Global Financial Imbalance Hurting Climate, Development Goals: FM Sitharaman

(MENAFN- Live Mint) New Delhi: Finance minister Nirmala Sitharaman on Friday flagged persistent asymmetry in global financial flows as a major impediment to sustainable development in the Global South, warning that it continues to stifle long-term investments in clean energy, urban mobility, and climate-resilient infrastructure.

Speaking at the New Development Bank's (NDB) Governors Seminar in Rio de Janeiro, Brazil, Sitharaman urged a fundamental rethink of the global financial architecture to better align with the development priorities of emerging and low-income economies.

“The asymmetry in global financial flows deters long-term investment and delays critical progress, especially in renewable energy, urban mobility and climate resilient infrastructure,” she said.

“The result is the widening gap between development potential and the financial realization," she added.

Sitharaman also highlighted the complexity of balancing growth and sustainability, particularly in democracies like India where expanding access to housing, healthcare, education, and livelihoods remains a critical imperative.

“The real challenge, therefore, is not choosing between development and sustainability, but designing policies, particularly in partnership with emerging markets and developed economy countries that foster inclusive growth and strengthen sustainable development,” she said.

The finance minister added that India is actively aligning its financial system with climate and development goals by deepening its green finance ecosystem.

“India has laid a strong foundation for green finance in recent years-through Sovereign Green Bonds, ESG disclosure mandates, and the proposed taxonomy for climate finance,” Sitharaman said.“We are building a more resilient, inclusive, and innovation-driven financial architecture that connects capital with climate imperatives.”

The finance minister underscored the role of institutions like the New Development Bank in reshaping development finance for the Global South.

“The NDB was set up to bridge a clear gap in the global financial architecture, one that responds to the unique needs of developing economies,” she said.

The NDB, formerly the BRICS Development Bank, was established in 2014 by Brazil, Russia, India, China, and South Africa to mobilize funding for infrastructure and sustainable development projects.

Headquartered in Shanghai, it serves as a credible alternative to Western-led institutions like the World Bank and the International Monetary Fund.

Sitharaman's remarks in Brazil echoed the concerns she raised earlier this week at the 4th International Conference on Financing for Development (FFD4) in Seville, Spain, where she called for urgent reforms to the global financial system , expanded climate finance, and faster sovereign debt restructuring, especially for vulnerable economies.

The calls come amid growing alarm over stalled progress on the United Nations' Sustainable Development Goals.

The UN estimates a $4 trillion annual shortfall in development financing, severely constraining the ability of countries to invest in essential services and transition toward sustainable, inclusive growth.

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