Changes from report parliamentary committee draft to plenary report

AddedR. whereas the current international financial architecture is based on the Bretton Woods Agreements of 1944, which represent an architecture that today is incapable of meeting the needs of the 21st century multipolar world, specifically the needs of so-called Global South countries characterised by deeply integrated economies and financial markets, but also marked by geopolitical tensions, growing systemic risks and the effects of climate change, and persists in upholding the existing power imbalance that favours countries in the so-called Global North;

AddedS. whereas in order to address unsustainable and illegitimate debts, all governments must participate on an equal footing in the decision-making on debt crisis prevention and resolution, as well as different aspects of debt management, beyond creditor-dominated forums;

AddedT. whereas an improved global financial safety net is necessary to deal with systemic risks and global financial, economic and health crises and shocks;

AddedU. whereas indebted countries tend to avoid debt restructuring at all costs, i.e. to secure access to the financial market in the future; whereas in order to make external debt payments possible, governments tend to implement harsh austerity programmes, on many occasions following the IMF assessment;

AddedV. whereas conditionalities imposed by the IMF and some multilateral development banks (MDBs) are focused on fiscal consolidation and market solutions, thus limiting public investment to advance the SDGs; whereas the ultimate consequence of austerity programmes is a deep breach of people’s human rights in the Global South; whereas the G20 Common Framework has done little to solve those limitations, since priority is given to debt rescheduling and reprofiling;

AddedW. whereas tax resources as a share of GDP remain low in most developing countries*, which are confronted with social, political and administrative difficulties in establishing a sound public finance system, thereby making them particularly vulnerable to tax evasion and avoidance activities of individual taxpayers and corporations;

AddedX. whereas globalisation creates both opportunities and challenges, as in the case of the increased prevalence and size of multinational enterprises and changes in business models that may enable base erosion and tax avoidance and profit shifting on a significant scale, severely undermining domestic revenue collection, particularly in developing countries*; whereas as a result, taxes on corporate profits have been declining around the world; whereas international tax cooperation needs more solidarity to address national and global challenges;

AddedY. whereas climate change has a negative impact on global sustainable development, exacerbating biodiversity loss, breakdown of ecosystems, natural disasters and extreme weather events, and disproportionately affecting historically marginalised groups, in particular women;

AddedZ. whereas development aid is increasingly being militarised, with funds originally intended for poverty eradication and social progress being diverted towards migration control, security cooperation, and geopolitical competition;

AddedAa. whereas illicit financial flows out of developing countries*, challenges such as trade mispricing, loopholes in international tax rules and corruption continue to pose a serious obstacle, often undermining fair and inclusive development efforts, and impacting developing countries’* national budgets and social policy, thus severely reducing funds available for sustainable development; whereas responsible tax behaviour by multinational enterprises is an essential element of the principles of corporate social responsibility;

AddedAb. whereas the potential of taxing extractive industries to boost fiscal revenues is largely untapped in developing countries*, primarily due to inadequate global tax rules and the challenges of enforcing them, as transnational companies frequently employ tax avoidance strategies; whereas this challenge is all the more acute for low-income countries that are heavily dependent on natural resources for their economic development;

AddedAc. whereas current investment choices continue to diverge from the sustainable development goals, with vast capital flows supporting carbon-intensive industries, while funding for decarbonisation and the energy transition remains insufficient;

AddedAd. whereas Russia is expanding its foothold in developing countries* in Africa, most notably in the Sahel region, spreading anti-European propaganda and offering alternatives to European ODA through bilateral deals;

AddedAe. whereas the digitalisation of the economy has exacerbated existing problems relating to corporate tax avoidance and evasion, and the importance of ensuring fair and effective taxation of digital services;

AddedAf. whereas the EIB, through its development arm EIB Global, has committed to increasing the impact of international partnerships and development finance outside the European Union, presenting an opportunity for an enhanced EU contribution to global sustainable development;

AddedAg. whereas the EIB has expanded its regional presence, including by opening new regional representation offices, such as the one in Jakarta, Indonesia, to strengthen engagement in south-east Asia and the Pacific;

AddedAh. whereas the EIB, through EIB Global, is committed to sustainable development, climate action and innovative investments in low- and middle-income countries;

