Financing for Development: What’s Next After Seville?

As leaders from around the world gathered in Seville, Spain, at the Fourth International Conference on Financing for Development (FfD4) to discuss how to finance sustainable economic development, a new era of geoeconomics was dawning around the world. For the past half century, money, not politics, has dominated the global stage. Yet growing domestic economic and political dissatisfaction in rich countries has strained their commitment to funding international development programs. The conference resulted in the Sevilla Commitment, a series of nonbinding resolutions to boost investment in sustainable development, address growing debt crises in poor countries, and restructure the international financing architecture. At the same time, some of the fundamentals underlying the international consensus on sustainable development have seriously frayed, which means that implementing the Sevilla Commitment will face serious headwinds in the months leading up to November’s COP30 and in the years to come.

Q1: What is Financing for Development?

A1:Financing for Development (FfD) refers to the various sources of funding and approaches by governments, companies, investors, and philanthropies required to achieve a global agenda of specific development priorities. A recent CSIS commentary provides an overview of this process.

In 2000, global leaders adopted the UN Millennium Declaration, identifying eight major development targets called the Millennium Development Goals (MDGs), to be met by 2015. UN member states notably expressed a concern regarding the ability of developing countries to generate resources to finance sustainable development. This worry propelled the First International Conference on Financing for Development in Monterrey, Mexico, in March 2002. Leaders highlighted the importance of mobilizing domestic resources and private flows, increasing foreign assistance, employing sustainable debt financing to fund investment, and addressing systemic issues to improve global systems to support development. Conference attendees committed to remaining engaged and following up on the implementation of their agreements.

In 2015, the MDGs were replaced with a more ambitious agenda for the next 15 years, the 2030 Agenda for Sustainable Development, comprised of 17 Sustainable Development Goals (SDGs), and accompanied by 169 targets. In the lead-up to adopting this new framework, the Third Conference on Financing for Development took place in Addis Ababa, Ethiopia, with a global framework for financing development—the Addis Ababa Action Agenda. This action agenda did not set financing targets, but beyond foreign aid and domestic resources, leaders recognized the important role that private finance can play in meeting these goals. 

The most recent FfD conference was held in Seville, Spain, from June 30 to July 3, 2025.

Q2: What are the current needs in terms of FfD?

A2: Covid-19 pandemic, climate-related disasters, the war in Ukraine, and other global conflicts, and a challenging macroeconomic outlook have all combined to slow progress towards achieving the 2030 SDGs. Currently, most of the 17 global goals are not on track.

Countries have only made progress on five targets related to access to basic services and infrastructure, which include: mobile use (SDG 9), access to electricity (SDG 7), internet use (SDG 9), under-5 mortality rate (SDG 3), and neonatal mortality (SDG 3). In contrast, most countries are stagnating or backsliding in the following: obesity rate (SDG 2), Press Freedom Index (SDG 16), Sustainable Nitrogen Management Index (SDG 2), Red List Index (SDG 15), and Corruption Perception Index (SDG 16).

As a result, the financing gap required to achieve the stated SDGs and their targets has risen from $2.5 trillion a year to an estimated $4 trillion yearly financing gap.

Q3: What financial instruments are currently available for countries to use?

A3: Donor and recipient countries have a variety of financing tools at their disposal to finance development challenges. They employ domestic resource mobilization (DRM)—taxes, savings, and capital market activity—loans, remittances, and foreign and domestic investments, to finance social spending, infrastructure development, and other needs. Most developing countries, however, can’t meet their own needs, much less deal with the global spillover effects of pandemics, financial crises, humanitarian crises, and climate-related events, and the other cross-border issues that need international cooperation and financial burden-sharing among countries. Traditionally, the poorest countries have used foreign aid, also called official development assistance (ODA), to help deal with extreme poverty or to fund initiatives that address these global problems.

Donor countries currently provide an estimated 0.3 percent of their GDP to ODA yearly—approximately $212 billion (2024). Despite the focus on ODA as a finance tool, it has not provided a major source of development funds for developing countries in the past quarter-century, and would never provide enough to cover development shortcomings on its own.

Moreover, dated perspectives on development have continued to treat these countries in a paternalistic, “donor-recipient” relationship rather than as partners, with ODA as the main tool. ODA alone often will never support sustainable and self-reliant paths to development.

Q4: What emerged from Seville?

A4: The 15,000 attendees at FfD4 met amidst a contentious global backdrop marked by increasing indebtedness in developing countries, wars in Ukraine and the Middle East, cuts to foreign aid, and the withdrawal of the United States from the conference.

