Between Commitments and Credibility: What I’m Watching for at FfD4
As I write this from Dubai, one week out from travelling to Seville for the Fourth International Conference on Financing for Development, the moment feels significant - not just for the multilateral calendar, but for what it might signal about our collective willingness to confront the architecture of global finance with something more than aspiration.
The financing gap has widened significantly over the last five years, reaching around $4 trillion annually. That stark figure from the first draft outcome document captures both the scale of our challenge and the urgency driving the FfD4 process. As someone who has spent years working within the UN system on financial architecture reform, I find myself cautiously optimistic about what this conference might achieve, while remaining clear-eyed about the distance between commitments and credibility.
The Promise of Reform – and the Risk of Abstraction
Reading through the Outcome Document recently published ahead of the Conference – otherwise referred to as the ‘Compromiso de Sevilla’, there is no question about ambition. ‘We decide to launch an ambitious package of reforms and actions to close this financing gap with urgency, and catalyse sustainable development investments at scale’… ‘We commit to continued reform of the international financial architecture, enhancing its resilience, coherence and effectiveness in responding to present and future challenges and crises’.
The language is strong. The political commitment to continue to support and engage constructively in the negotiations on a United Nations Framework Convention on International Tax Cooperation represents meaningful progress. The call for development partners to double their support for domestic resource mobilisation and public financial management by 2030 shows real ambition on revenue mobilisation.
Yet throughout the document, there is a familiar pattern: aspirational language backed by mechanisms that often remain vague or untested. It is the perennial challenge of multilateral diplomacy – how to translate political consensus into operational change that countries can actually implement and stakeholders can hold accountable.
Nowhere is this tension more visible – or more urgent – than in how we define and regulate creditworthiness.
Credit Ratings: Leverage Point and Litmus Test
The Structural Problem
Credit rating agencies continue to function as gatekeepers to global capital – but they do so with limited public accountability globally, short time horizons, and a narrow conception of fiscal sustainability. The problem is not simply technical; it is structural.
Consider the methodological constraints: CRAs still heavily discount investments in climate resilience and social infrastructure, treating them as fiscal burdens rather than long-term assets. Their scenario analysis remains stubbornly short-term, typically extending no more than three to five years – far too brief to capture the benefits of education spending, renewable energy transitions, or pandemic preparedness. The reasons for the agencies to operate in this fashion are many and, from their perspective, entirely plausible. Meanwhile, the mechanistic use of credit ratings in regulatory frameworks like Basel III creates self-reinforcing cycles where rating downgrades trigger capital flight, validating the very pessimism that prompted the downgrade.
Perhaps most problematically, there is an asymmetry of power: CRAs shape risk narratives that determine borrowing costs for entire populations, yet they operate with minimal public oversight and limited accountability for the development consequences of their assessments. The oversight that does exist is centred around American and European needs and understandings. Even with this narrow focus, the oversight is targeted, limited, and certainly not transparent (see the argument over deanonymising SEC investigations, as one example – I was a signatory to this call headed by Americans for Financial Reform and fully believe that deanonymising regulatory intervention may well make sense for the regulator, but not for the public).
Activating the Solutions We Already Have
This brings us to paragraphs 44+ of the Outcome Document, which mark a genuine watershed in recognising these dynamics. Three commitments in the draft deserve real attention:
First, the call on CRAs to refine their methodologies to account for investments, lengthen time horizons for credit analysis, and publish long-term ratings based on scenario analysis. This directly addresses the short-termism that penalises countries investing in climate resilience or social infrastructure.
Second, ‘We decide to establish a recurring special high-level meeting on credit ratings under the auspices of ECOSOC for dialogue among Member States, credit rating agencies, regulators, standard setters, long-term investors, and public institutions that publish independent debt sustainability analysis. The meeting will include updates on the Secretary General’s efforts to engage with credit rating agencies, discussion on the use of credit assessments, exchanges on good practices for regulation of credit rating agencies, and sharing of perspectives on credit assessment methodologies’. Creating structured space for this conversation within the UN system represents a significant institutional innovation and a unique commitment in this new space for the UN.
Third, the recognition that potential miscalibration of risk-weightings in financial regulation, such as Basel III may be hampering development finance. This technical-sounding language masks a crucial point: when regulatory frameworks mechanistically rely on credit ratings, they can amplify rating biases and create self-fulfilling prophecies of financial exclusion.
It is worth making something clear. The point of this process is not to be prescriptive with what needs to happen. Take the ECOSOC annual meeting that has been earmarked. The details over what should be developed within the meetings are not contained in the Outcome Document, and for good reason. What needs to be developed, what is reasonable or workable, and what the objectives should be, need to be co-created, not prescribed from upon high. This, I believe, is the only way progress will be witnessed and, of course, is the right approach.
