Indonesia walks the talk when it comes to identifying solutions to fund reaching the Sustainable Development Goals (SDGs) and will present its innovative and inclusive financing approach and solutions at a major global summit next month. The approach has enabled the country to raise close to $12 billion to meet the SDGs.
“Only five years remain to deliver on the 2030 Agenda, yet less than 20% of global targets are on track. We need bold, diverse financing solutions to close the gap,” said Putut Hari Satyaka, Deputy Minister for Development Financing and Investment at Indonesia’s Ministry of National Development Planning (Bappenas).
“Through mechanisms like Islamic finance, we see an opportunity to promote ethical, inclusive, and sustainable investments.”
In the lead-up to the Fourth International Conference on Financing for Development (FfD4), set to take place in Seville, Spain, between 30 June and 3 July, the Government of Indonesia and the UN in Indonesia co-organized a series of national and international events addressing the urgent need for more equitable financial systems.
The global annual financing gap to reach the SDGs is estimated at US$ 4 trillion, or around 3.5% of global GDP. As global progress on the SDGs stalls, developing countries face growing constraints in financing key development and climate initiatives. The COVID-19 pandemic, inflation shocks and reduced overseas assistance have further strained public budgets.
In Indonesia alone, additional resources are needed to support reaching the SDGs—ranging from climate adaptation and biodiversity conservation to just energy transition and social protection. Bappenas estimates the financing gap to be US$ 1.7 trillion. Recognizing this, Indonesia has been seeking financing strategies that are innovative and also align with its cultural and ethical values.
Islamic Finance for Sustainable Development
Indonesia has emerged as a leader in Islamic finance issuing more than US$ 11.6 billion in thematic bonds and green sukuk since 2018. Since 2023, the country also has mobilized US$ 309 million blue bond to support marine ecosystem conservation marking a milestone in faith-aligned environmental financing.
Other instruments under exploration include green waqf (Islamic endowments) for long-term social and environmental impact, as well as community-based investment models.
Adopting a whole of UN approach, the UN Development Programme (UNDP), the UN Environment Programme (UNEP),the United Nations Children’s Fund (UNICEF) and the UN Economic and Social Commission for Asia and the Pacific (ESCAP) have worked closely with the Government to advance regulatory frameworks, provide technical support, and build coalitions around financing innovation.
The Seville conference is expected to be a critical moment for rethinking global financing frameworks. Indonesia is using the lead-up to FfD4 to share lessons, advocate for reform, and promote more diverse and just financing systems that reflect the realities of developing nations.
One of the most critical pathways forward is linking financing for development with greater investments in decent employment and universal social protection—pillars that are essential for building resilient, inclusive economies.
Ambassador of Spain to Indonesia, H.E. Francisco Aguilera Aranda, welcomed Indonesia’s leadership in this area, stating,
“We will continue to champion decent employment and universal social protection in major international processes, such as the Fourth Conference on Financing for Development in Seville, the 2025 High-Level Political Forum, and the Second World Social Summit,” underscoring Spain’s commitment to advancing social justice and inclusive growth worldwide.
Indonesia will showcase its experience in innovative financing, which could be taken up by other countries as well, said Gita Sabharwal, UN Resident Coordinator in Indonesia.
“Islamic finance holds great promise for inclusive and sustainable development,” she said. “Indonesia’s leadership is helping to shape global thinking around ethical finance at a time when trust in traditional systems is being challenged. What we are seeing is a real opportunity to build partnerships rooted in shared values and mutual benefit.”
As part of its efforts to champion sustainable development financing, at the ECOSOC Forum on Financing for Development and the Fourth Preparatory Committee Session for FFD4 in New York in April, Indonesia in collaboration with Joint SDG Fund and the UN Development Programme (UNDP) cohosted a side event on “Innovative Financing: Leveraging Islamic Finance for SDGs”. The event emphasized the role of Islamic finance in offering inclusive, innovative tools to power energy, inclusive growth and sustainable food systems.
“We believe that the approach Indonesia is taking could be useful for others and countries around the world can benefit from our experience and accelerate their own progress towards the SDGs,” Mr Satyaka said.
Note
All joint programmes of the Joint SDG Fund are led by UN Resident Coordinators and implemented by the agencies, funds and programmes of the United Nations development system. With sincere appreciation for the contributions from the European Union and Governments of Belgium, Denmark, Germany, Ireland, Italy, Luxembourg, Monaco, The Netherlands, Norway, Poland, Portugal, Republic of Korea, Saudi Arabia, Spain, Sweden, Switzerland for a transformative movement towards achieving the SDGs by 2030.