AddedAi. whereas on 20 January 2025, the United States issued an Executive Order, enacting a 90-day suspension and reassessment of all foreign assistance programmes, including those administered by United States Agency for International Development (USAID), and reaffirmed its withdrawal from the World Health Organisation (WHO) and the Paris Agreement, actions that have serious implications for humanitarian, health and climate initiatives in the Global South; whereas other countries, including some EU countries, also cut their global aid budgets, placing immense pressure on the international development and humanitarian sector;

AddedAj. whereas the US withdrawal from foreign assistance programmes puts the EU in a decisive position in global development cooperation and the EU should assess how to strategically address critical shortfalls, particularly in sectors where stability, economic development, and humanitarian support are at risk, while ensuring a coordinated approach with international partners;

AddedAk. whereas using regional multilateral development banks (MDBs) as a source of funding could lead to more balanced and equitable collaborations in support of efforts to reform the international financial architecture;

AddedAl. whereas official development assistance (ODA) has been cut back in many countries, including in the EU; whereas in 2023 only five countries worldwide met or exceeded the UN target of spending 0.7 % of their GNI on official development assistance (ODA); whereas the EU collectively undertook to provide 0.7 % of GNI as ODA, and 0.2 % as ODA to least developed countries (LDCs) by 2030, reaffirmed in the Council conclusions of June 2024, in the European Consensus on Development and in the Council conclusions of 26 May 2015; whereas the successful mobilisation of further capital, both private and public, in addition to ODA and other existing forms of development finance, is critical;

AddedAm. whereas the New Collective Quantified Goal (NCQG) agreed upon during the COP29 in Baku on 24 November 2024 includes commitments to mobilise at least USD 300 billion per year for climate change mitigation and adaptation in developing countries*; whereas the launch of the Baku-Belém Roadmap requires reaching at least an additional USD 1.3 trillion per year for development cooperation by 2035;

AddedAn. whereas the fragmentation of government approaches to sustainable development financing remains a challenge, with the OECD noting that better policy coherence is needed to align tax, budgetary and development policies;

Principles and objectives

Change 2

Removed1. Reiterates that EU development policy must be driven by the principles and objectives set out in the UN 2030 Agenda for Sustainable Development, the Paris Agreement and the Addis Ababa Action Agenda;

Added1. Stresses the importance for the international community to utilise the opportunities presented by the 4th Financing for Development Conference (FfD4) in Seville to promote structural reform of the international financial architecture to democratise international development cooperation and create equal power sharing, and to call for equitable and inclusive development cooperation policies that support gender equality;

Removed2. Emphasises the need for a comprehensive and integrated approach to development financing, as outlined in the Bridgetown Initiative, which calls for liquidity and debt sustainability issues to be addressed, development finance to be scaled up and private capital to be mobilised to achieve the SDGs;

Added2. Calls on the EU as a key multilateral actor and its Member States to increase their efforts in development cooperation, increasing their presence, to improve the EU’s global credibility as a reliable partner and strengthen partnerships based on shared values;

Removed3. Urges the EU and its Member States to work towards mobilising an additional USD 500 billion per year for climate change mitigation and adaptation in developing countries, as proposed in the latest version of the Bridgetown Initiative;

Added3. Reiterates that EU development policy must be driven by the principles and objectives set out in the UN 2030 Agenda for Sustainable Development, the Paris Agreement and the Addis Ababa Action Agenda and must ensure the application of a human rights based and human-centred approach, in line with Article 208 TFEU, the European Consensus on Development, the GAP III, the YAP, and International Human Rights Law;

Removed4. Calls for the establishment of specific taxes, such as a levy on the windfall profits of fossil fuel companies, financial transactions and emissions on shipping and aviation, to help finance global public goods and support sustainable development;

Added4. Acknowledges that the existing financial architecture presents ongoing challenges to preventing and addressing debt crises, highlighting the need to strengthen the tools available to promote responsible financing and long-term debt sustainability; considers that, in view of the insufficient progress towards the SDGs, the SDG financing gap, and the multitude of recent crises, the FfD4 is an urgently needed opportunity to set up a fair and efficient multilateral debt work-out mechanism, to help strengthen multilateralism, support systemic changes that address long-standing inequalities, define concrete commitments, reinforce the EU’s credibility as a development partner, as well as make substantial progress on ensuring stable financing for sustainable development worldwide; stresses that the mobilisation and effective use of domestic resources, underpinned by the principle of national ownership, are also essential for sustainable development;

