The war could widen the $3.6 trillion annual gap in financing needed to achieve #sustainable #development #goals (SDGs). The financial fallout from the war in Ukraine could widen the already huge gap in financing needed to achieve SDGs and lead to cascading #credit #downgrades and #debt#defaults in developing countries, UNCTAD said.
▪ The gap in financing needed to achieve SDGs, such as ending poverty and halting climate change, now sits at $17.9 trillion for the 2020-2025 period, new UNCTAD estimates show. This puts the current annual gap at $3.6 trillion – more than $1 trillion wider than before the COVID-19 pandemic – without even factoring in the effects of the war. The $17.9 trillion figure is likely an underestimate because the calculations were done before the start of the war in Ukraine.
▪ The conflict is tightening global liquidity, especially for developing countries, as investors flock to assets perceived as less risky. The cost of credit has already increased since the start of the conflict, with bond yields rising an average of 36 basis points.
▪ The war’s impact on government spending around the globe will put further pressure on aid budgets, which were already low. External financial resources for development continue to decrease, which has been especially detrimental to low-income and middle-income countries. Capital flight and less development assistance would create acute stress for many developing countries already struggling with high debt levels. Cascading credit downgrades and debt defaults could be on the horizon.