Financing for Whom? Trials & Tribulations from the Fourth Financing for Development in Seville

By Bhumika Muchhala
NEW YORK, Jul 15 2025 – The Fourth International Conference on Financing for Development (FfD4) took place in Seville, Spain from 30th June to 3rd July amidst intensifying attacks on multilateralism, unprecedented cuts to global aid and development financing, and regression of decades of progress in the fight against poverty.

Participants at the once-a-decade United Nations (UN) conference included 70 heads of states, over 1,000 civil society leaders, and over 400 policymakers from governments around the world, who engaged in over 100 panel events and 50 protest actions.

Importantly, civil society actors experienced an unprecedented wave of restrictions and lack of access, from difficulties obtaining accreditations, discriminatory profiling, chilling of freedom of speech, and exclusion from key negotiations.

This left many advocates, including those who had followed the FfD4 negotiations closely, to organize a protest at the conference’s venue on its final day.

However, the outcome document, or Compromiso de Sevilla, was adopted weeks ago by consensus of UN member states on 17th June in New York, making this fourth conference the first where an outcome document was agreed before the Conference began. This was lamented by many participants as rendering the conference itself a purely symbolic event, without the final negotiations taking place.

The adoption of the text was marked by the official withdrawal of the U.S. who stated a refusal to participate in Sevilla, who waited to withdraw until almost a year of intergovernmental negotiations had concluded.

The role of the US in the negotiations has been publicly reported, in terms of aggressively blocking and requesting deletions across entire paragraphs of the seven themes of FfD, that of domestic public resources, international development cooperation, private finance, sovereign debt, systemic issues, science and technology, and follow-up and monitoring.

Also, driving the race to the bottom during the negotiations was the European Union and other developed country delegations such as Australia, New Zealand, Canada, Japan and the U.K. The aggregate effect inflicted dilutions, distortions, and erasure of global economic governance milestones and actionable commitments into a reaffirmation of the status quo, with many critics arguing that the Compromiso de Sevilla shows little shift, or even backsliding, from the previous three FfD outcome documents in 2015 (Addis Ababa Action Agenda), 2008 (Doha Declaration) and 2002 (Monterrey Consensus).

In fact, lost in the sweeping tide of attention that private financing, and in particular blended finance and incentivizing institutional investors, received at the Seville conference, is the political genealogy and systemic origins of FfD.

Its roots are in the collective initiative of the Non-Aligned Movement (NAM) in the late 1990s to address the systemic asymmetries that characterize the international financial architecture, resulting in the boom-bust financial crises experienced by the global South through 1980s and 1990s.

The nations of NAM called for a multilateral process that would generate action towards reforms that expand policy and fiscal space for structural transformation toward economic, monetary and financial sovereignty in the South. The 2002 Monterrey Consensus argued that the systemic drivers of global inequalities between nations and regions cannot be resolved on the national terrain alone—international cooperation and democratic global economic governance is critical.

Specifically, these systemic drivers refer to the key pillars of the international financial architecture: the international currency hierarchy marked by US dollar hegemony—or the scaffolding of unequal economic exchange, deregulated capital flows, market-based exchange rates, financial speculation and dependency, chronic sovereign debt distress, and a trade architecture defined by extractive, value-chain dependent and low-value-added production structures that are the legacy of colonialism.

Debt Battleground

At a time when debt servicing costs across the global South have reached a historic high of $1.4 trillion in 2023 (principal plus interest), public budgets are being eviscerated, the SDGs derailed, and climate action rendered into a fiscal impossibility. In this looming context, FfD4 fell far short on delivering meaningful reform of the outdated and imbalanced global debt architecture.

While the first iteration of outcome document, The Elements Paper, issued on 24 November 2024, included proposals for a new multilateral sovereign debt resolution framework for fair, binding, and effective crisis prevention and burden sharing.

