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Financing for sustainable development is clogged

The IMF/World Bank Spring Meetings are a time when financing for sustainable development gets attention. This year, it was apparent that the main channels…



By Homi Kharas, Charlotte Rivard

The IMF/World Bank Spring Meetings are a time when financing for sustainable development gets attention. This year, it was apparent that the main channels are clogged.

To see why, it is useful to start with an understanding of the core elements of sustainable development financing. There are many channels, each with its own drivers.

As Table 1 below shows, external financing in support of sustainable development objectives is in the range of $500 billion to $600 billion. These figures include a number of different sources of financing for sustainable investment, including aid, loans, and private flows. We adjust net official development assistance (ODA) for sums that cannot be used for sustainable development investments: donor administrative costs, in-country refugee charges, and humanitarian assistance. What’s left—approximating what is called country programmable aid—can be used for investments to achieve the Sustainable Development Goals (SDGs).

If developing countries can develop sound project pipelines and improve their policy and institutional structures and if advanced economies give political and financial backing to unclogging finance channels, it is possible to move the agenda forward.

The nature of official flows is reasonably well-understood. Private flows are less easy to categorize, which we can divide into five categories: (i) lending to sovereigns and their enterprises through bond markets and syndicated bank credits; (ii) private philanthropy, which is now of significant proportions; (iii) private finance mobilized into investment projects in co-financing with multilateral agencies (the International Finance Corporation is the major mobilizer); (iv) private provision of infrastructure (mostly in electric power generation, but also toll roads and hospitals); and (v) impact investing into a variety of sectors.

The smaller channels of development finance are closing or showing little prospects for improvement in the short to medium term. For example, even though there is much excitement about environmental, social, and governance investments and sustainable bonds, very little of this money flows to developing countries, and there is an increasing backlash against “greenwashing.” Private philanthropy is large but not organized in a systematic way and responds to the preferences of individual donors rather than being directed to the SDGs. Much is in the form of in-kind donations. And the flows from large emerging economies like China and India have slowed dramatically, starting—in the case of China—well before the pandemic, and now becoming increasingly small as recipient countries shelve investment projects. From a policy perspective, other than the engagement of these creditors in debt relief (see below), there is little that can be done by policymakers in the short run to provide more resources.

For this reason, the real policy debate is over the three main channels that account for around two-thirds of the flows: aid, official nonconcessional lending, and private lending to sovereigns or to entities with a sovereign guarantee. Policymakers need to find a way to unclog these channels.

Table 1: Broadly-defined net international development financing contributions (current USD, billions)Source: Author’s calculations, based on data from OECD statistics, World Bank International Debt statistics, UN financial statistics, Boston University Global Development Policy Center, Government of India Ministry of External Affairs, Indiana University Lilly Family School of Philanthropy, OECD TOSSD, World Bank Private Participation in Infrastructure (PPI) database, and the Global Impact Investing Network (GIIN).


It is commendable that aid has continued to grow even while advanced economies have seen their own domestic situations worsen. Overall aid from Development Assistance Committee countries rose in 2020 and 2021, with increases from countries such as Germany, Sweden, Norway, the United States, and France. Multilateral aid rose even faster, with disbursements from the IMF’s Poverty Reduction and Growth Trust and the World Bank Group’s International Development Association (IDA) providing much-needed countercyclical financing. Aid continued to rise in 2021 and important international funds were replenished, including IDA and the Green Climate Fund.

However, aid in some important countries, notably the U.K., fell in 2020 and again in 2021. In aggregate, aid grew by 0.6 percent in 2021 in real terms, excluding vaccines for COVID-19. At one level, it is commendable that aid continued to grow despite real budget difficulties in every donor country. At another level, however, aid increases appear modest. The ODA increase in 2020 was modest—less than 0.1 percent of the $12 trillion that governments of donor countries spent on their domestic fiscal stimulus packages in 2020.

During the Spring Meetings, the pressures on aid were evident. Officials, especially from Europe, talked about needing to accommodate in-donor costs for housing Ukrainian refugees from aid budgets. Afghanistan, which prior to February 24 was expected to figure prominently in the discussions, was hardly brought up, and a U.N. appeal for humanitarian funding in March came up $2 billion short—the pledged amounts were 45 percent less than the estimated need. Afghanistan now has the highest infant and child mortality in the world.

Given the pressures on aid to respond to humanitarian crises, the Ukraine war, spillover impacts on food and fuel crises, potential debt crises, and the ongoing need for vaccinations and pandemic-related spending, prospects for increases in aid for sustainable development appear bleak.

