Financing development? An assessment of domestic resource mobilisation, illicit financial flows and debt management

In mid-2025, the world’s governments will gather in Spain for the 4th United Nations Summit on Financing for Development (FfD). It will be a key moment to assess the fairness and efficiency of global economic governance, and for world leaders to address underlying systemic issues and challenges. With this in mind, it is high time to ask: how is it going with financing for development? In this report, we assess the situation with a specific focus on debt management, domestic resource mobilisation and illicit financial flows in nine focus countries: Bangladesh, Ecuador, Grenada, Kenya, Morocco, Nepal, Peru, Philippines, Zambia. 

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There are direct links between the level of available public resources of governments and the ability of countries to fulfil the Sustainable Development Goals (SDGs), the global environmental targets, as well as their human rights obligations, including those related to gender equality and women’s rights.

For example, fulfilment of the right to health requires adequate public funding for health care, and the right to education depends on adequate public funding for schools. Austerity measures and inadequate levels of quality public services have disproportionate negative impacts on the poorest, and furthermore tend to impact women harder than men, thus contributing to increased inequalities.

Despite this, researchers have warned that, following the Covid-19 pandemic, the world is now facing a potential ‘austerity pandemic’, as governments around the world are slashing public budgets at large scale. In fact, projections have shown that 85 per cent of the global population might be impacted by public budget cuts in the coming years.

At the core of this problem lies a systemic failure within the global economic governance systems. This includes a lack of a fair, effective and inclusive global system to tackle key factors such as sovereign debt challenges and international tax dodging by wealthy individuals and corporations.

As a result, the availability of public resources at the national levels is eroded by high costs for sovereign debt payments or by large-scale illicit financial flows. These factors can also undermine development effectiveness, including in cases where inward financial flows in the form of aid or climate finance are matched or even surpassed by outflows in the form of payments to creditors or international tax abuse.

In the following chapters, we assess the state of play – first from the global perspective, and then from the national perspective – in nine focus countries. These countries have been selected with a view to ensuring coverage of three different regions (Asia, Africa, and Latin America and the Caribbean), as well as different income groups – ranging from least developed countries to middle-income countries.

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