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Giving Compass' Take:
• The authors share what governments need to do in order to recover from COVID-19 and get on track for achieving the Sustainable Development Goals by 2030.
• What role can you play in advancing the SDGs?
• Read about how the United States is committing to the SDGs.
Three key challenges emerge as developing countries seek to recover from the COVID-19- induced recession. First, their governments, especially those with limited (or expensive) access to private capital markets, need access to more official financing to reverse the fall in investment, education and the environment that is occurring. Advanced economies provided trillions of direct and indirect fiscal support to bolster domestic economic recovery efforts, equivalent to 28% of their GDP (IMF, 2021). During the pandemic they have largely borrowed on private capital markets to finance their activities, taking advantage of historically low interest rates. Some 36 emerging and developing economies, however, had their creditworthiness downgraded in 2020 as a consequence of the recession and, as they face rising risk premia and interest rates, they have less fiscal space to respond.1 They have spent just 7% and 2% of GDP respectively on recovery actions. Only two countries in sub-Saharan Africa accessed the international bond market (Fitch, 2020). Second, new channels are needed to provide financing for local authorities’ investment plans and implementation of activities that support the Sustainable Development Goals (SDGs). Third, a transparent way to track spending and financing is needed to permit dialogue, sharing of knowledge and innovations, and mutually reinforcing accountability at global, national and local levels.
The year 2021 presents an opportunity to reset and realign global, national and local priorities in the wake of COVID-19. It is an opportune time because (i) global interest rates are at historically low levels, making this the right time to scale up investment (see Figure 1); (ii) growth multipliers of public spending are high, given the large cyclical downturn associated with the COVID-19 lockdowns; and (iii) there is an urgent need to put in place transformative shifts in each country, especially to address climate change, improve biodiversity conservation and achieve inclusive economic growth so that business and governments alike embrace the SDGs as the “North Star” to guide their recovery strategies.
COVID-19 has complicated plans to achieve the Sustainable Development Goals (SDGs) by 2030. As we are witnessing a proliferation of recovery initiatives by governments and international financial institutions, we need to ensure that additional resources align with larger environmental and sustainability goals. Cities and local authorities have a key role to play, as they have a unique capacity to implement and monitor sustainable policies at the local level with immediate feedback loops. For this reason, policy-makers must be equipped with tools that allow them to assess the impact of their budgets and COVID-19 relief schemes on the 2030 Agenda. The G20 can play a central role in setting standards for reporting on such data for both domestic and development cooperation funding.