Official nonconcessional lending

Official financial institutions provided $60 billion during 2020, almost entirely from multilateral institutions that stepped up countercyclical financing in response to the COVID-19 pandemic. Even this, however, was unable to prevent a bifurcated global recovery: Rich countries have mostly regained their pre-pandemic output levels, while developing countries still fall far short. A further concern is that the pandemic forced many developing country governments to slash investment spending and close schools, compromising the potential for future growth.

Against this backdrop, a major announcement at the Spring Meetings was the approval of the IMF’s Resilience and Sustainability Trust (RST) facility, funded in part through a reallocation of special drawing rights (SDRs) that had been issued to rich countries in the initial response to the pandemic. The RST is aiming to raise SDR 33 billion (roughly $45 billion equivalent). Its big breakthrough, however, is not the volume of funding but the terms: The loans will have a 20-year maturity, a 10 ½ year grace period, and an interest rate slightly above the SDR interest rate that is currently 0.5 percent.

Another major announcement was a second surge financing package by the World Bank Group, which aims to provide $170 billion in sustainable development finance over the 15 months between April 2022 and June 2023. However, the World Bank warns that this program will substantially erode the available capital of the International Bank for Reconstruction and Development (IBRD), the main lending arm of the World Bank to middle-income countries. IBRD will be forced to cut its lending by one-third in fiscal year 2024 and beyond under current assumptions.

Other multilateral development banks face the same problem as IBRD. They have lent considerable amounts to respond to the pandemic, leaving them undercapitalized as they look to the future. For this reason, the channel of providing more official nonconcessional lending is clogged.

Private capital

The Spring Meetings had their fair share of warnings about impending debt crises in developing countries and, indeed, credit ratings from the major agencies show that risk is rising. During 2020 and 2021, 42 developing countries had their credit rating downgraded by at least one of the three major ratings agencies, and an additional 33 had their outlook downgraded. The Common Framework for debt treatment beyond the debt service suspension initiative seems stuck. Only three countries are participating (Chad, Ethiopia, and Zambia) and negotiations in each case have been ongoing for too long, with progress measured more by process change than by actual results.

As a sharp reminder of why credit ratings are important, consider that developing countries with an investment grade rating pay an average real interest of 3.6 percent on borrowing from capital markets; those with less than investment grade ratings pay an additional 10 percentage points in interest. At those interest rates, it becomes very difficult to maintain creditworthiness. The only option for a finance minister is to avoid new borrowing and to try to limit fiscal deficits. This is why developing countries were complaining during the Spring Meetings about their lack of fiscal space. Given these conditions in financial markets, there is considerable pessimism that developing countries will be able to profitably return to capital markets on a broad scale.

The way forward

This assessment of what is blocking long-term finance for development suggests three main areas for policy action:

  1. Aid remains the cornerstone of sustainable development finance, but it is in such short supply relative to demand that it must be leveraged—through guarantees, funding institutional innovation, or providing fresh capital to development institutions.
  2. International financial institutions are an efficient way of leveraging capital but are rapidly running out of headroom. They will need fresh capital soon, or else middle-income developing countries will be left with few options. Small improvements may be possible on the margin through balance sheet optimization, but these are a distraction from the core need for additional funding.
  3. Private finance can only restart if new flows are protected from the legacy of existing debt. This means either accelerating debt workout or use of guarantees and other forms of risk pooling and risk shifting, preferential treatment for funds used for core SDG and climate investments, and/or lending to off-sovereign balance sheet public wealth funds or development banks.

If developing countries can develop sound project pipelines and improve their policy and institutional structures and if advanced economies give political and financial backing to unclogging finance channels, it is possible to move the agenda forward. Big asks—no wonder the mood at the Spring Meetings was somber.

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China Auto Sales Jump 55% Year Over Year As Price Cuts Continue To Move NEV Metal

China Auto Sales Jump 55% Year Over Year As Price Cuts Continue To Move NEV Metal

Retail sales of passenger vehicles scorched higher in May,…



China Auto Sales Jump 55% Year Over Year As Price Cuts Continue To Move NEV Metal

Retail sales of passenger vehicles scorched higher in May, with 1.76 million units sold, according to preliminary data from the China Passenger Car Association released this week. 

The sales figure represents 8% growth from the month prior. As has been the case over the last several years, new energy vehicles continue to grow disproportionately to the rest of the sector, driving sales higher.

Last month 557,000 NEVs were sold, growth of 55% year over year and 6% sequentially, according to a Bloomberg wrap up of the data. 

