The gap between development financing needs and available resources could swell to USD 6.4 trillion by 2030 without a major overhaul of the financing system, according to a new OECD report.
The Global Outlook on Financing Sustainable Development 2025: Towards a more resilient and inclusive architecture shows that although total external finance to developing countries reached USD 5.24 trillion in 2022, it remained significantly below the USD 9.24 trillion estimated to be required annually to achieve the 2030 Agenda.
Financing needs have risen by 36% between 2015 and 2022, due in large part to climate change and geopolitical uncertainty, but resources provided have only increased by 22% over the same period - a 60% gap. Without an agreement this year on major reform of the international financing architecture, the report estimates that the financing gap will balloon to USD 6.4 trillion by 2030.
"The development financing gap is not insurmountable. The challenge lies in mobilising resources at scale, channelling financial assets into transformative investments such as clean energy transitions and sustainable infrastructure," OECD Secretary-General Mathias Cormann said.
The report, published ahead of the upcoming Conference on Financing for Development in Seville, calls for updating the financing framework for post-2025 to redirect the capital available globally, starting with balancing ambition and practicality in addressing sustainable development priorities. Inclusive governance and policy coherence are critical to overcoming the hurdles, as disparities in decision-making structures and resource allocation undermine global trust and co-operation.
Despite a rebound from the COVID-19 pandemic, financing for sustainable development is still insufficient to meet growing needs, the report shows. While official development assistance (ODA) hit a record of USD 223.3 billion in 2023 among members of the OECD Development Assistance Committee (DAC), further commitments are required to ensure effective support to fill the needs of partner countries, particularly for investments in clean energy transition.
Remittances have been the dominant source of external financial flows to developing countries, a more than 30% increase since 2015 to reach USD 476 billion in 2023. However, transfer fees remain twice the level of the Sustainable Development Goals (SDGs) target of 3%, resulting in USD 16 billion in annual losses to households sending and receiving the money.
Strengthening domestic resource mobilisation is key for effective state functioning, but the tax-to-GDP ratio in low-income countries remains an average 11.44% in 2022, below the recommended 15% threshold. Meanwhile, debt levels in developing countries continue to rise. Between 2015 and 2024, the number of countries in debt difficulty and at high risk of debt distress increased from 16 to 24 and from three to 11, respectively.
As the economic gap between rich and poor nations has diverged rather than converged, the report calls for actions to renew the development financing system to better align money for sustainable development. For instance, there are already USD 461 trillion worldwide in financial assets - sufficient to cover the gap 115 times over - but the misalignment of these resources, including the USD 1.53 trillion spent on subsidising fossil fuels in 2022, needs to be redirected to achieve the 2030 Agenda.
To enhance accountability and transparency in resource allocation, the report also urges strengthening the global financing for development monitoring system to restore trust among all countries.
The Global Outlook provides a basis for the upcoming discussions at the Fourth International Conference on Financing for Development in Seville, where from 30 June countries will negotiate how to reform the global financing architecture for the implementation of the SDGs.
Download the report.
