Last year was the hottest on record, and experts are warning that the first half of 2024 could be even hotter. It is countries in the global south that are experiencing the harshest consequences of a rapidly warming planet. These are the communities that are also dealing with the fallout from a worsening global economic situation.    

The United Nations Department of Economic and Social Affairs (UN DESA) reports in ‘World Economic Situation and Prospects 2024’ , that 238 million people – roughly equivalent to the population of Belgium, France, Germany, Portugal and the UK combined– could not afford to buy sufficient food in 2023 because of food price increases, with women and children hit the hardest. It also reports that more people were pushed into poverty than the year before - a downward spiral that continues unabated since the global Coronavirus pandemic  The World Bank predicts that by 2024 people in one out of every four developing countries will still be poorer than they were in 2019. 

The fact is that more than 50 per cent of people living in extreme poverty - who cannot afford a single meal let alone other basics for a decent life - live in countries that face severe debt problems. According to the United Nations Conference on Trade and Development (UNCTAD) 3.3 billion people live in countries that spend more on interest payments than on health or education. Without these countries’ debt being substantially reduced, coupled with other measures to increase budgets to finance sustainable development and deal with the climate emergency, it is unlikely that these numbers will change.

Behind these numbers are people. In Africa, the youngest continent in the world, many of those impacted are young, eager to get a good education, find work and live to the fullest. But they are thwarted by a lack of resources and opportunities to do so. In Africa, debt service payments are 2.5 times greater than what is spent on education; four times greater than health spending; and 11 times greater than social protection spending. History shows that frustration and hopelessness lead to social unrest, a warning for a potentially hot 2024 in more ways than one.

What is worse, the debt crisis is expected to spread in 2024. Already half of low-income countries and many middle-income countries entered 2024 in great uncertainty about their ability to meet their debt servicing obligations. The fact is that the global financial architecture is not designed to ensure that these countries have the finance they need. It also does not provide a timely, fair and transparent mechanism to restructure or cancel the debt of countries at high risk of - or already in - default. 

Moreover, the long and frustrating debt restructuring negotiations for countries in distress like Sri Lanka, Suriname, Ghana and Zambia have demonstrated the weakness and deficiencies of the mechanisms to deal with sovereign debt defaults Not surprisingly, nobody denies that the institutions and policies dealing with sovereign debt - and global development finance more generally - are no longer fit for purpose. 

The reform of the global financial architecture

July 2024 is the 80th anniversary of the Bretton Woods Conference that established the World Bank and the International Monetary Fund (IMF). The global context has changed dramatically since that meeting where only 44 countries had delegates around the table and the US and the UK dominated discussions.   Yet the Bretton Woods institutions are still dominated by the same small group of shareholders from the global north. 

Decisions on IMF quota reform - which if carried out meaningfully would allow more countries more equitable shares, and representation - has proceeded so far at a snail’s pace. Also, there is no provision for better access to IMF lending to those countries who need it the most (and who need it urgently).

The slim chance of a leadership shake-up at the IMF, with the official end of IMF Managing Director Kristalina Georgieva’s term in office in October, offers some reason for optimism. However, this would mean putting an end to the “gentleman’s agreement” that the US selects the head of the World Bank while Europe decides on who heads the IMF. 

The big question for 2024 is whether we will see a similar act of political will on development finance architecture reform as was shown by the Africa Group at the UN on global tax governance. It is thanks to them that the UN General Assembly Resolution for a UN Framework Tax Convention was adopted in November 2023.

The Bridgetown initiative, presided over by the Prime Minister of Barbados Mia Mottley, was also a welcome demonstration of global south leadership to advance on the reform agenda. However, it is at best an incomplete agenda and, at worst, its strong focus on mobilising private finance risks deepening rather than solving problems. Similarly, the World Bank’s ‘Evolution Roadmap’ of reform announced in 2023 fails to address the Bank’s successive failures to provide countries with support and resources to permanently overcome inequality and adopt their own pathways to sustainable development, as civil society representatives have pointed out. 

On the eve of the final countdown to the Sustainable Development Goals deadline in 2030, the first goal to eradicate extreme poverty has received a massive setback. And the writing on the wall appears to say that it will take a multilateral miracle to turn this around. 

This is the year that change can – and must - come

It may sound counter-intuitive in the current polarised geopolitical context - and in a year of political uncertainty brought about by elections in so many countries and regions, most notably the US and EU. But 2024 does come with promising opportunities for meaningful multilateral progress in the area of international cooperation on finance. 

Thanks to the great leadership of the Africa Group, the UN has now finally kick-started an intergovernmental process to negotiate a permanent framework to fix the broken global tax system. Terms of reference for a new Framework Convention on International Tax Cooperation are to be ready by August 2024. 

Another promising pathway for multilateralism is the UN’s decision to hold its fourth Financing for Development Conference (UN FfD) in Spain in 2025. The FfD process provides a space for all countries, irrespective of income status and power in global economic governance decision-making, to participate on an equal footing in setting the framework for global finance to align with existing commitments towards sustainable development, climate change and human rights. 

More than 20 years after the international community achieved its historic ‘Monterrey Consensus’ on Financing for Development, the 2025 Conference and its negotiations – which will kick off in 2024 - could provide an opportunity for a renewed multilateralism to define a democratic economic governance and finance a collective future. 

It should not be too much to expect a global Marshall Plan 2.0 that responds to the existential threats of climate change, ecological breakdown and inequality that the world faces today.