The sales boost comes as the country slashed prices to move metal throughout the first 5 months of the year. In late May we noted that China's auto industry association was urging automakers to "cool" the hype behind price cuts that were sweeping across the country. 

The price cuts were getting so egregious that the China Association of Automobile Manufacturers went so far as to put out a message on its official WeChat account, stating that "a price war is not a long-term solution". Instead "automakers should work harder on technology and branding," it said at the time.

Recall we wrote in May that most major automakers were slashing prices in China. The move is coming after lifting pandemic controls failed to spur significant demand in China, the Wall Street Journal reported last month. Ford and GM will be joined by BMW and Volkswagen in offering the discounts and promotions on EVs, the report says. 

At the time, Ford was offering $6,000 off its Mustang Mach-E, putting the standard version of its EV at just $31,000. In April, prior to the discounts, only 84 of the vehicles were sold, compared to 1,500 sales in December. There was some pulling forward of demand due to the phasing out of subsidies heading into the new year, and Ford had also cut prices by about 9% in December. 

A spokesperson for Ford called it a "stock clearance" at the time. 

Discounts at Volkswagen ranged from around $2,200 to $7,300 a car. Its electric ID series is seeing price cuts of almost $6,000. The company called the cuts "temporary promotions due to general reluctance among car buyers, the new emissions rule and discounts offered by competitors."

China followed suit, and thus, now we have the sales numbers to prove it...

Tyler Durden Wed, 06/07/2023 - 20:00

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World Bank: Global Economic Growth Expected To Slow To 2008 Levels

World Bank: Global Economic Growth Expected To Slow To 2008 Levels

Authored by Michael Maharrey via,

Most people in the mainstream…



World Bank: Global Economic Growth Expected To Slow To 2008 Levels

Authored by Michael Maharrey via,

Most people in the mainstream concede that the economy is heading for a recession, but the consensus seems to be that downturn will be short and shallow. Projections by the World Bank undercut that optimism.

According to the World Bank, global growth in 2023 will slow to the lowest level since the 2008 financial crisis.

In other words, the World Bank is predicting the beginning of Great Recession 2.0.

You might recall that the Great Recession was neither short nor shallow.

In fact, World Bank Group chief economist and senior vice president Indermit Gill said, “The world economy is in a precarious position.”

According to the World Bank’s new Global Economic Prospects report, global growth is projected to decelerate to 2.1% this year, falling from 3.1% in 2022. The bank forecasts a significant slowdown during the last half of this year.

That would match the global growth rate during the 2008 financial crisis.

According to the World Bank, higher interest rates, inflation, and more restrictive credit conditions will drive the economic downturn.

The report forecasts that growth in advanced economies will slow from 2.6% in 2022 to 0.7% this year and remain weak in 2024.

Emerging market economies will feel significant pain from the economic slowdown. Yahoo Finance reported, “Higher interest rates are a problem for emerging markets, which already were reeling from the overlapping shocks of the pandemic and the Russian invasion of Ukraine. They make it harder for those economies to service debt loans denominated in US dollars.”

The World Bank report paints a bleak picture.

The world economy remains hobbled. Besieged by high inflation, tight global financial markets, and record debt levels, many countries are simply growing poorer.”

Absent from the World Bank analysis is any mention of how more than a decade of artificially low interest rates and trillions of dollars in quantitative easing by central banks created the wave of inflation that continues to sweep the globe, along with massive levels of debt and all kinds of economic bubbles.

If you listen to the mainstream narrative, you would think inflation just came out of nowhere, and central banks are innocent victims nobly struggling to save the day by raising interest rates. Pundits fret about rising rates but never mention that rates were only so low for so long because of the actions of central banks. And they seem oblivious to the consequences of those policies.

But being oblivious doesn’t shield you from the impact of those consequences.

In reality, central banks and governments implemented policies intended to incentivize the accumulation of debt. They created trillions of dollars out of thin air and showered the world with stimulus, unleashing the inflation monster. And now they’re trying to battle the dragon they set loose by raising interest rates. This will inevitably pop the bubble they intentionally blew up. That’s why the World Bank is forecasting Great Recession-era growth. All of this was entirely predictable.

After all, artificially low interest rates are the mother’s milk of a global economy built on easy money and debt. When you take away the milk, the baby gets hungry. That’s what’s happening today. With interest rates rising, the bubbles are starting to pop.

And it’s probably going to be much worse than most people realize. There are more malinvestments, more debt, and more bubbles in the global economy today than there were in 2008. There is every reason to believe the bust will be much worse today than it was then.

