Expanding, Creating, and Engendering Fiscal Space: Strategies Toward External Debt, Concessional Finance, and Special Drawing Rights

This is a background paper prepared for UN Women-ILO Joint Programme on Promoting Decent Employment for Women Through Inclusive Growth Strategies and Investments in Care

Abstract

A debt crisis of epic proportions in the Global South is emerging. The consequences of this debt crisis are likely to be far more disastrous than those of the first lost decade of the 1980s. The unfolding debt crisis—on top of the Covid, supply chain and other crises—dim the prospects of mobilizing vast quantities of the medium- and long-term financial resources necessary to reverse backsliding and make progress on the full range of United Nations Sustainable Development Goals (SDGs) by the looming 2030 target. SDG 5 provides the impetus for this background paper, which is part of a joint programme between UN Women and the ILO. Many of the strategies discussed here speak to SDG 5 indirectly, though some address it directly. The strategies on offer also support the SDGs that target green transitions and economic justice (namely, SDGs 6, 7, 10-15).

As with previous debt crises and the pandemic, the burdens of today’s debt crises are borne disproportionately by women and other vulnerable groups and nations. These burdens compound the myriad challenges they face, threaten to compromise any gains made in the recent past, and introduce new setbacks. It’s therefore crucial that we explore opportunities for expanding and creating the fiscal space that national policymakers can use to support SDG 5. I consider here only strategies that focus on a subset of external financial flows (namely, external debt, concessional finance, and special drawing rights, SDRs). My principal goal is to support development of an analytical and policy framework for expanding, creating, and engendering fiscal space through strategies that ease external debt burdens and increase access to some forms of external finance. Most of the strategies considered in this paper are “gender-indifferent,” meaning that they are neither informed by concerns about gender and nor do they directly target gendered inequalities. Gender-indifferent external finance strategies directly increase fiscal space and can indirectly support gender equality, if national policymakers have the political commitment and tools to use the space created toward this end. I also consider here some gender-informed external finance strategies that can, to various degrees, directly support gender equality. And because austerity policies disproportionately affect women and girls, any strategies that ease external financing burdens and constraints necessarily support gender equality. It’s my intention that those advocating for women the world over will find in this paper a set of attractive and viable strategies for creating, expanding, and engendering fiscal space through strategies aimed at external finance at a time of overlapping crises. I also hope that this paper will be of use to those advocating for green transitions and for a just, inclusive global economy.