The Sevilla Commitment, formally endorsed during the conference, creates a new framework with over 130 initiatives and a renewed promise to catalyze investment in sustainable development, address debt challenges, and reform the international finance architecture.

New avenues for raising revenue have been outlined in projects like the coalition for global solidarity levies, a tax on premium-class flying and private jets; SCALED, a platform of scalable blended finance tools; and the effective taxation of high-net-worth individuals initiative. Led by the Organisation for Economic Co-operation and Development and the United Nations Development Program, Tax Inspectors Without Borders 2.0 also enhances government revenue collection through an updated deployment of experienced tax experts to strengthen local capacity and address complex tax issues. All these tax-related initiatives, however, require domestic legislation and likely face steep political opposition, especially in countries already struggling with economic downturns and looming fiscal deficits and debt.

The Global Hub for Debt Swaps for Development, Debt-for-Development Swap Program, and Debt Pause Clause Alliance all strive towards alleviating debt burdens and mitigating crises for emerging market countries. These and similar structures have faced past criticism for their complex and time-consuming nature. Advocates have called for more practical, streamlined, and therefore more scalable approaches.

New instruments for local currency financing were proposed through FX EDGE, a multilateral development bank (MDB) toolbox for risk management, and Delta, a liquidity platform helping development finance institutions provide local currency lending. The Sevilla Commitment also encouraged greater collaboration between MDBs and national development banks, along with a call for tripling MDB lending by 2035 to create multi-stakeholder coalitions and new taxes on carbon, pollution, and the ultra-wealthy to channel revenue towards climate adaptation and the UN SDGs. In addition, MDBs made substantive funding commitments, including $5.2 billion by CAF, the Inter-American Development Bank, and the European Investment Bank, along with strong efforts to work as a system.

Q5: What lies ahead for FfD?

A5: FfD4 provided key insights into the future of global development financing amid an ever-changing geopolitical landscape. With a complicated outlook for trade, indebtedness, and the recent cuts to foreign aid (which is expected to drop between 9–17 percent in 2025 alone), development stakeholders seek alternative sources of finance. There is an urgent need to find innovative ways to close the financial gap and make the world a more prosperous, safe, and peaceful place.

Developing self-reliance through DRM for low-income countries is paramount. The Sevilla Commitment calls for countries to raise tax revenue thresholds to 15 percent of GDP. Investing in capacity building with effective and transparent institutions and legal frameworks could unlock DRM and enable a lower cost of capital.

Reforming credit ratings agencies remains important, as concerns that uneven assessment of low-income countries’ credit scores stymie foreign investment and increase the cost of capital—in 2023, developing countries’ debt-service payments grew by 5 percent. Support for the African Credit Rating Agency from the Sevilla Commitment signals significant steps towards more consistent and regionally informed credit assessments for African nations.

To achieve the scale necessary to address the SDGs and other ambitious goals, the evolving landscape of tools and instruments also needs to become easier to adapt and use. Doing so requires a greater degree of trust and collaboration. This includes agreeing on how to measure progress, price risk, and ultimately securitize and syndicate debt and equity products for use beyond a narrow group of development finance institutions (DFIs) and impact investors.

Private financing has not mobilized at its intended rates thus far, with only $70 billion mobilized in 2023. Some private sector attendees called for public financing where noncommercial risks exist. DFIs were supposed to play a strong role in helping crowd in private finance and technical assistance (grants or forgivable loans) by covering these types of noncommercial risks (e.g., political or war risk) and large-scale public investments (e.g., infrastructure) that private investors can’t always cover. But DFIs—including the regional development banks, the World Bank, and the U.S. International Development Finance Corporation (DFC)—have so far fallen short of meeting current needs. While many DFIs at the Seville conference renewed or made new commitments for increased FfD in many areas, these institutions need to carefully examine their risk appetites and the terms and conditions they offer. Many potential candidates for development finance complain that DFIs currently offer terms no better—and indeed often less favorable—than commercial banks, including onerous bureaucratic application processes, lending rates no better than commercial banks, and extremely long turnaround times for funding disbursement.

Philanthropies also offer a potential source of capital to cover noncommercial risks and investments through direct donations and new tools for impact investing. The National Philanthropic Trust 2024 report estimates donor-advised funds (DAFs) alone have $253.0 billion in charitable assets, while a combined $1.5 trillion exists across all private foundations. Philanthropies have shown increasing interest in using “blended finance” to invest alongside other donors, governments, and commercial investors. These types of “blended finance” structures allow different types of capital providers to cover different aspects of a specific investment according to their respective missions and investing mandates.

