While financial market conditions have improved lately and the world economy has proven resilient to the continued efforts to bring down inflation, developing economies are not out of the woods yet. Growth is expected to remain subdued in years to come and risk remains strongly tilted to the downside. Even if risks do not materialize, many developing economies are stuck in a negative debt-development feedback loop keeping them from undertaking new growth- and welfare-enhancing investments. For countries to break free of this situation they urgently need to prioritize policy reforms aimed at improving fiscal balances and mobilizing private capital. However, given the scale of spending needed, countries will under no circumstances be able to undertake a sustainable development transformation over the next decade without the support of a much larger and more responsive multilateral financial system. This will have to include both better access to effective debt restructuring, liquidity support and long-term affordable capital. A failure to get this right not only matters for debt vulnerable developing economies. It jeopardizes the achievement of global climate and SDG targets with ever-increasing costs, and potentially irreversible outcomes.