# Global economic crisis strangling progress for poor, warns U.N. development chief
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-11-10
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: UNDP Chief Warns of Regression in Global Development
Meta Description: Economic setbacks caused by climate change, COVID-19, cost-of-living crisis, and debt risks jeopardising Sustainable Development Goals as countries face
URL: https://financedigest.com/global-economic-crisis-strangling-progress-for-poor-warns-u-n-development-chiefhtml

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By Laurie Goering

SHARM EL-SHEIKH, Egypt (Thomson Reuters Foundation) – Decades of development progress are at risk as economies are pushed backward by climate change losses, the COVID-19 economic fallout, a growing cost-of-living crisis, and soaring debt and inflation, the U.N. [development chief](https://www.financedigest.com/crypto-firms-will-develop-offshore-without-clear-us-rules-coinbase-chief-says.html "Crypto firms will develop ‘offshore’ without clear US rules, Coinbase chief says") said at COP27 in Egypt.

We essentially document a regression – and regression that is virtually universal [across the board,”](https://www.financedigest.com/board-report-highlights-complex-decision-making-process-across-banking-and-finance-sector.html "Board Report Highlights Complex Decision-Making Process Across Banking and Finance sector") said Achim Steiner, who leads the United Nations Development Programme (UNDP).

Progress toward the globally agreed Sustainable Development Goals – which include ending poverty and hunger and are due to be achieved by 2030 – is sliding, he said, with some [countries finding themselves back](https://www.financedigest.com/as-who-pandemic-pact-talks-begin-poor-countries-on-back-foot.html "As WHO pandemic pact talks begin, poor countries on back foot") where they were in 2016.

The economic pain is making it harder for many governments to find the funding [needed to roll out clean energy and tackle climate](https://www.financedigest.com/analysis-global-climate-coalitions-need-safer-harbour-from-antitrust-turbulence.html "Analysis-Global climate coalitions need safer harbour from antitrust turbulence") change – something that would have been easier when interest rates were still low, Steiner said in an interview.

With 54 countries now in [debt distress – and getting close to defaulting – “it will be more costly to step](https://www.financedigest.com/sovereign-debtors-creditors-agree-on-steps-to-jumpstart-debt-restructurings.html "Sovereign debtors, creditors agree on steps to jumpstart debt restructurings") in,” he added.

But multiplying global crises, particularly the war in Ukraine, are also creating new incentives to swap fossil fuels for renewable energy, with its possibilities for cheaper [power bills once in place and greater energy](https://www.financedigest.com/france-strains-to-avert-power-cuts-as-cold-snap-tests-europes-energy-resolve.html "France strains to avert power cuts as cold snap tests Europe’s energy resolve") independence, he said.

It has also become clearer that demands for environmental protection and economic advancement are “no longer forces pulling in opposite directions”, especially as renewables like [solar become](https://www.financedigest.com/croatias-coast-turns-to-solar-in-bid-to-become-energy-sustainable.html "Croatia’s coast turns to solar in bid to become energy-sustainable") the cheapest source of energy, Steiner said.

That means there are still strong possibilities to wrest the world off using coal, oil and gas and onto a greener development path, [despite the economic headwinds](https://www.financedigest.com/despite-the-headwinds-investors-have-important-reasons-to-be-cheerful.html "DESPITE THE HEADWINDS, INVESTORS HAVE IMPORTANT REASONS TO BE CHEERFUL") around the globe, he said.

The problem – particularly for poorer, debt-ridden countries – is finding the money to actually install clean energy, which has [higher upfront costs](https://www.financedigest.com/ds-smith-says-cardboard-box-volumes-strong-flags-higher-costs.html "DS Smith says cardboard box volumes strong; flags higher costs") but produces decades of cheap power.

DROWNING IN DEBT

One solution to boost renewable energy faster – and reap the [development benefits](https://www.financedigest.com/the-benefits-of-developing-online-stores-through-shopify.html "The Benefits of Developing Online Stores Through Shopify") that come with it – may be debt forgiveness, Steiner said.

“For many countries this is an absolutely horrendous moment,” he said. They can’t go to the [financial markets.”](https://www.financedigest.com/the-political-wildcard-what-is-trumps-us-presidential-nomination-doing-to-financial-markets.html "The political wildcard: What is Trump’s US presidential nomination doing to financial markets?")

Debt forgiveness – or debt-for-climate swaps, in which [money freed up from cancelled debt](https://www.financedigest.com/necessary-lessons-in-debt-six-out-of-ten-brits-wouldnt-feel-comfortable-discussing-any-money-issues-with-their-children.html "Necessary lessons in debt? Six out of ten Brits wouldn’t feel comfortable discussing any money issues with their children") goes directly into climate projects – would be like “putting a scalpel to a festering wound”, painful but necessary, he added.

A momentum-gathering push at COP27 to reshape [international financial](https://www.financedigest.com/the-hidden-financial-woes-of-international-students-heading-for-the-uk.html "The Hidden Financial Woes of International Students Heading for the UK") institutions to make it easier for money to flow where it is needed also is part of the puzzle, he said.

