Fragile finances: Managing risks, supporting stability

Development finance in all its forms plays a critical role in fragile contexts. Done well, the right financing can help incentivise and pay for transformative change that will reduce risks, strengthen states and societies, work to end crises and humanitarian need, and deliver better lives for everyone. However, there are also risks.

The recent States of Fragility 2020 and related paper on financing in fragile contexts highlighted the fiscal risks faced by fragile contexts, exacerbated by the economic contraction and COVID-19. Given the global nature of the pandemic, the “cresting debt wave” that developing and fragile contexts are facing coincides with higher spending needs to cushion the impact of the pandemic and support the recovery, increased complexity in resolving debt crises, and increased fiscal pressures in donor countries. This presents not just financial, but also potential fragility risks: less fiscal space to respond to crises reduces investments in the SDGs, constrains economic opportunities for individuals and communities and may increase the risk of conflict.

As part of the UNDP Development Dialogues series, this event will look at the financing landscape in fragile contexts today, with a focus on bringing a fragility lens to looming fiscal crises, and on supporting socio-economic responses in an increasingly fragile world. The event aims to raise awareness of the links between fiscal and socio-economic challenges, fragility and conflict, and to trigger future discussions and solutions between these very different policy communities.