In other words, you can strike “short” and “shallow” from your recession vocabulary.

Even the World Bank is hinting at this.

Tyler Durden Wed, 06/07/2023 - 15:20

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DNAmFitAge: Biological age indicator incorporating physical fitness

“We expect DNAmFitAge will be a useful biomarker for quantifying fitness benefits at an epigenetic level and can be used to evaluate exercise-based interventions.”…



“We expect DNAmFitAge will be a useful biomarker for quantifying fitness benefits at an epigenetic level and can be used to evaluate exercise-based interventions.”

Credit: 2023 McGreevy et al.

“We expect DNAmFitAge will be a useful biomarker for quantifying fitness benefits at an epigenetic level and can be used to evaluate exercise-based interventions.”

BUFFALO, NY- June 7, 2023 – A new research paper was published in Aging (listed by MEDLINE/PubMed as “Aging (Albany NY)” and “Aging-US” by Web of Science) Volume 15, Issue 10, entitled, “DNAmFitAge: biological age indicator incorporating physical fitness.”

Physical fitness is a well-known correlate of health and the aging process and DNA methylation (DNAm) data can capture aging via epigenetic clocks. However, current epigenetic clocks did not yet use measures of mobility, strength, lung, or endurance fitness in their construction. 

In this new study, researchers Kristen M. McGreevy, Zsolt Radak, Ferenc Torma, Matyas Jokai, Ake T. Lu, Daniel W. Belsky, Alexandra Binder, Riccardo E. Marioni, Luigi Ferrucci, Ewelina Pośpiech, Wojciech Branicki, Andrzej Ossowski, Aneta Sitek, Magdalena Spólnicka, Laura M. Raffield, Alex P. Reiner, Simon Cox, Michael Kobor, David L. Corcoran, and Steve Horvath from the University of California Los Angeles, University of Physical Education, Altos Labs, Columbia University Mailman School of Public Health, University of Hawaii, University of Edinburgh, National Institute on Aging, Jagiellonian University, Pomeranian Medical University in Szczecin, University of Łódź, Central Forensic Laboratory of the Police in Warsaw, Poland, University of North Carolina at Chapel Hill, University of Washington, and University of British Columbia develop blood-based DNAm biomarkers for fitness parameters including gait speed (walking speed), maximum handgrip strength, forced expiratory volume in one second (FEV1), and maximal oxygen uptake (VO2max) which have modest correlation with fitness parameters in five large-scale validation datasets (average r between 0.16–0.48). 

“These parameters were chosen because handgrip strength and VO2max provide insight into the two main categories of fitness: strength and endurance [23], and gait speed and FEV1 provide insight into fitness-related organ function: mobility and lung function [8, 24].”

The researchers then used these DNAm fitness parameter biomarkers with DNAmGrimAge, a DNAm mortality risk estimate, to construct DNAmFitAge, a new biological age indicator that incorporates physical fitness. DNAmFitAge was associated with low-intermediate physical activity levels across validation datasets (p = 6.4E-13), and younger/fitter DNAmFitAge corresponds to stronger DNAm fitness parameters in both males and females. 

DNAmFitAge was lower (p = 0.046) and DNAmVO2max is higher (p = 0.023) in male body builders compared to controls. Physically fit people had a younger DNAmFitAge and experienced better age-related outcomes: lower mortality risk (p = 7.2E-51), coronary heart disease risk (p = 2.6E-8), and increased disease-free status (p = 1.1E-7). These new DNAm biomarkers provide researchers a new method to incorporate physical fitness into epigenetic clocks.

“Our newly constructed DNAm biomarkers and DNAmFitAge provide researchers and physicians a new method to incorporate physical fitness into epigenetic clocks and emphasizes the effect lifestyle has on the aging methylome.”

Read the full study: DOI: 

Corresponding Authors: Kristen M. McGreevy, Zsolt Radak, Steve Horvath

Corresponding Emails:,, 

Keywords: epigenetics, aging, physical fitness, biological age, DNA methylation

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About Aging-US:

Launched in 2009, Aging publishes papers of general interest and biological significance in all fields of aging research and age-related diseases, including cancer—and now, with a special focus on COVID-19 vulnerability as an age-dependent syndrome. Topics in Aging go beyond traditional gerontology, including, but not limited to, cellular and molecular biology, human age-related diseases, pathology in model organisms, signal transduction pathways (e.g., p53, sirtuins, and PI-3K/AKT/mTOR, among others), and approaches to modulating these signaling pathways.

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