Our [financial system..](https://www.financedigest.com/money-laundering-made-easy-by-uk-financial-system.html "Money laundering made easy by UK financial system"). needs to evolve with the size and nature of the challenges,” Steiner said. We [need better institutions.”](https://www.financedigest.com/lessons-that-banks-and-financial-institutions-need-to-take-from-the-covid-19-pandemic.html "Lessons that Banks and Financial Institutions need to take from the Covid-19 Pandemic")

Barbados [Prime Minister](https://www.financedigest.com/britains-queen-elizabeth-will-appoint-new-prime-minister-at-balmoral.html "Britain’s Queen Elizabeth will appoint new prime minister at Balmoral") Mia Mottley has proposed a revamp of post-World War II international financial systems, dubbed the “Bridgetown Agenda”, designed to boost climate funding flows and make them easier to access for debt-strapped countries.

The proposal has won some early key backing, including from France’s [President Emmanuel Macron](https://www.financedigest.com/french-president-macron-reaffirms-that-pensions-system-reform-is-necessary.html "French President Macron reaffirms that pensions system reform is necessary").

Sameh Shoukry, Egypt’s COP27 president, has also called for new [finance that is “sustainable](https://www.financedigest.com/improving-sustainability-finance-effective-lifecycle.html "Improving sustainability in finance with an effective IT lifecycle") and cheap.

“Undoubtedly this is an important gap in climate action,” he said.

ADAPTATION AND RISK

Besides powering up green energy investment, more money is [needed to help countries](https://www.financedigest.com/5-countries-you-need-to-have-an-offshore-account-in.html "5 Countries You Need To Have An Offshore Account In") adapt to climate change impacts that are already happening, and to reduce the risks, so as to stop development efforts sliding, Steiner said.

The U.N. Adaptation Gap” report, released this month, [says developing](https://www.financedigest.com/mobile-games-developer-huuuge-says-has-24-2-million-at-svb.html "Mobile games developer Huuuge says has .2 million at SVB") countries may need as much as $340 billion a year by 2030 to stay ahead of wilder weather and rising sea levels.

Finding much-needed [private investment](https://www.financedigest.com/procurementin-european-private-equity-investment-adding-value-to-the-boardroom.html "Procurement in European private equity investment – adding value to the boardroom.") for adaptation efforts is difficult, because the returns are less clear and often seen as having only local impact, it noted.

But Steiner, whose agency is trying to create a pipeline of adaptation [projects to attract investment](https://www.financedigest.com/sse-to-invest-122-million-in-scottish-pumped-hydro-project.html "SSE to invest 2 million in Scottish pumped hydro project"), said the shortfall in finance has far wider implications than many people realise.

Flood-battered Pakistan, for instance, is likely to [see its exports](https://www.financedigest.com/russias-rosatom-sees-2022-exports-growth-at-15-report.html "Russia’s Rosatom sees 2022 exports growth at 15% – report") of key commodities like cotton and rice hit, which affects international markets and commodity prices. Making [payments on its debt](https://www.financedigest.com/ukraine-seeks-debt-payment-freeze-as-war-ravages-economy.html "Ukraine seeks debt payment freeze as war ravages economy") will also be tougher with less income.

When [nations such as Pakistan undergo the kind of profound shock they’ve just gone through, when small island nations in the Caribbean every year worry about in 12 hours losing a third](https://www.financedigest.com/still-living-at-home-a-third-of-the-nation-cant-afford-to-rent.html "Still living at home? A third of the nation can’t afford to rent") or more of their GDP … you have created an economically impossible scenario,” Steiner said.

That has direct implications for rich countries and the [global economy](https://www.financedigest.com/global-economy-seen-facing-a-challenging-year-eurochambres.html "Global economy seen facing a challenging year -Eurochambres") – not just those nations being slammed the hardest, he said.

The wealth of many of the savers in many of the wealthy countries are inexplicably linked to the [economies of the Global](https://www.financedigest.com/global-economy-weathered-98bn-natural-hazard-loss-in-first-half-of-2016-according-to-aon-catastrophe-report.html "GLOBAL ECONOMY WEATHERED BN NATURAL HAZARD LOSS IN FIRST HALF OF 2016, ACCORDING TO AON CATASTROPHE REPORT") South,” he added.

Success at the COP27 negotiations in Sharm el-Sheikh, he said, will require leaving the talks with a sense that climate action is [pushing forward “built on shared](https://www.financedigest.com/bayer-shares-gain-on-prospect-of-second-activist-pushing-for-change.html "Bayer shares gain on prospect of second activist pushing for change") interests, transparency, mutual accountability and trust.

“This is not a law-making convention,” he noted. “This is essentially negotiating an extraordinary transition in our economies, with 8 billion people sitting at the table.”

Originally published on:

(Reporting by Laurie Goering @lauriegoering; Editing by Megan Rowling. The Thomson [Reuters](https://www.financedigest.com/thomson-reuters-keeps-outlook-but-wary-of-slowing-economy.html "Thomson Reuters keeps outlook, but wary of slowing economy") Foundation is the charitable arm of Thomson Reuters. Visit https://www.context.news/)


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