, and more communities pushed further into poverty with women bearing the brunt through unpaid care work, all because outdated and undemocratic institutions like the IMF are failing to address a crisis they helped create.”
According to a recent study by ActionAid, 75% of low-income countries are in debt crisis, negating critical investments in education, health and climate action to service foreign debts. UNFFD4 was seen as an opportunity to reset the trajectory to deal with the debt crisis.
“The human cost of the escalating debt crisis is immense and immediate. We cannot sit idly while the fate of millions hangs in the balance. The time for empty promises is over. The time for decisive, compassionate action is now,” added Larok.
Global South countries are routinely excluded from important economic decisions in the current financial system, which has for more than 80 years placed the IMF and World Bank at its core. This has resulted in damaging reforms, unending debt cycles, and reductions in government spending on vital public services.
Roos Saalbrink, the Global Lead on Economic Justice at ActionAid, commented, “It is disheartening to see the rich countries sticking to their old ways despite empty rhetoric on the need for global cooperation. They are hiding behind their fingers by arguing that the urgent need for reforms to global financial system will lead to duplication of processes. This current system, designed in their favour, continues to harm the Global South, especially women and marginalised communities.”
“Talk of enhancing the representation of Global South countries in decision-making, without addressing the debt issue and the current colonial financial system, is hollow.”
To echo the words of the Republic of Kenya, UNFFD4 should have ensured that today’s fiscal decisions and development imperatives do not compromise the well-being of future generations and safeguard tomorrow’s possibilities.
Saalbrink added, “FFD4 was a once in a decade opportunity for Global North countries to actually act in the interest of the majority. Sadly, we have again seen the centering of the IMF’s role over the UN’s in global economic governance, in which Global North countries have disproportionate power.
“People in the Global South do not have the luxury of this deceptive approach, for eight decades, they have been systematically sidelined with devastating impacts on the lives of millions.”
An unresolved debt crisis, coupled with the colonial and extractive global financial system, will perpetuate inequalities faced by women and girls in the Global South.
Wangari Kinoti, the Global Lead on Women’s Rights and Feminist Alternatives at ActionAid, said:
"The failure to cancel debt is a profound betrayal of women battling several intersecting crises in the Global South. When public services are chronically underfunded, when climate emergencies ravage their lands, it is women and girls who become the first responders.
“They are the invisible shock absorbers of our failing systems, filling the gaps albeit with unrecognised, unpaid care and domestic work. They tend to the sick when hospitals are ill-equipped. They walk unimaginably long distances to fetch water and girls often sacrifice their education, their futures, to support their families and communities.
“This unconscionable burden, borne on their backs, is a direct consequence of a global financial system that prioritises profit over people and debt over dignity.”
ActionAid has consistently demonstrated that the IMF's advice undermines human rights and development goals. To counter this, ActionAid is calling for a stronger UN role in global economic governance with yearly global economic governance, with the yearly FFD forum, a key space for governments to follow up on an equal footing. Crucially, member states must commit to maintaining a well-funded UN.
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Spokespeople are available for interviews. ActionAid will also have spokespeople in Seville during FFD4. Please contact the press office at media-enquiries@actionaid.org or on +263776665065 or +44 7592 302293 to arrange.