By Sakiko Fukuda-Parr and Isabel Ortiz
NEW YORK, Apr 24 2025 – The Fourth International Conference on Financing for Development (FfD4) will bring world leaders together to forge a new international consensus on how to finance a better future for all. Yet, in practice, the first drafts of its outcome reveal a glaring omission: people. Despite rhetoric about inclusivity, the drafts are strikingly weak on social issues, as if financing and macroeconomic policies exist in a vacuum, detached from the lives they impact.

This is not just an oversight—it’s a continuation of a decades-long mistake in economic policymaking, where abstract macroeconomic principles have been always prioritized over human welfare, inflicting suffering on billions. “Must we starve our children to pay our debts?” asked Julius Nyerere, former president of Tanzania, in the 1980s. Today, 3.3. billion people live in countries that spend more on debt service than health and education, and 6.7 billion endure austerity cuts. For too long, neoliberal economic policies have treated people as an afterthought.

Sakiko Fukuda-Parr

While trillions of dollars have been funneled to creditors and corporations, macroeconomic stability and debt service have been pursued at the expense of the poor and the shrinking middle and working classes. In recent years, billions of lives were upended by budget cuts: reduced pensions and social protection benefits; lower salaries; less access to health and education; cuts to programs for women, children, the elderly, persons with disabilities. Labor and corporate regulations were dismantled in the name of growth, job security eroded, consumption taxes rose, increasing prices and further squeezing household incomes. It is hardly surprising that social discontent and political instability are increasing.

The FfD4 outcome risks perpetuating this terrible legacy. While drafts pay lip service to social issues, they generally fail to incorporate them in the recommendations of each of the main sections: domestic public finance; private finance; development cooperation; trade; debt; international financial architecture and systemic issues; science, technology, data and monitoring. Notably, the main beneficiaries of the private finance section are foreign investors and corporations!

The time for excluding people is over. The FfD4 must put people at the center of its agenda to avoid repeating the mistakes of the past and becoming irrelevant. Governments and international institutions must recognize that macroeconomic and financial decisions have profound social impacts—and act accordingly. The final outcome should include commitments to:

Isabel Ortiz

1. Domestic public finance expenditures: Prioritize universal social protection or social security, quality education health, water, and other basic economic and social rights. Adequate financing for these priorities must be integrated into national development plans and budgets, with guarantees against retrogression or backsliding during crises, in accordance with human rights and labor standards. Austerity cuts are not an option. Social insurance, a key element of social security, has its own funding mechanism, employers’ and workers’ contributions (so far ignored by the FfD4 drafts), that must be set at adequate levels, especially raising corporations’ contributions to make social security sustainable, combined with the formalization of workers in the informal economy to ensure decent jobs with social security, and expand coverage.

2. Domestic finance revenues: Introduce more progressive taxation with effective international tax cooperation. Revenue raising is essential for social priorities but should not rely on taxation of those with lower incomes – such as consumption tax – but on those with the means – such as taxes on wealth, windfall profits and corporate income. End loopholes by eliminating tax havens and illicit financial flows, as well as by adopting the UN Framework Convention on International Tax Cooperation to stop corporate tax dodging. Gender-responsive budgets must be implemented to ensure that both revenues and expenditures accrue to women – half of the world’s population.

3. Private finance: Ringfence social infrastructure and services from private financing. Privatization and Public-Private Partnerships (PPPs) of public services have repeatedly failed, leading to higher costs, reduced access, and poorer services. Public investment, not privatization, is the key to equitable and resilient social systems. Mandate human rights due diligence for private investors (binding rules, not voluntarism), with accountability, enforcing penalties for private actors that undermine labor/environmental standards.

4. Trade: Allow policy space to Global South countries to protect local industries and food sovereignty, and subject trade agreements to social impact assessments (SIAs) to evaluate their effects on employment, inequality, gender, and access to goods and services. Abandon investor-state dispute systems (ISDS) that override public interest. Trade policies must maximize social benefits and mitigate adverse impacts.

5. Debt: Establish a fair and transparent UN debt workout mechanism to effectively reduce illicit sovereign debts and incorporating human rights into Debt Sustainability and Debt Restructuring Assessments, ensuring that debt service does not result in social spending cuts.

6. Technology: Tax Big-Tech and address the negative social impacts of Artificial Intelligence (AI), such as job displacement and wealth concentration. Adequate social protection measures must be enacted for those affected by job losses, and AI-driven profits must be taxed to redistribute benefits back to society.

7. International financial architecture: Reform the International Monetary Fund (IMF) and Multilateral Development Banks (MDBs) to shift voting power to Global South and to end their support to austerity policies: The IMF as well as the MDBs must stop promoting regressive reforms and austerity measures that harm people. Adjustment programs, as well as surveillance policy advice, often cut/rationalize necessary benefits for women, children, persons with disabilities, pensioners, and the unemployed, just for cost-savings, leaving only a minimal safety net for the poorest. These measures violate human rights law, including labor standards, approved by all countries: the IMF and the MDBs should align themselves with them. Additionally, a fairer and periodic distribution of IMF Special Drawing Rights should be allowed, without policy conditionalities, to fund human rights and sustainable development goals (SDGs).

8. Data, monitoring and follow-up: Strengthen data systems to assess the social impacts and distributional effects of financing policies. This includes disaggregated data by, at least, gender and income group. If analysis reveals that the majority of people are not the primary beneficiaries or that human rights are undermined, policies must be revised to ensure equitable development.

The FfD4 outcome is an opportunity to correct the mistakes of the past. Governments must recognize that financing for development is not just about balancing budgets or stabilizing economies —it’s about improving citizens’ lives. If the outcome document fails to prioritize social issues, it will not only betray the promise of the financing for development process but also perpetuate current systemic inequalities.

Sakiko Fukuda-Parr, Professor of international Affairs at The New School in New York, is a former director at the United Nations Development Program (UNDP).

Isabel Ortiz, Director of the Global Social Justice, is a former director of the International Labor Organization and UNICEF, and a former senior official at the United Nations and the Asian Development Bank.

IPS UN Bureau

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