Financing the SDGs in the Least Developed Countries (LDCs): Diversifying the Financing Tool-box and Managing Vulnerability

Achieving the 2030 Agenda will be a challenge for all countries. It is however particularly salient for the 48 Least Developed Countries, where levels of deprivation are acute, infrastructure is inadequate, economies are vulnerable and capital is in short supply. Yet these are the countries we need to reach first if we are to meet the aspiration to “leave no on behind”.

This joint report from UNDP and the French Development Agency (AFD) looks at how the Least Developed Countries (LDCs) can make better use of a more diverse financing for development 'tool-box'. How can they leverage more blended finance, guarantees and local currency financing for example, and how can this financing be used to support priority interventions such as investments in infrastructure and local private sector development? LDCs are also extremely vulnerable to shocks and crises, yet financial instruments exist to support countries to manage their vulnerability. These include innovations such as GDP-indexed bonds and countercyclical loan contracts. Can these innovations be scaled-up and how can we ensure all financing is 'risk-informed'? The report concludes with an action to improve LDCs’ access to the financing 'tool-box'.