New Global Financing Strategies Are Needed in 2023

Published: January 18, 2023

Is the international development and humanitarian financing system set up to deal with on going and spiraling global crises?

For several years, Bread for the World has been sounding the alarm about multiple overlapping crises that have caused soaring rates of global hunger and even several instances of the worst-case hunger scenario–famine.

Bread advocates have been winning increases in U.S. funding to respond to these immediate needs, including an additional $1 billion for famine relief in 2017 and $5 billion for global emergency food and nutrition responses in 2022.

Nonetheless, people continue to suffer through the worst global hunger crisis of the past 30 years. And it is likely that widespread hunger will continue as the global pandemic enters its fourth year and Russia’s war against Ukraine enters its second. Nevertheless, Bread for the World will continue to focus advocacy efforts on the enormous humanitarian challenges and the resources needed to save lives.

One major problem for low-and middle-income countries is debt and the large sums needed to pay even the interest on loans. The debt crisis is not new. Previous debt relief efforts, such as the Highly Indebted Poor Countries (HIPC) initiative and its successors, offered some breathing space. The impact was largely temporary, however, particularly as national governments began to incur additional debt to fund ongoing budgetary needs, including COVID-19 response and safety-net programs.

As a result, more than 60 percent of low-income countries are in debt distress or at high risk of it. This is double the proportion of countries that struggled to repay their debts in 2015. The impact of high debt repayments is to push agriculture, food security, and other essential spending to the edges of the budget or out of it altogether.

All of this raises the question: Is the international development and humanitarian financing system set up to deal with on going and spiraling global crises?

Prime Minister Mia Mottley of Barbados is among many who argue that it is not. Last year, Mottley proposed the Bridgetown Agenda, a plan to reform the international financial system. Bread expects many elements of the Bridgetown Agenda to be raised in global forums this year.

  • First, it is clear that the global debt system is unsustainable. It is preventing countries from responding to crises and investing in their own development. The Bridgetown Agenda calls for immediate action to end the debt crisis, including action by donors like the United States to reallocate excess Special Drawing Rights to lower-income countries. The U.S. has pledged to donate a portion of its Special Drawing Rights through the International Monetary Fund, but Congress has yet to appropriate the necessary funds.
  • Second, in the coming years, continuing overlapping crises will likely require evermore resources, while national budgets, even of wealthier countries like the U.S. ,will be increasingly constrained. The Bridgetown Agenda endorses proposals to reform the multilateral development banks (MDBs) and optimize the use of their assets and resources. Analysts argue that this would increase the amount of financing available to low-and middle-income countries to $1 trillion without requiring additional funding from donor countries. Last month, the World Bank Group released a road map for evolving its mission and funding capacity to help solve today’s global problems.
  • Third, current international financing mechanisms were not designed to fund either preventive measures for climate disasters or disasters that affect more than one country simultaneously. Beyond calling for immediate action to ensure funding for climate change and other Sustainable Development Goals (SDGs), the Bridgetown Agenda proposes a reconstruction fund to make grants to countries that suffer climate disasters rather than relying on one-time appeals for individual countries.

In an era of recurrent, ongoing, and overlapping crises, the global community must examine and perhaps reimagine, its structures and systems to ensure that resources are used as effectively and efficiently as possible.

The goal of ensuring that no one goes hungry calls for new strategies and resources in the face of today’s crises.

Jordan Teague is interim director, policy analysis and coalition building, with Bread for the World.