As Global North blocks progressive reforms at FfD4, World Bank’s failed private sector approach gains traction
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Article summary
- Global North states actively undermine Global South architecture reforms proposed during process
- The World Bank’s “billions to trillions” approach continues to gain prominence despite evidence of failure since FfD3
Despite evidence of the failures of the “billions to trillions” agenda, the Fourth UN Financing for Development conference (FfD4) ended, with private finance as a key pillar. While the need for further reform of the Bretton Woods Institutions (BWIs, i.e. the World Bank and IMF) was noted in the final draft of the outcome document (see Observer Spring 2025), the BWIs have largely failed to support calls for international financial architecture (IFA) reform within the UN. Instead they opted to highlight their autonomy as institutions and preserve interests of their dominant shareholders through the Global North-centric ‘private finance first’ approach. With ongoing high levels of debt distress and capital costs, combined with vanishing Overseas Development Assistance (ODA), borrowing countries undoubtedly will see the attraction of private finance.
Proposals that could create more equitable outcomes and decrease profit shifting, such as agreeing a UN Framework Convention on International Tax Cooperation, were not adequately supported by Global North countries and the BWIs beyond language on engaging in processes, despite support by groups including the G20 in recent years (negotiations will continue nonetheless). Instead, priorities outlined in the document align neatly with the World Bank’s efforts to become a private finance mobiliser, as shared in a revealing March paper outlining its contribution to FfD4.
The Bank continues to preference market-led solutions, while the failed “billions to trillions” agenda – launched alongside FfD3 and since labelled by the Bank’s Chief Economist, Indermit Gill, as “a fantasy” – remains unchallenged, regardless of civil society’s efforts to highlight failures. The Bank has chosen to give extensive coverage to “private sector–led growth and enhanced job creation” in the FfD4 paper. It has not championed proposals to address a debt situation exacerbated by private creditors, including a UN Framework Convention on Sovereign Debt, despite Gill also noting, “Since 2022, foreign private creditors have extracted nearly $141 billion more in debt-service payments from public-sector borrowers in developing economies than they have disbursed in new financing.” There are no references throughout the Bank’s contribution to human rights, only human capital, consistent with recent critique of the Bank for focusing on profit-making rather than rights (see Observer Autumn 2023).
Enabling environment for more dependency
Instead, the outcome document called for an “enabling environment” to “scale-up foreign direct investment and private capital mobilization,” despite acknowledging that private finance investment “has not reached expectations, nor has it adequately prioritized sustainable development impact.” Despite this, the FfD4 text positions public and private actors on equal footing and focuses heavily on economic growth as an end goal, rather than economic transformation. This echoes recent criticisms of the Bank’s revamp of its Corporate Scorecard (see Observer Autumn 2024), which offers no measurement of economic transformation. The Bank also fails to acknowledge the recent UN Pact for the Future’s focus on moving beyond Gross Domestic Product as the key measure of developmental success.
In line with the Bank’s thematic focus on jobs and economic transformation, the FfD4 text called for “decent and productive jobs, to ensure that all people benefit from inclusive and sustainable economic growth.” The Bank has recently been questioned by civil society on whether its jobs initiative will comply with internationally recognised Decent Work standards, avoiding a ‘race to the bottom’ on wages, workers’ protections and rights, which the Bank’s business enabling environment model has previously encouraged, exacerbating inequality (see Observer Spring 2024).
Following the completion of negotiations, the outcome document entered a silence procedure. The Civil Society FfD Mechanism expressed frustration about the lack of CSO input, noting “the current draft, if adopted as is, would represent a missed historic opportunity to realign the international financial architecture with principles of fairness, inclusivity, and accountability.” The following week, on Tuesday 17 June, the final outcome text was published, to a heavily disappointed response (see here, here and here).
