The warning comes in the Financing for Sustainable Development Report 2026 (FSDR), a new UN report launched on Monday, which finds that with just four years left until the 2030 deadline for the Agenda for Sustainable Development, progress has stalled – and in some cases reversed – following the shocks of the COVID-19 pandemic, rising geopolitical tensions and growing climate impacts.
According to the report, development finance is being squeezed at a critical moment: one quarter of developing countries still have lower per capita income than before the pandemic, and some 3.4 billion people are living in countries that spend more on interest payments than on health or education.
Official development assistance has fallen sharply, foreign investment continues to decline and many countries struggle to raise enough tax revenue to fund basic services.
At the same time, global trade tensions and rising tariffs are adding to economic pressures, particularly for least developed countries.
Signs of resilience
Despite the bleak outlook, the report points to areas of resilience. Global economic growth exceeded expectations in 2025, trade between developing countries (South-South trade) has expanded rapidly over the past two decades, and investment in renewable energy reached a record high of $2.2 trillion in 2024 – double the level invested in fossil fuels.
The authors stress, however, that progress will not be sustained without urgent action, identifying a financing gap of up to $4 trillion annually for developing countries and calling for accelerated implementation of the Sevilla Commitment (a 2025 global agreement to scale up developing financing) as the best – and only – realistic path to get back on track.
Key priorities include increasing investment, strengthening multilateral cooperation, modernising the international financial system to give developing countries a stronger voice, and building resilience to better withstand future shocks.
Without renewed global cooperation and political will, the report cautions, the promise of the SDGs – and a more equitable future – will remain out of reach.
Middle East war fuels slowdown
Speaking at UN Headquarters on Monday, the Secretary-General, António Guterres, said that the conflict in the Middle East is adding to the risks facing development.
“We are seeing in real time the war’s impacts on the cost of fuel, fertilizer and food,” he said, “as well as trade, transportation and tourism”.
Rising energy costs, slower growth and currency depreciations are, he added, putting even more pressure to the debt burdens shouldered by developing countries.
The UN chief identified three broad areas of focus for cutting into the $4 trillion financing gap.
First, by “revving up the machinery of finance” (leveraging the Multilateral Development Banks, creating new public-private finance initiatives); second, by reforming debt (including mechanisms for debt relief and a “reimagining” of the credit ratings system); and third, through a reform of the international financial architecture, so that it reflects today’s global economy.