The ECOSOC Annual Meetings
I think it is worth focusing on the establishment of annual meetings with the primary players within the world of credit ratings for a moment. I play a very small part in a much larger agenda which has brought us to this point, and it ought to be recognised. I can recall more meetings than I would care to reveal where the idea of credit ratings being central to the prevailing problems facing the required development of large proportions of the globe was instantly dismissed. ‘That’s too technical’, or ‘that makes sense, but what are we supposed to do about it?’ On reflection, the dismissal, or at best muted agreement was absolutely valid. On the face of things, the credit rating space is too technical. On the face of things, there is very little space for impact or influence. But, with perseverance and communicating these issues in different ways for different audiences, the agenda has been fully developed. Now, the credit rating question is front and centre. I can attest to this personally. In conferences and multilateral meetings the world over, the credit rating-related events are standing-room only. This is represented in the Outcome Document and it is worth celebrating.
It is worth celebrating because now the real work can get started. Never before in the development space have the credit rating industry been represented as it is now. There are many reasons why the credit rating agencies are now responding and engaging. From a self-interest point of view, they are being put on the international agenda and cannot afford to be absent. They must inject their own understanding, their own side of the story. But, what I have seen, admittedly to differing levels, is a genuine willingness to engage in ways which are not ‘normal’ for the CRAs. There is still a natural organisational defensiveness but this is to be expected. But, now, there is a growing sense that engagement and co-creation can be a benefit for the agencies, not just a way to quiet the international focus. Innovations that are in the pipeline are garnering genuine engagement from the rating agencies and, for this, they should be encouraged. What strikes me through this whole process is that for the world we want to see, the rating agencies will need to be onside. The modern development of credit and debt demands it.
What I Hope to Hear in Seville
So what would progress look like in Seville? For me, it is about listening for signs of activation - moments where ambition moves into architecture.
Are the major CRAs prepared to treat this not as a reputational defence, but as a collaborative opportunity?
The document’s call for transparent, accurate, objective and long-term model-based credit assessments challenges fundamental aspects of current rating methodologies. The most promising signals would be CRA willingness to engage in structured peer review and methodological transparency. Followers of my work will know that I am an active campaigner for taking a realistic approach when it comes to the credit rating agencies. I would suggest that those who think the CRAs will rip up their methodologies to take a development approach to rating creditworthiness will be sorely disappointed. This is for good reason… this is not the job of the CRAs and nor should it be. However, incremental methodological evolution should be demanded and the CRAs ought to meet that demand. There are other areas of evolution which would have more impact – like the credit rating committee stage – and more focus is needed on those aspects.
Will Member States take seriously the opportunity to build public rating infrastructure as a complement, not a confrontation?
The document’s language on public alternatives represents a diplomatic breakthrough, but implementation will require institutional capacity and political courage. It may also require a wide re-evaluation of what is possible, what the objectives ought to be from such public investment, and ultimately what may be the best way to implement such an approach. Public initiatives, like the forthcoming AfCRA initiative, face a similar problem which has prevented public alternatives to the private offering of the CRAs: how do you differentiate while remaining credible? If an offering is the same as the Big Three, then why would anybody use it? If the offering is different, then how do you answer questions of bias etc? I argue that for the likes of AfCRA, technical innovation is the route to success rather than focusing on the outcome, but time will tell on how AfCRA is received by the market and its players.
Final Reflections - Where This Might Go
We cannot afford a retreat from multilateral cooperation. These global challenges far exceed the capacity of any single state to respond. That conviction, stated early in the Compromiso de Sevilla, captures both the stakes and the opportunity at FfD4.
The multilateral moment is undeniably fragile. Even as the draft was being finalised, the world’s largest (USA), fifth-largest (UK) and eighth-largest (Netherlands) ODA providers announced significant aid cuts – a sobering counterpoint to the ambition on display. Political winds are shifting in ways that make international cooperation more challenging, not less.
Yet I remain convinced that the window for meaningful credit rating reform – and broader financial architecture reform – is open, even if only partially. The technical understanding of how these systems work has never been stronger. The political coalition for change continues to grow, driven by countries that have experienced firsthand how rating methodologies can constrain their development space.
What gives me hope is not just the language in the FfD4 Outcome Document, but the quality of engagement I’ve seen in preparatory discussions. Finance ministers who once viewed credit ratings as immutable facts of economic life are beginning to understand them as methodological choices that can be influenced and improved. Multilateral institutions that once treated CRA assessments as gospel are starting to develop more nuanced approaches to risk assessment.
Reforms that once felt radical are now on the table. The architecture of global finance will not, and cannot shift all at once – but it is beginning to creak in new directions. If we hold steady, and act with clarity, we can help it move.
I’ll be in Seville next week not just as a speaker and an observer, but as someone who believes these conversations matter for how global finance serves development. If you are following the process, I encourage you to stay engaged, ask hard questions, and keep pushing for systems that are not just technically sophisticated but fundamentally fair. If you are in Seville next week, please reach out!
It is time we remembered that creditworthiness is not just a number – it is a narrative we shape together.