Between the financing crisis and weak governance.. What is the real challenge facing sustainable development?

In light of the international discussions witnessed in the past months about the future of the Sustainable Development Goals (SDGs), the issue of the financing crisis has returned to the forefront as one of the most prominent challenges hindering the achievement of these goals. Despite the international consensus that has existed since 2015 on the necessity of achieving Sustainable Development Goals (SDGs), the gap between declared ambitions and actual results still exists and is even expanding as the year 2030 approaches.

In this context, an international report issued byUnited Nations Development Program (UNDP) raised a fundamental question about whether the problem lies in the lack of resources, or in the way they are managed? Experience since the announcement of the 2030 Sustainable Development Agenda shows that corruption, illicit financial practices, and poor performance of institutions continue to waste money that could have been directed to development projects and public services.

Therefore, the report explains that improving governance – that is, the way public money is managed and decision-making – not only reduces the waste of money, but helps increase available resources and improves the impact of every amount spent. Building confidence between the state and society encourages citizens and investors to contribute constructively. This confidence is a necessary condition for dealing with the financing crisis.

From this standpoint, the report proposes five practical priorities to address this crisis and develop frameworks for its governance. It is explained in the following lines.

Data transparency and its role in addressing the financing crisis

Limited data and poor transparency represent one of the main obstacles to efficient public finance management. It makes it difficult for governments to track spending and assess its true impact. This causes an increase in the risk of waste and a decline in confidence in financial policies.

The importance of accurate data lies in its ability to support responsible financial decisions. Reliable statistics contribute to enhancing tax compliance, reducing the waste of public money, and building confidence between the state and society. With clarity of information, citizens become more willing to pay taxes, and investors become more confident in directing their money in a sustainable investment environment.

Transparency also enables countries to better manage their debts and monitor risks early before they turn into broader financial crises. Because the weakness of justice, the spread of corruption, and the marginalization of broad social groups; All of these factors exacerbate financial pressures and weaken economic stability.

Therefore, investing in governance-related data is an essential tool for improving resource management and dealing withthe financing crisis, but this tool – despite its importance – remains of limited impact unless it is supplemented with practical measures that stop the illegal practices through which public funds are being drained.

Reducing illicit financial practices

Illegal financial practices – such as tax evasion, illegal smuggling of funds abroad, and exploitation of loopholes in trade and remittances – waste large amounts of public funds that could be directed to development projects and public services. In some countries, this financial bleeding leads to huge losses in the national economy. Here is a country like Namibia that lost more than 8% of its GDP in 2022; Because of these illegal financial practices.

Addressing this problem requires reforming tax systems, increasing transparency in the movement of trade, and enhancing the ability of regulatory authorities to implement the law. However, such practices transcend national borders. Which makes international cooperation an indispensable element.

Although preventing these harmful financial practices represents a necessary step in confronting this crisis, the sustainability of the solution remains dependent on the ability of countries to enhance their resources from within their economies, rather than relying excessively on unstable external sources of financing.

Enhancing local revenues

The resources that countries collect from within their economies – led by taxes and government fees – are considered the most sustainable foundation for financing the path of development, but the ability of countries to maximize these revenues remains limited in light of weak transparency and the spread of corruption. This undermines citizens’ confidence and reduces their willingness to comply with taxes.

International experience indicates that fair and accountable financial systems – with these financial resources directed to public budgets in a responsible manner – contribute to improving revenue collection procedures. Citizens feel that their money is managed transparently and directed to the public good, which has a positive impact on the amount of domestic resources available to the state, in addition to the fact that the clarity and stability of tax policies helps attract investments and expand the tax base without relying on a limited number of financiers.

In this context, international organizations – such as the United Nations Development Program – are working with a large number of countries to support the reform of financial systems and enhance the efficiency of tax administration, which helps governments increase their own resources and reduce dependence on unstable external sources of funding.

Fairer budgets in the distribution of services

In this context, public budgets are considered one of the decisive keys in dealing with the financing crisis, and the problem here is related to how they are distributed among different sectors and groups. At the general level, about two-thirds of the world’s population expresses their satisfaction with government services, but this satisfaction clearly declines when looking at specific basic services, most notably health care. While satisfaction rates with health services reach about 65% in high-income countries, they drop to 42% in low-income countries. Which reveals a clear gap in directing public spending.

This imbalance goes beyond the quality of services to include the financing crisis itself. Weak distributional justice erodes citizens’ confidence in fiscal policies and reduces their willingness to file a tax return or pay government fees. Therefore, the importance of community involvement in determining spending priorities, along with citizen oversight mechanisms, is highlighted to ensure that public resources are directed to actual needs and not to the interests of limited groups.

With the expansion of global economic pressures and the increasing risks associated with climate change, the debate goes beyond the boundaries of social justice to raise a more urgent question about the ability of public budgets to absorb the requirements of climate change, and to mobilize the necessary funding to confront its challenges without prejudice to the rights of the most vulnerable groups?!

Climate Finance

Confronting climate change also requires significant financing, but the amount of financing alone is not enough. Because the decisive factor is how this funding is managed, and on what basis is it directed? Strong institutions ensure that climate resources are allocated fairly, are spent for their stated purposes, and reach the most affected communities without being wasted down ineffective or corrupt pathways.

In this context, clear budgets, monitoring, disclosure and governance mechanisms contribute to building confidence in how funds are used, while comprehensive decision-making processes allow citizens to be involved in setting climate policy priorities. Without these foundations, climate finance remains limited in its impact, unable to achieve just results or bring about sustainable transformation, no matter how much its size increases or how diversified its sources are.

In conclusion, the financing crisis reveals that the real challenge facing sustainable development extends to the weak ability to manage it fairly and efficiently, which highlights the essential role of governance in accordance with the sixteenth goal of the Sustainable Development Goals (SDGs), which is to build strong institutions, promote justice, and combat corruption.

Based on this understanding,The Earth Guards Foundation calls for strengthening governance and transparency as an essential entry point to address the funding crisis, by reforming decision-making mechanisms, expanding the scope of accountability, and ensuring that public spending is directed to clear priorities that serve the public good. In order to achieve all Sustainable Development Goals (SDGs).