Financing for Low-Income Countries, Collateral Damage of Global Imbalances
July 02, 2026
On 15–17 June 2026, the G7 Summit of Heads of State and Government was held in Évian under the French presidency. Since 1974, when Valéry Giscard d’Estaing first brought together the leaders of the world's leading industrialised nations at the time in Rambouillet in the wake of the first oil crisis, the nature of this forum—which has since become a major institution of the international order—has evolved considerably. Since the G20 became the primary informal forum for global coordination, the G7, while no longer appearing "as anything more than the leader of the Western bloc, particularly since the war in Ukraine" (Cabrillac and Jaillet, 2026), has continued to address the major political and economic challenges facing the world. At the same time, it has remained a forum concerned with the problems of low-income countries, which are under-represented—or not represented at all—in the G20 and whose interests do not necessarily align with those of the major emerging economies participating in that forum.
In Évian, discussions were naturally dominated by the conflict involving Iran, the ongoing negotiations between the United States and Iran, and Russia's war against Ukraine. However, the agenda and the declarations—prepared over many months with considerable care—also addressed major geo-economic issues. These issues were also of direct relevance to poor and vulnerable countries. FERDI contributed to these preparations, and the G7 declarations reflect several positions that we have long advocated, particularly in the run-up to the Évian Summit.
Given that the G7 countries were unwilling to reconsider the sharp cuts in their development assistance budgets, they should at least have agreed to ensure that the countries most in need were better protected than other countries—a point that FERDI sought to emphasise (FERDI, 2026). Even this was by no means a foregone conclusion. An important first milestone came with the G7 Ministerial Communiqué on Development (updated on 6 May), which, in paragraph 5, "A common commitment for future generations", states:
| " We encourage all development actors to focus concessional resources where they are most needed, particularly in least developed and most vulnerable countries..."
This communiqué is noteworthy for several reasons. Its wording was taken up almost verbatim in the Leaders' Declaration on Mutually Beneficial International Partnerships, this time in the form of a commitment rather than an encouragement:
| " We will use concessional resources strategically where they are most needed, particularly in least developed and most vulnerable countries, addressing the specific needs of countries exposed to external and natural shocks, remoteness, limited access to capital markets and protracted or ongoing conflicts. "
The same declaration, which notes that concessional official development assistance continues to play a strategic role when combined with other forms of finance, repeatedly emphasises the importance of solidarity with the most vulnerable countries and populations, the need to strengthen resilience to external shocks, and the importance of addressing risks.
It therefore reflects the need to take vulnerability, in all its dimensions, into account when allocating concessional resources—an approach that FERDI has advocated for many years. FERDI will continue to support the implementation of this declaration by contributing its expertise on the category of least developed countries (LDCs)—which reappears in a G7 leaders' declaration after an absence of around twenty years—on the identification of the "most vulnerable countries", and on how best to reconcile the objective of international solidarity with the financing of global public goods.
Equally important is the G7 Declaration by Heads of State and Government For More Balanced, Sustainable and Resilient Growth. It places particular emphasis on the need to "achieve balanced and sustainable growth by reducing global imbalances". Although the declaration makes only limited reference to poor countries, it opens with a statement that echoes a message long emphasised by FERDI in the run-up to the G7:
| " Global imbalances can have adverse economic impacts, especially on the poorest countries, although most of them do not contribute to imbalances. " The declaration also underlines the need for countries with large external surpluses "to avoid distortionary measures that have negative spillover effects on other countries".
FERDI has consistently argued that the poorest countries have become collateral victims of the rise in global imbalances (Mien E., Butail B., Cabrillac B., 2026). These imbalances have enabled China to establish a dominant position in global manufacturing value chains, making it increasingly difficult for poorer countries to integrate into them. At the same time, the United States continues to attract an ever-growing share of global savings, while the poorest countries, in particular, struggle to secure the financing needed for their development.
The G7 should take these adverse effects more explicitly into account, both in designing policies to reduce global imbalances and in ensuring that such policies do not unintentionally worsen the situation of the countries least responsible for those imbalances. This is an issue that FERDI intends to continue analysing, and one that is closely linked to the broader question of allocating concessional resources to the least developed and most vulnerable countries.
On both the allocation of concessional resources to the poorest and most vulnerable countries and the attention that these countries deserve in the context of reducing global imbalances, FERDI remains fully committed. It will continue its work with the aim of developing operational recommendations that can help turn the commitments made at the G7 into concrete action.