At the heart of the debacle of sovereign debt is the absence of a sovereign debt crisis resolution mechanism. Meanwhile, the creditor profile has shifted over the decades from predominantly official creditors to a five-fold increase in private creditors, who not only refuse to participate in equitable debt restructuring but also impose high and variable interest rates, creating a crisis in the cost of capital for sovereign borrowers.

The historical context of the post-war regime of international crisis management governed by international financial institutions (IFIs) conditions continued market access and international financial legitimacy on both the uniformity and continuity of debt servicing. In turn, the means of debt repayment are enforced through austerity measures which has for decades eroded social equity, economic resilience, and the delivery of public services and systems across the global South.

During the FfD4 negotiations, the Association of Small Island Developing States, the Africa Group, and countries like Cuba, Brazil, and Pakistan called for the creation of a UN Framework Convention on Debt. Indeed, external debt payments by many countries far exceed aid and other financial transfers, or public expenditures on essential public services like health and education, generating both a net outflow of financial resources from South to North while simultaneously eroding economic development, social equity, and well-being.

Supported and campaigned for by global civil society, the framework would encompass a global consensus on the rules, principles, and structures of the various stages of the debt cycle. By locating deliberations in the UN General Assembly’s one-state-one -vote system, member states argued the Convention would facilitate the fairness and transparency of debt resolution mechanisms and civil society advocates clarified that it would democratize the global debt architecture from exclusive and creditor-dominated G20 and IMF forums.

However, the staunch opposition of most creditor countries, in particular the US and EU, led to the deletion of the Convention language and an insistence on relegating debt issues to the Group of 20 (G20) Common Framework. Critics in civil society and academia have consistently argued that the G20 status quo has failed to resolve debt distress and create fiscal space, is unable to ensure equitable participation of private creditors (e.g. comparability of treatment), enables a lack of transparency in debt contracts, and blocks rules on responsible lending and borrowing, for example.

Unsurprisingly, debt crises are reproduced while any resulting fiscal space is funneled into paying off private creditors, generating a ‘kicking the can down the road’ scenario that simply extends debt purgatory. The final debt architecture agreement in paragraph 50(f) states that member states “… will initiate an intergovernmental process at the UN, with a view to closing gaps in the debt architecture and exploring options to address debt sustainability, including but not limited to a multilateral sovereign debt mechanism.

While an intergovernmental process is included its function is limited to “making recommendations,” fundamentally weakening the mandate of member states to take meaningful action on debt.

Reign of Private Finance

In the dozens of speeches made and hundreds of events held in Seville, it was impossible not to notice the aggressive promotion—and normative consensus—of private financing, proffered as a monolithic answer to narrow the estimated $4.3 trillion financing gap in the South.

The derisking development model, replete with its constellation of mechanisms such as blended finance and guarantees, dominated FfD4 with a laser focus on how private capital can be incentivized by the global South through the use of securitization, or the bundling of individual project loans into vehicles that can be bought by financial funds.

Buttressed by over a decade of the ‘Billions to Trillions’ narrative authored by the World Bank and the UN ecosystem, the idea asserts, with brazen decisiveness, that scarce public resources in the global South will always fall short of ever-growing development and climate financing needs and thus, private (and profit-seeking) capital is indispensable.

The seemingly logical resolution to this depoliticized reality becomes a quid pro quo: fiscal gaps can only be closed by attracting Wall Street (e.g. investment banks, asset managers, insurers, pension and private equity funds, among others) to invest in development, infrastructure, and green projects.

Commitments to private capital mobilization run rife across the Compromiso de Sevilla text. For example, scaling up private financing from “public sources by 2030 by strengthening the use of risk-sharing and blended finance instruments, such as first-loss capital, guarantees, local currency financing, and foreign exchange risk instruments, taking into account national circumstances” is highlighted.

In turn, such a scaling up requires “an enabling policy environment which facilitates private investment in agriculture and food systems, and the role that public investments can play in incentivizing and derisking private investments.” To realize this, member states are encouraged to “strategically attract foreign development investment, including from institutional investors.

