Beyond Broken Promises
Fixing Financing for the Future
Imagine you’re a young entrepreneur with a brilliant idea for a green startup. You need funding, but your government is so strapped for cash it spends more on repaying loans than on educating young people or keeping them healthy.
This isn't a fantasy – it’s reality for millions.
Developed economies promised to help – from pledging 0.7% of their income in aid decades ago to $100 billion a year in climate finance by 2020 – but too often those promises were broken or delayed. In 2022, donor countries gave just 0.37% of their GNI as aid, missing the 0.7% target by a whopping $143 billion. And that much celebrated climate finance goal? Failure to meet it has fuelled mistrust in climate negotiations between countries to attempt to boost CO2-cutting measures. The result is a gaping funding gap for the Sustainable Development Goals (SDGs) – about $3 trillion per year needed through 2030– and young people’s futures on the line.
On the ground, these shortfalls hurt young people every day.
Meet Esther and Azizah
Esther, 25, from Nigeria
As founder of a youth empowerment initiative, she’s seen development projects claim to help communities but completely overlook young people’s voices. She’s fighting for aid that reaches young changemakers directly, because they know how to transform their own communities.
Azizah, 27, from Indonesia
She researches agriculture and worries that funds meant for “food security” go to large agribusinesses instead of small farmers. It’s like claiming to support local markets but giving all the money to multinational supermarkets! Azizah calls for investing in local, youth-led farms that truly build long-term food security.
These are real struggles caused by a broken system. It doesn’t have to be this way. It’s time to move beyond broken promises and fix financing for the future.
Below we break down key solutions – in plain language – so young people everywhere can understand the issues and champion the changes we need. From reforming aid and taxes to tackling debt and climate shocks, here’s how we can #FinanceTheFuture:
One big problem is that development funding isn’t always spent where it’s needed most.
For example, a lot of official aid now comes as loans or via private funds, not straight grants. For countries already juggling tight budgets, these loan-based aid packages are a trap. They must divert funds to debt service (interest and repayments) that could have built a hospital or financed scholarships. This perpetuates a cycle: a country takes loans to develop, then uses future revenues to service those loans instead of investing in its young people and their future.
That’s like a friend “helping” you pay for college by giving you a loan you’ll be struggling to repay for years. Many developing countries face this exact issue on a national scale. Rather than receiving support they won’t need to return, they get credit that adds to their debt – sometimes for projects that don’t even benefit them much. Did you know a growing chunk of official development assistance comes as concessional loans? In 2022, grants made up only 63% of aid, one of the lowest shares in decades. The rest were loans, which ultimately have to be paid back and can worsen countries’ debt burdens.
What needs to change?
Governments and global institutions should prioritize grants, not loans, especially for low-income countries and critical needs.
Instead of leveraging aid to guarantee profits for private investors, aid should directly fund schools, clinics, and infrastructure that benefit ordinary people. Every dollar of aid should be transparent and accountable to the people it’s meant to help. Grants mean true help – no payback, no interest, just solidarity. When the situation absolutely requires loans (for instance, to rapidly respond to an emergency), those loans should be highly concessional (ultra-low interest, long repayment periods) or have built-in forgiveness clauses.
It’s simple: development finance shouldn’t bankrupt the future it’s trying to build. By reorienting aid to be people-centered, we can rebuild trust. In doing so, the international community can ensure that “aid” doesn’t become just another word for “debt” for next and future generations.
Invest in Young People – Education, Health, and Jobs Are Non-Negotiable
It might sound obvious, but it needs to be said: to secure the future, invest in the young people of today, which is the largest in history.
Yet in many budgets, young people’s needs come last. When money is tight, education programs get cut, youth employment schemes stall, and health clinics in our communities go understaffed. This is a deadly mistake. We are the largest youth generation in history, brimming with ideas and energy. If countries invest in us – in our skills, well-being, and leadership – we will drive economic growth and solve the problems we’ve inherited. If they don’t, the whole world misses out.
Governments should prioritize spending on public services like education and healthcare even when faced with fiscal pressures. Every dollar spent educating a child or training a young worker pays itself back many times over in a more productive, innovative economy. For example, recent research indicates that many youth-focused interventions return $5–10 in benefits for every $1 invested, with some programs exceeding a 10:1 return on investment. Education alone delivers "large, consistent returns" in higher incomes and drives broad social gains – improving health outcomes, advancing gender equality, and even fostering stability and social cohesion. Conversely, where youth are neglected, you often see unrest and stagnation. The World Bank observes that widespread youth disengagement (young people not in education, employment, or training) directly contributes to reduced economic growth and can fuel political instability, social unrest and insecurity. In short, investing in young people is the smartest investment to achieve the SDGs: it creates a ripple effect for decades to come.