Removed5. Stresses the importance of policy coherence for development as a fundamental part of the EU’s contribution to achieving the SDGs;

Added5. Calls on the EU to take effective measures against the shrinking of civic space, and ensure civil society participation in the reform of the current structures for development finance;

Removed6. Underlines the importance of fostering stronger, more inclusive multi-stakeholder partnerships and of tailoring development partnerships to reflect the capacities and needs of partner countries;

Added6. Reiterates that at least 93 % of EU development policy expenditure must fulfil the criteria for ODA, and that at least 85 % of new actions should have gender equality as a principal or significant objective, and that at least 5 % should have gender equality as the principal objective;

Added7. Emphasises the need for a comprehensive, integrated and people-centred approach to development finance in line with the Bridgetown Initiative, which calls for liquidity and debt sustainability issues to be addressed, for democratisation of financial institutions and debt relief to be implemented, for development and climate finance to be scaled up and for private capital to be increased to achieve the SDGs; stresses the importance of strengthening cooperation with like-minded partners;

Added8. Calls for the EU to lead by example in reforming the international financial architecture to better meet the needs of the 21st century, characterised by deeply integrated economies, financial markets, and growing systemic risks;

Added9. Recalls the commitment taken at COP 29 in form of the Baku-Belem roadmap to mobilise USD 1.3 trillion per year for development cooperation by 2035; urges the EU and its Member States to work together with their partners towards achieving this goal on the global level, encouraging cumulative polluters to take their part in climate change mitigation and adaptation in developing countries*, as well as for loss and damages, through public concessional and non-debt creating instruments, in line with the ‘Baku to Belem Roadmap’ agreed at COP 29; emphasises in this context the need for private investment to provide the necessary funds;

Added10. Recalls that progressive taxation is pivotal to making progress on the ecological transition as well as on social and economic justice; stresses the need to look to new sources of financing, notably from sectors contributing the least to taxation while benefiting the most from globalisation, including those with the largest carbon and greenhouse gas emissions; in particular, calls for the exploration of innovative financing mechanisms, including market-based instruments and for contributions from sectors benefiting from globalisation, and establishment of specific taxes, to help finance global public goods, reduce inequalities within and between countries, contribute to climate objectives and support regional sustainable development; notes that growth, competitiveness and stability of developed economies is also a necessary precondition for increasing ODA financing;

Added11. Stresses the importance of policy coherence for development (PCD), including gender and climate goals, as a fundamental part of the EU’s contribution to achieving the SDGs; calls for mainstreaming development goals into all EU policies that affect developing countries*, taking into account their legitimate concerns as regards the impact from European legislation; welcomes the Global Gateway strategy and highlights the importance of any EU development initiative to comply with a rights-based approach and to be linked to human development at all times; insist that EU development initiatives should never contribute in any way to enhancing the debt crisis or increasing inequalities; stresses furthermore that PCD implementation is essential to address the structural causes of the Global South’s unsustainable indebtedness;

Added12. Stresses the importance of supporting enabling environments for civil society engagement through development programmes and ensuring their participation in decision-making processes on development aid, including ensuring an inclusive process in the FfD4, supporting civil society participation and access to negotiations and information, and support their role in monitoring and following up on decisions made;

Added13. Underlines that underinvestment in critical social sectors threatens progress towards meeting the SDGs and exacerbates inequalities, including gender inequality; stresses the need to close financing gaps in the provision of essential public services, including health, education, energy, water and sanitation, and building social protection systems;

Added14. Recognises the primary objective of EU development policy to be the reduction and, in the long term, the eradication of poverty, while also contributing to fostering sustainable economic, social and environmental development in developing countries*;

Added15. Emphasises that inadequate investment in agrifood systems continues to aggravate food insecurity; stresses that a strategic approach that ensures better alignment and synergy among the different sources of financing, particularly in developing countries*, is needed to address food insecurity and malnutrition;

