The Road to the SDGs

T H E R O A D T O T H E S D G s | P R O G R E S S A N D A C H I E V E M E N T S meetings, we sought to convey the voice of MCs and Muslim communities in non-MCs to the world, highlighting the real challenges faced by developing and poor countries. We were also keen to reveal the investment opportunities available in a market of 1.7 billion people worth more than US$ 7 trillion. One of IsDB's major contributions was the development of a comprehensive assessment report on global best practices in addressing political risks. IsDB also implemented two country platforms for Somalia and Uzbekistan. Moreover, IsDB was selected as an implementing partner of the G20 Global Partnership for Financial Inclusion (GPFI) in recognition of its efforts and active contribution to GPFI initiatives and to the discussion and formulation of its initiatives. Islamic finance is a participatory financing that gives IsDB a competitive advantage in attracting increasing numbers to deal with the banking system in MCs and Muslim communities in non-MCs. In our capacity as a GPFI implementing partner, for the financial inclusion of nearly 1.7 billion people around the world who do not have access to banking services, I delivered a statement on behalf of IsDB at the G20 Leaders’ Summit, held on November 21-22, 2020. 3. Chairing 2020 meetings of MDB heads In 2020, IsDB chaired the meetings of the heads of MDBs, namely the World Bank Group, the International Monetary Fund, the International Finance Corporation, the African Development Bank, the Asian Development Bank, the European Investment Bank, the European Bank for Reconstruction and Development, the Inter-American Development Bank, the Asian Infrastructure Investment Bank, the Council of Europe Development Bank and the New Development Bank. My chairmanship of heads of MDBs meetings coincided with the Saudi presidency of G20. We held three meetings and discussions focusing mainly on the best ways to help MCs face the consequences of the COVID-19 pandemic. In this context, we discussed the WB/IMF Debt Service Suspension Initiative (DSSI) for poor countries, an initiative adopted by the G20 to help poor countries channel their financial resources towards fighting the pandemic and mitigating its economic and social impacts. The DSSI was one of the most prominent G20 achievements, providing liquidity estimated at approximately US$ 14 billion, in addition to the approval by MDBs of financial resources up to US$ 230 billion to help developing and poor countries strengthen their health systems, support SMEs, maintain jobs and support social safety nets and food security. Moreover, on IsDB's initiative, a comprehensive report on the contribution of MDBs to the implementation of the 2030 Agenda was developed. QUESTION: The debt service suspension initiative for poor or developing countries has definitely helped such countries respond to the COVID-19 pandemic and its repercussions. However, after the pandemic is over, they will face a problem in financing their future projects due to the colossal amount of accumulated debt. How can the issue of external debt be solved? Does IsDB have any initiatives in this context? ANSWER: COVID-19 started as a health issue. However, the ensuing lockdowns also gave rise to economic and social repercussions. Although no country has been spared the impact, developing and poor countries, poor people, informal workers, investors and microenterprises were hit the hardest. Poor countries suddenly found themselves before two challenging demands: (1) providing the funds necessary for urgent medical supplies, health sector support, food provisions and support for small enterprises to ensure their survival, and (2) the debt service obligations towards creditors (countries, commercial or investment banks, MDBs, etc.). As developing and poor countries have limited resources, they cannot meet both demands concurrently. That is why the World Bank and IMF introduced an important initiative that was discussed by MDBs in the meetings I chaired and subsequently endorsed by the G20 countries under the Saudi presidency. Pursuant to this initiative, poor countries received approximately US$ 14 billion for health and food security expenditure. As such, this initiative did not help solve the external debt problem suffered by developing countries for the following reasons: u The initiative was designed as a temporary and time- limited solution to help poor countries address the health, economic and social consequences of the COVID-19 pandemic. This goal was achieved. u The initiative specifically addressed bilateral debt between countries and did not cover private sector and MDB debts. The debts of developing countries are over US$ 50 trillion. Over and above, those countries combined need US$ 1 trillion annually for SDG-funding. This indicates an increase in external debt that impacts the global banking and financial system, not just poor countries. The previous century witnessed numerous global crises due to external debt. It has now become evident that emerging from this snare requires a new business model to finance development in developing countries. It must be a model that addresses the root causes that drowned [ 13 ]