It’s not just national governments either – international financing must pay attention to youth. Whether it’s World Bank loans or UN programs, a fair share should be earmarked for youth-led initiatives and sectors that benefit young people (like education, mental health, or green jobs). There’s also a role for Youth Participatory Budgeting – involving young representatives in deciding how funds are allocated, to ensure our priorities are heard. Early results are encouraging: local governments that enable young people to decide funding report greater youth satisfaction and “satisfying results” in project outcomes. This suggests that youth-led funding mechanisms can improve responsiveness of public spending and strengthen trust between young people and institutions.
Domestic Resource Mobilization - Building for the Future
Here’s a secret weapon to fund development: a country’s own resources, mobilized fairly and effectively.
This means improving how governments raise money domestically – mainly through taxation – and plugging the leaks that siphon public funds away. Developing countries actually lose huge sums every year to unfair tax rules and illicit financial flows – money that could be building our future. According to the Tax Justice Network, around $492 billion in tax is avoided or evaded each year globally by multinational corporations and wealthy individuals shifting profits to tax havens.
That’s half a trillion dollars per year not going to schools, roads or climate action. In Africa alone, an estimated $88.6 billion (3.7% of the continent's GDP) leaks out annually through illicit financial flows – nearly as much as the continent receives in official aid and foreign investment combined! If we stop these illicit outflows, Africa could halve its SDG financing gap . In other words, Africa is actually a net creditor to the world when you compare money illegally leaving to the debt it owes . This story repeats in many regions.
So what’s the solution?
Fair and progressive taxation. This means designing tax systems so that the wealthy and big corporations pay their fair share, closing loopholes that let them shift profits offshore or hide assets would bring in vital revenue.
This would ease the burden on working families. Many low-income countries could also broaden their tax base in equitable ways – bringing more of the informal economy into the system and improving compliance, without hurting small businesses.
Strengthening national tax administration capacity is key here: investing in modern tax systems, training auditors, and using digital tools can dramatically boost collection. Some countries have shown it’s possible. For example, Georgia and Albania increased their tax-to-GDP ratios by over 5 percentage points through reforms in the 2000s. Yet still, about two-thirds of low-income countries collect less than 15% of GDP in taxes, a level considered a minimum for healthy development.
This is where young people come in
The next generation can advocate to clamp down on tax dodging and use the revenue for their communities. And globally, there’s momentum we can amplify. Leaders and activists are calling for a UN Tax Convention – a global agreement to rewrite the rules of the tax game in a fair way.
Right now, much of international tax policy is decided by a club of rich countries (the OECD), but a UN-led process would give developing countries an equal seat at the table.
In late 2024, the UN General Assembly actually voted with an overwhelming majority to start negotiations on a UN tax convention. This could be a game-changer: imagine all countries agreeing on measures to stop profit shifting, tax equitably and properly, and share information to catch evaders. It’s not a distant dream – it’s on the agenda now. Every dollar fairly taxed is a dollar that can be invested in young people and their future, from scholarships to startups.
Debt Sustainability – Breaking the Debt Trap
Over the past few years, we’ve watched country after country tip into financial crisis – not because of sudden mismanagement, but because of unsustainable debt.
About 60% of low-income countries are now at high risk of or already in debt distress. Many are spending more on servicing debt than on health or education – globally, over 3.3 billion people live in countries where debt interest payments exceed social services budgets.
It’s like a debt trap: loans pile up, a shock hits (a pandemic, a recession, a hurricane), and suddenly these countries can’t keep up with payments. In the last three years alone, 18 countries have defaulted on sovereign debt, triggering economic freefall in some young countries. It’s also deeply unfair, as a lot of these debts ballooned due to factors outside their control – like COVID-19 and financial shocks that made borrowing costs jump. They’re forced to cut essential spending and still can’t catch up, eventually defaulting. Around the world, we see the effects: public services for people get slashed, job markets dry up, prices soar. How do we break this vicious cycle? We need a fair way to deal with sovereign debt – one that puts people’s needs front and center, not the profits of vulture creditors.
Take Sri Lanka as an example: in 2022 it defaulted on its foreign debt, sparking the worst economic crisis in its history. Suddenly, the country couldn’t import fuel, food, or medicine; prices skyrocketed and people protested in the streets.