These programs, however, require a great deal of cooperation and co-creation among stakeholders across the public, private, and civil sectors. Commercial investors often struggle to understand the motivations of governments and philanthropists, and vice versa. During the Seville conference, public sector leaders noted the lack of engagement by the private sector—of the 45 million businesses in the International Chamber of Commerce’s network, only 75 companies confirmed participation, and only 25 actually attended. This low turnout at FfD4 demonstrates the need for a more compelling mandate for private sector participation, including spotlighting both quantitative returns on investment and qualitative benefits, including brand-building and access to some of the world’s fastest-growing markets.

Overall, the outlook for FfD looks murky. Public-private collaboration remains inadequate. The United States and other donor nations continue to cut ODA as they face domestic fiscal and political concerns of their own, the UN and other international organizations have yet to come up with consistent approaches to oversight and measurement, and international commitments—including the Sevilla Commitment—remain nonbinding. Combine these factors with low DRM in emerging economies and their often-weak domestic institutions, and the prospect for achieving the 2030 goals continues to dim.

Q6: What is the role of the United States in the FfD agenda?

A6: The withdrawal of U.S. attendance at the Seville conference provided an opportunity for other countries to step in. Spain took on a leading role, not only as the host country, but in pledging to increase aid spending. Spain also partnered with Brazil and South Africa in a joint initiative to promote the global taxation of the superrich. African nations were galvanized to create a UN tax convention. China has emerged as a partner for foreign assistance in the wake of the U.S. pullback; the country seeks to increase its role as a leader of South-South cooperation.

The U.S. sphere of economic influence is at risk. China has positioned itself as the United States’ greatest competitor in global development, with the second-largest economy in the world, valued at approximately $18.3 trillion. Chinese prosperity has enabled it to expand its development assistance and trade with developing countries, growing its influence with the potential of superseding the United States.

China’s growing influence comes as the United States and its allies work to address their public budget crises and rising security concerns. Recent U.S. legislation has resulted in deep cuts to foreign aid and social spending in an effort to reduce growing federal budget deficits and domestic dissatisfaction. The United Kingdom and European Union have similarly reoriented their budgets to address the rising security threat from a revanchist Russia. In this new era of “geoeconomics” where commerce finds itself subordinated to statecraft, countries, including the United States, will increasingly use tools like industrial policy and tariffs to achieve geopolitical and security ends first and global economic ends second.

In this emerging geoeconomic era, the U.S. government—together with philanthropy, foreign governments, multilateral organizations, and private sector partners—has an opportunity to take a new approach with new instruments, including blended finance. U.S. government agencies, including the DFC, U.S. Trade and Development Agency, and the Millenium Challenge Corporation, can play a key role in convening the various actors, setting standards, developing common measurement systems, and refocusing foreign aid from a “giveaway” to real investments that provide solid impact and return—for investors and the U.S. taxpayer. Doing so requires preserving the “dealmaking” ability of these agencies and dramatically improving their ability to work together both among themselves and with companies, investors, other DFIs, and philanthropies.

All of this should contribute to a shift from “aid to trade.” Developing countries must be viewed as partners in trade, investment, and economic growth that benefits them, and U.S. financial assistance should focus on stimulating private sector development abroad and enhancing countries’ capacity in DRM, cementing a path to self-reliance and building lasting trade and economic growth benefiting both recipient and donor countries.

The era of geoeconomics does not necessarily herald the end of the Pax Americana. Indeed, a new era of domestic and global prosperity remains possible with U.S. leadership. Achieving that, however, will require sincere reform of U.S. government agencies and a renewed commitment to strategic collaboration among U.S. companies, DFIs, investors, and philanthropies. Among other things, FfD4 demonstrated that as the landscape of development financing continues to change, the United States will have to craft a sustainable development strategy if it wishes to remain a pillar of international partnership, or else risk a loss of leadership as others step up in its absence.

Richard Crespin is a senior associate (non-resident) with the Project on Prosperity and Development at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Pilar Frank O’Leary is a senior adviser (non-resident) with the Project on Prosperity and Development at CSIS. Romina Bandura is a senior fellow with the Project on Prosperity and Development at CSIS. Liliana Tomko is a research intern with the Project on Prosperity and Development at CSIS.