Added16. Underlines the importance of fostering stronger, more inclusive multi-stakeholder partnerships that fully consider the views and standpoints of our development partner countries – at national, regional and local levels – as well as those of other stakeholders such as international institutions, development banks, non-governmental and civil society organisations, academia and think tanks; believes these development partnerships should be based on equality and tailored to reflect the capacities and needs of partner countries, as outlined in the European Consensus on Development; considers that, while financial support for partner countries is often essential, it cannot fully replace domestic efforts, but should complement them with the aim of catalysing economic growth, strengthening social protection systems and supporting investments in comprehensive human development, particularly education and job creation, which are key tools in eradicating poverty; underlines, in line with the principle of common but differentiated responsibilities, that partnerships should be grounded in mutual interests and shared values, prioritising sustainable development and the needs of people; stresses the importance of respecting human rights and ensuring a people-centred approach;

Added17. Stresses the importance of transparency, accountability and proper oversight, emphasising that all EU funding for development cooperation must be carefully managed and monitored to prevent misuse, diversion, or inefficiency, while ensuring that resources are directed towards projects and initiatives that achieve the greatest positive impact in terms of the SDGS;

Debt

Change 3

Changed7.18. CallsIn forview of the reformincreasing number of low-income countries in debt distress or at high risk thereof; calls for the Commonopening of an intergovernmental process to set up a UN Framework Convention on Sovereign Debt to address responsible financing with the purpose of preventing and resolving unsustainable debts; urges the EU and its Member States to support this process, to ensure fair burden-sharing among all creditors, including multilateral development banksbanks, where necessary, without jeopardising theirMDBs’ financial health, to deal in particular with problems such as enormous delays in implementing restructurings and the lack of a common understanding and enforceable rules as regards the comparability of treatment of official and private creditors;

Change 4

Removed8. Believes that, in many cases, only general debt relief, accepted by all creditors, can put a country back on a sustainable path of financing, instead of deferring debt repayments;

Added19. Considers that the reform of the current debt structure should provide countries in the Global South with fair and lasting solutions to a crisis that is already having devastating effects on populations, particularly on women and the most vulnerable communities;

Removed9. Finds, however, that any such debt relief must be accompanied by internationally agreed principles on responsible borrowing and lending, including higher transparency and accountability standards, capacity building and fighting against corruption;

Added20. Believes that, in many cases, only general debt relief and cancellation of debt, free of economic policy conditions and accepted by all creditors, can put a country back on a sustainable path of financing, instead of deferring debt repayments; stresses the need to develop domestic legislation to enforce private creditor’s participation in debt restructuring deals;

Removed10. Emphasises the need for enhanced international cooperation to address the changing structure of creditors in sovereign debt, with a focus on including private creditors and new bilateral creditors outside the Paris Club in debt restructuring efforts;

Added21. Finds, however, that any such debt relief must be accompanied by internationally agreed principles on responsible borrowing and lending, including implementation and monitoring mechanisms, alongside enhanced transparency and accountability standards, capacity building and efforts to combat corruption; highlights that, in order to be effective, responsible lending and borrowing principles need to go beyond voluntary approaches; highlights in this context the importance of committing to international human rights, civic and civil society engagement;

Removed11. Urges the G20 to develop a harmonised framework to strengthen domestic sovereign debt restructuring laws across its member countries, with the aim of facilitating more efficient and equitable debt treatment;

Added22. Recognises that women are often overrepresented in the public sector, and thereby disproportionally vulnerable to and impacted by budget cuts; emphasises therefore the importance of including a gender perspective in debt collection;

Added23. Emphasises the need for enhanced international cooperation to address the changing creditor structure, where private creditors now hold more than a quarter of the external debt stock of developing countries*, and new bilateral creditors outside the Paris Club are involved in debt restructuring efforts, particularly in jurisdictions governing significant portions of sovereign debt, such as New York and the United Kingdom;

Added24. Stresses the importance of increasing public and grants-based finance for climate mitigation and adaptation, and that climate finance in the form of loans risks further aggravating the debt distress of low- and middle-income countries; notes that only 50 % of the EU’s total climate finance continues to be provided in the form of grants; urges the EU and all Member States to increase grant-based finance, particularly for adaptation, and especially for least developed countries and small island developing states*;

Added25. Calls for closer and stronger cooperation and coordination between the European Parliament, the European Commission, the European External Action Service and EU delegations, particularly in developing countries* in fragile contexts, in order to facilitate discussions and cooperation with relevant actors on the ground in order to identify the most effective projects;