Or Zambia: it stopped paying some of its debts in 2020 and spent years in limbo negotiating with creditors. In the meantime, Zambia had to cancel infrastructure projects it desperately needed because it could no longer afford them.
These stories show that debt crises are development crises: they limit opportunities from young people and create a lost generation if handled poorly.
Grants, Not Loans – Put People Over Profits
So, what do we do?
Calls are growing for a fair international debt workout mechanism – basically a better system to restructure or cancel debts when countries can’t pay, akin to bankruptcy protection for nations.
Right now, when a country is in debt trouble, there’s no single place to work it out; it’s a messy web of negotiations with banks, hedge funds, other governments, and institutions like the IMF. It’s slow, chaotic, and often too little, too late. The head of UNCTAD (the UN trade and development agency) noted that currently we only have ad-hoc measures when a crisis hits, but “no permanent institution” to systematically address sovereign debt problems . She and many others are urging the creation of a permanent debt restructuring mechanism that is swift and fair to both debtors and creditors.
Imagine a UN-led process where, when a country is in distress, all creditors come to the table at once (governments, banks, bondholders – everyone), and an impartial body helps agree on relief measures – whether lowering interest, extending maturities, or even forgiving part of the debt – while protecting vital social spending. It would be a cooperative solution to restore stability and development. The idea has been around for years (the IMF floated it in the early 2000s), but now with so many crises, the momentum is back.
In the meantime, there have been some initiatives, though limited. During COVID-19, the G20’s Debt Service Suspension Initiative (DSSI) paused about $12.9 billion in payments for 48 countries, freeing up cash for pandemic response. It was a welcome relief but temporary one (ended in 2021) and notably, private lenders mostly refused to join in – so countries still had to pay commercial creditors. The G20 then set up a “Common Framework” to restructure debt for the poorest countries, but it’s been painfully slow and not very “common” (only four countries have applied). Zambia’s restructuring under this framework took over two years to agree – an ordeal that shouldn’t be repeated if better, faster tools are in place. For example. there are proposals for clauses in loan contracts that would trigger a pause in payments if a country is hit by a severe shock (like a natural disaster or a commodity price collapse). Some small island states have already pioneered these state-contingent clauses: Grenada and Barbados negotiated “hurricane clauses” that freeze debt repayments for a couple years if a big hurricane strikes. This gives breathing room to recover without the debt snowballing.
Finally, we need to deal with the overhang of climate-related losses. Around 93% of countries most vulnerable to climate disasters are either in or at significant risk of debt distress, taking on debt to rebuild after climate disasters (think cyclone-hit Mozambique or drought-stricken Horn of Africa). It’s a cruel irony – they did least to cause climate change but bear its costs in their national debt. Concepts like debt-for-climate swaps are emerging, where a portion of a country’s debt is forgiven in exchange for investments in climate resilience or green projects. For example, Belize swapped $365 million debt for marine conservation funds, and there are calls for larger programs to exchange debt cancellation for climate action across hard-hit nations. Supporting these creative solutions can both reduce debt and help tackle the climate crisis young people care so much about.
Breaking the debt trap will require bold moves by world leaders – and relentless advocacy: no country should have to choose between paying creditors and providing for its young population’s basic needs. Whether it’s through global campaigns like Debt Justice, young people and young countries can shift the narrative. It’s time to rewrite the rules so that countries can recover and thrive instead of sinking deeper when crises hit. After all, a debt crisis in any developing country is a crisis for young people in that country – and a failure of the global system to protect its next and future generations.
Finance the Future, Now!
We’ve explored how fixing finance – from aid and tax to debt and climate funding – is completely possible with the right choices.
The Fourth International Conference on Financing for Development (FfD4) is coming up, and it’s a golden opportunity to turn these ideas into action. Let’s raise our voices, share our stories, and demand that our leaders back their words with real money and reforms.
- Read our FfD4 explainers - a youth-friendly, fact-based guide to demystify global finance issues, supporting young people to advocate for financial justice at the Fourth International Conference on Financing for Development (FfD4).
- Spread the message on social media (use #FinanceTheFuture to tell the world why these issues matter) and tag Our Future Agenda.
- Join the Engine Room to meet and organize with your peers – join youth forums, FfD4 prep meetings, and campaigns calling for tax justice and debt cancellation.
We can push beyond broken promises towards a world where finance works for and not against young people. Let’s make finance work for young people and young countries, not against them.
The road to FfD4 and the SDGs needs our energy and activism. We’ve got this – together, we’ll finance the future next and future generations deserve.
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