Amid an uncertain and uneven recovery from the COVID-19 pandemic, several developing economies of Asia and the Pacific are experiencing shrinking fiscal space and rising debt levels. Policymakers are now faced with an unenviable task – to ensure sustained socio-economic recovery, which will require continued fiscal support, while finding means to finance the rising fiscal deficit and tackle debt sustainability concerns. At the same time, they need to continue to pursue the ambitions of the 2030 Agenda and tackle the climate emergency. While emergency lending by the IFIs plus the G20’s Debt Service Suspension Initiative provided some relief, the extent to which these will suffice to alleviate the financing pressures and tackle debt-related challenges is unclear.
The purpose of this Regional Conversation is to exchange views with policymakers and experts on how to increase the availability of financing for sustainable development and climate action and address debt risks in Asia and the Pacific. The conversation builds on an a high-level event on Debt relief in the aftermath of the pandemic organized by ESCAP during its 77th Commission Session in April 2021, and will complement discussions to take place at the third session of the Committee on Macroeconomic Policy, Poverty Reduction and Financing for Development during 20-22 October 2021.
The conversation will focus on the following questions:
- What strategies and policies are developing countries of the region pursuing to address debt risks and channel financial resources in support of SDGs and climate action?
- Is the current international debt architecture, including the Common Framework and collective action clauses in sovereign bonds, sufficient to address rising debt risks? If not, what reforms are needed?
- What is the potential for scaling up debt-for-climate swaps as a tool to reduce debt risks and increase investments in climate action? What should be the broad contours of a framework for this purpose, and how regional cooperation could help?
- How can ESCAP help developing countries of the Asia-Pacific region address financing challenges and explore the potential of innovative sustainable financing strategies?
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