Low- and lower-middle- income countries (LMICs) are home to 50 percent of global population but have only 10.4 percent of the world’s investment (capital formation). Indeed, for these developing countries, the financing gap for achieving the Sustainable Development Goals (SDGs) will amount to US$4.2 trillion annually until 2030 (OECD, 2020). To help close this gap, this Policy Brief proposes that the G20: 1) Review the existing development financing scheme; 2) Develop domestic credit markets in LMICs; 3) Reform the private capital market credit rating system; 4) Restructure existing official debts for long-term low-interest finance; 5) Integrate blended financing in development financing schemes involving philanthropies and private companies; 6) Create a coordination and cooperation body involving global, regional and national development financial institutions; and 7) Establish national-level development banks.
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