Countries on Wednesday agreed on a series of bold measures to overhaul global finance practices and generate investments for tackling a range of economic, social and environmental challenges at the United Nations Third International Conference on Financing for Development, being held in Addis Ababa.

The groundbreaking agreement, the Addis Ababa Action Agenda, provides a foundation for implementing the global sustainable development agenda that world leaders are expected to adopt this September. The agreement was reached by the 193 UN Member States attending the Conference, following negotiations under the leadership of Ethiopian Foreign Minister Tedros Adhanom Ghebreyesus.

The agreement, adopted after months of negotiations between countries, marks a milestone in forging an enhanced global partnership that aims to foster universal, inclusive economic prosperity and improve people’s well-being while protecting the environment.

UN Secretary-General Ban Ki-moon said, “This agreement is a critical step forward in building a sustainable future for all. It provides a global framework for financing sustainable development.” He added, “The results here in Addis Ababa give us the foundation of a revitalized global partnership for sustainable development that will leave no one behind.”

The Conference is the first of three crucial events this year that can set the world on an unprecedented path to a prosperous and sustainable future. Its outcome provides a strong foundation for countries to finance and adopt the proposed sustainable development agenda in New York in September, and to reach a binding agreement at the UN climate negotiations in Paris in December that will reduce global carbon emissions.

Financing is considered the linchpin for the success of the new sustainable development agenda, which will be driven by the implementation of 17 sustainable development goals.

Close to 150 world leaders will adopt the new goals at the Sustainable Development Summit in New York this September. The goals address global priorities including ending poverty and hunger, reducing social inequality, tackling climate change, and preserving the planet’s natural resources.

In support of implementation of the sustainable development goals, the Addis Ababa Action Agenda contains more than 100 concrete measures. It addresses all sources of finance, and covers cooperation on a range of issues including technology, science, innovation, trade and capacity building.

The Action Agenda builds on the outcomes of two previous Financing for Development conferences, in Monterrey, Mexico, and in Doha, Qatar.

Wu Hongbo, the Secretary-General of the Conference, said, “This historic agreement marks a turning point in international cooperation that will result in the necessary investments for the new and transformative sustainable development agenda that will improve the lives of people everywhere.”

Domestic resource mobilization is central to the agenda. In the outcome document, countries agreed to an array of measures aimed at widening the revenue base, improving tax collection, and combatting tax evasion and illicit financial flows. Countries also reaffirmed their commitment to official development assistance, particularly for the least developed countries, and pledged to increase South-South cooperation.

The outcome document also underscores the importance of aligning private investment with sustainable development, along with public policies and regulatory frameworks to set the right incentives. A new mechanism that will facilitate financing for new technologies for developing countries was also agreed upon.

The Addis Ababa Action Agenda includes important policy commitments and key deliverables in critical areas for sustainable development, including infrastructure, social protection and technology. There were agreements for international cooperation for financing of specific areas where significant investments are needed, such as in infrastructure for energy, transport, water and sanitation, and other areas to help realize the proposed sustainable development goals.

Countries also stressed the importance of nationally owned sustainable development strategies, supported by integrated national financing frameworks.

“We reiterate that each country has primary responsibility for its own economic and social development and that the role of national policies and development strategies cannot be overemphasized,” the agreement states.

The Addis Ababa Action Agenda

To achieve these goals, countries also agreed to new initiatives, including on:

Technology—Countries agreed to establish a Technology Facilitation Mechanism at the Sustainable Development Summit in September to boost collaboration among governments, civil society, private sector, the scientific community, United Nations entities and other stakeholders to support the sustainable development goals.

Infrastructure—Countries agreed to establish a Global Infrastructure Forum to identify and address infrastructure gaps, highlight opportunities for investment and cooperation, and work to ensure that projects are environmentally, socially and economically sustainable.

Social protection—Countries adopted a new social compact in favour of the poor and vulnerable groups, through the provision of social protection systems and measures for all, including social protection floors.

Health—Countries agreed to consider taxing harmful substances to deter consumption and to increase domestic resources. They agreed that taxes on tobacco reduce consumption and could represent an untapped revenue stream for many countries.

Micro, small and medium-sized enterprises—Countries committed to promote affordable and stable access to credit for smaller enterprises. They also pledged to develop and operationalize a global strategy for youth employment and implement the International Labour Organization Global Jobs Pact by 2020.

Foreign aid—Countries recommitted to achieve the target of 0.7 per cent of gross national income for official development assistance, and 0.15 to 0.20 per cent for least developed countries.

A package of measures for the poorest countries—Developed countries commit to reverse the decline in aid to the poorest countries, with the European Union committing to increase its aid to least developed countries to 0.2 per cent of gross national income by 2030. They also agree to adopt or strengthen least developed countries investment promotion regimes, including with financial and technical support. Governments also aim to operationalize the technology bank for this group of countries by 2017.

Taxation—The Agenda calls for strengthening support for the work of the UN Committee of Experts on International Cooperation in Tax Matters to improve its effectiveness and operational capacity, and the engagement with the Economic and Social Council. It emphasizes the importance of inclusive cooperation and dialogue among national tax authorities.

Climate Change—The Action Agenda calls on developed countries to implement their commitment to a goal of jointly mobilizing USD100 billion per year by 2020 from a wide variety of sources to address the needs of developing countries. Countries also committed to phase out inefficient fossil fuel subsidies that lead to wasteful consumption.

In addition, there were about 200 side events, where governments and other stakeholders announced additional commitments. These included additional aid for capacity building in the area of taxation; financing through development banks, including $400 billion from the World Bank Group, as well as establishment of new international development banks; and increased aid and philanthropic funding for social needs.

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Source: United Nations, July 15, 2015