Author(s): Lucia Sigmar
The impact of the COVID-19 crisis on financing for sustainable development in low- and middle-income countries eligible for official development assistance is discussed in this note (ODA). Prior to the COVID-19 crisis, levels and trends in domestic and external financing were already falling short of SDG expenditure requirements. The current global environment, on the other hand, may result in a major drop in the amount of money accessible to poor countries. In total, external private finance inflows to developing economies are expected to fall by USD 700 billion in 2020, outpacing the immediate impact of the 2008 Global Financial Crisis by 60%. This raises the danger of severe development setbacks, making us more vulnerable to future pandemics, climate change, and other global public health threats. While official development finance can act as a short-term countercyclical force, and tax revenues remain the sole long-term feasible source of funding for many public services, no single source of development finance can meet the issue alone. Actors in development finance and beyond must work together to "build back better" in order to create a world that is more equal, sustainable, and therefore resilient.