However, the ‘billions to trillions’ aim of activating the supposed spigot of private cash has been recently exposed by multiple sources as a myth. A Financial Times article titled, “The magic pony of private finance fails to fund the global green transition,” revealed that only 10 per cent of private financing went to global South nations.

The ratio of private to public capital has struggled to rise above 1:1, and institutional investors like pension funds are notable by their almost total absence. Furthermore, number-crunching from the Organisation for Economic Cooperation and Development shows that every dollar of multilateral investment activated merely 30 cents of private investment.

Simply put, trillions are not manifesting. One explanation is that the scale of profits expected by financiers cannot be delivered with public goods and services investments; they two are inherently contradictory in nature.

Two fundamental issues persist.

First, rather than galvanizing new heights of financing, private creditors are in reality responsible for net outflows of financial resources from developing countries and into their own coffers. Indeed, the World Bank discloses that since 2022, “foreign private creditors have extracted nearly US$141 billion more in debt service payments from public sector borrowers in developing economies than they disbursed in new financing … this withdrawal has upended the financing landscape for development.”

And second, structural, institutional, and political changes to address fiscal space, such as redressing tax evasion and avoidance, fiscal restraint rules, constraints on public money creation, economic diversification, and technology transfer, for example, are conveniently elided.

Survival of the Systemic?

The integral focus of the Monterrey Consensus in addressing the need for international monetary cooperation, recurrent financial crises, vulnerabilities to exogenous shocks, and adverse spillovers of rich country policies across the global South has essentially evaporated from FfD discourse and text.

In a text that supposedly addresses the international financial architecture, it is shocking that there is no meaningful reference to the international monetary system, nor to central banks, the core institution of national money creation. Indeed, the 4th FfD text presents the sharpest regression of systemic issues across the four FfD texts produced over 23 years, despite the recent experience of the COVID pandemic and current debt crisis exposing the systemic fault lines of a global financial architecture designed to extract rather than provide.

However, one key deliverable is offered in the outcome document, that of addressing the inordinate power of Credit Rating Agencies (CRAs) in determining the cost of capital in the global South and the central role they play in both debt and climate crises.

Paragraph 55 states a decision to “establish a recurring special high-level meeting on credit ratings under the auspices of ECOSOC for dialogue among Member States, credit rating agencies, regulators, standard setters, long-term investors, and public institutions that publish independent debt sustainability analysis.”

While this falls short of proposals to establish an intergovernmental commission to regulate CRAs for the objective of producing accurate, objective, and long-term oriented credit ratings, it is a potential step forward in bringing CRAs into global economic governance.

There is widespread agreement by UN member states on the urgency for multilateral oversight on the oligopoly of three central CRAs, that of Moody’s, Standard and Poor, and Fitch, with attention to their multiple dysfunctionalities.

Recent pandemic and debt crises have exposed challenges, from a developing country perspective, in terms of bias and pro-cyclicality in ratings, conflicts of interest, and penalization of debt, climate and social vulnerabilities.

Beyond the inadequacy of CRAs rating methodologies and bias in implementation that undermine developing countries’ access to capital markets and increase their borrowing costs by inflating risk premiums, advocates for financial regulation have asserted that CRA regulation must include the establishment of multilateral, public, and independent rating agencies, promoting competition to avoid quasi-monopolistic market dynamics.

The spotlight on CRAs has the potential to hold financial power to account, however, it will depend on the ability of member state voices and proposals to set the agenda forward, rather than that of CRAs and other financial actors.

Given the colossal challenges in development financing at a time of global authoritarianism, war and conflict, and the spectre of ‘post-aid international development,’ what are the possibilities of democratizing global economic governance? The right to development, inclusive dignity, historical equity, and the political economy of inequality will require grappling with old and new forms of power.

One thing is certain. The way forward must hold steadfast to the aspiration and vision of a fair, equitable, and effective financial architecture that works for the majority.

Bhumika Muchhala is Senior Advisor, Third World Network and Adjunct Professor, The New School.

IPS UN Bureau

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