PRESS RELEASE : UK pushes for a bigger, better and fairer international financial system [September 2023]

The press release issued by the Foreign Office on 19 September 2023.

UK commitments will go towards unlocking billions in global finance and support developing countries invest to achieve sustainable development goals.

• Foreign Secretary announces programmes at the UN General Assembly to help achieve the UN’s Sustainable Development Goals
• funding focuses on improving global financial system, including making it easier for developing countries to access funds and invest in their own sustainable development
• James Cleverly will also announce new UK support for climate preparedness and to improve access to education around the world

Foreign Secretary James Cleverly will today (Tuesday) set out new UK action to build a more inclusive international financial system to improve lives around the world at the UN General Assembly (UNGA).

Climate change, the threat of pandemics, and stagnant economic growth are some of the biggest challenges facing the world’s most vulnerable and require a united global effort to tackle. On his second day in New York the Foreign Secretary will make clear we should respond to these challenges through a strong and collective international system as he reasserts the UK’s commitment to achieving the Sustainable Development Goals by 2030.

Unlocking more finance from international financial institutions and the private sector will be critical if we are to achieve those goals and the UK is already playing key role by mobilising private investment, improving global tax systems and future-proofing for climate change – including through the UK’s recent $2 billion commitment to the Green Climate Fund.

The UK is announcing pledges and reforms that will unlock billions of pounds in global finance and support developing countries invest in their future to boost sustainable development goals.

As representatives of global governments gather for the Sustainable Development Goals Summit, the Foreign Secretary will announce new financial guarantees for Multilateral Development Banks to help our overseas aid go further and multiply our impact by unlocking more affordable loans.

Through one of these guarantees the UK will help unlock up to $1.8 billion of climate finance to support at risk populations across Asia and the Pacific in adapting to the impacts of climate change and increase their resilience to natural disasters. It will help accelerate their transition from fossil fuels to low carbon energy sources, demonstrating how sustainable economic growth and development can go hand-in-hand.

The Foreign Secretary will also announce another guarantee to provide urgent investments in quality education to tackle the global learning crisis.

New UK support will help unlock up to $1 billion in new financing for education for Lower Middle Income countries in Asia and Africa, where an estimated seven out of 10 children are unable to read a simple story by the age of 10. The International Finance Facility for Education (IFFEd) will help increase school enrolment for the poorest and most marginalised children. It will enable countries to use education as a tool for sustainable development and focus on improving literacy, numeracy, and social skills, including through training teachers and developing curriculums.

Foreign Secretary James Cleverly said:

The extra finance needed to achieve the Sustainable Development Goals is estimated to be around $4 trillion annually. We urgently need bold global action to build a bigger, better and fairer international financial system that helps close this gap.

The UK played an instrumental role in establishing the Goals and we are committed to achieving them by 2030. Together with our international partners, we are going faster and further, to change the international financial system and make sure no one is left behind. The voice of the poorest and most vulnerable countries must be heard at the heart of the multilateral system.

The UK is also leading the way on making the global financial system more shock responsive. For example, the UK was the first to offer climate resilient debt clauses in loans from our Export Credit Agency, pausing repayments when a natural disaster or pandemic strikes. In the face of increasing global challenges, the Foreign Secretary is calling for this to become the rule, not the exception to allow affected countries to focus on recovery.

As part of our commitment to tackle climate change, the UK will also provide additional disaster risk financing support for the Caribbean, a region that is particularly vulnerable to natural disasters. The Foreign Secretary will announce the UK will join CCRIF SPC (formerly the Caribbean Catastrophe Risk Insurance Facility), the Inter-American Development Bank, the Caribbean Development Bank and the Coca Cola Foundation to establish an affordable insurance scheme to increase the resilience of vital water and sanitation services. This will provide quick payouts to fund repairs following hurricanes and floods, restoring access to safe drinking water and preventing the spread of diseases.

Making sure countries have sustainable public finances is vital to delivering the Sustainable Development Goals. With the right support to strengthen domestic taxation and close loopholes, lower income countries could collectively raise an additional $260 billion.  But we also need a fairer system where existing global commitments on international tax are fully met so that the most vulnerable countries are not losing out on revenues that they should receive. The Foreign Secretary will announce a new UK funding package of £17 million to improve tax systems in developing countries so they can stop revenues leaking and can invest in their sustainable development.

The UK is also committing £3 million to support the increased use of standards in Commonwealth countries, helping reduce barriers to trade, increase economic stability, and decrease aid dependency, opening opportunities for international businesses, including those from the UK.

Further information

The Foreign Secretary is announcing today:

• the UK is providing a guarantee of up to $300 million to the Innovative Finance Facility for Climate in Asia and the Pacific (IFCAP). We estimate this will unlock $1.2 to $1.8 billion in additional climate financing over the next 5 years, meaning around a 4 to 6 time return of increased climate finance compared to our guarantee commitment.  The Innovative Finance Facility for Climate in Asia and the Pacific (IFCAP) is a multi-donor financing partnership facility set up by the Asian Development Bank (ADB) with the goal of scaling-up finance for accelerated action against climate change in Asia and the Pacific
• the UK will contribute up to £180 million of support to the International Finance Facility for Education (IFFEd). This includes up to £95 million in grants and paid-in capital, and a contingent guarantee of up to £85 million. IFFEd will unlock up to $1 billion in affordable education finance, with the amount available subject to final confirmation of other donor support, alongside Sweden and the UK. As more donors join IFFEd, this amount will increase
• the UK will provide the Caribbean Water Utilities Insurance Collective (CWUIC) with a $25 million returnable investment to help water and sanitation companies in the Caribbean access affordable insurance
• new UK funding of £17 million to improve tax systems in developing countries
• a total of £3 million to support the increased use of standards in Commonwealth countries. The funding will be used for workshops and training, technical assistance, information exchange and toolkits to support the implementation of international standards amongst Commonwealth countries