Excellency Mr. Carlos Dominguez III, Secretary of Finance of the Philippines
Excellency Mr. Ibrahim Ameer, Minister of Finance of Maldives
Excellency Mr. Ajith Nivard Cabraal, Governor of the Central Bank of Sri Lanka
Excellency Mr. Mark Brown, Prime Minister of Cook Islands
Excellency Mr. Henry Puna, Secretary General of the Pacific Island Forum
Excellencies, distinguished participants, ladies and gentlemen,
Welcome to our regional conversation on “Financing sustainable development and addressing debt risks in the aftermath of the COVID-19 pandemic: Potential of innovative sustainable financing strategies”.
This is the second event of our 2021 Regional Conversation series. These Regional Conversations focus on priority areas where ESCAP can support member States in their post-COVID-19 recovery efforts and their journey towards SDGs.
The COVID-19 pandemic caused much damage in terms of lives and livelihoods lost. It has exacerbated the challenge to finance SDGs as the resources have been channeled to support recovery efforts.
Several developing economies in Asia and the Pacific are experiencing constrained fiscal space and rising debt levels in a context where the recovery from the COVID-19 pandemic remains uncertain and uneven.
As a result, policymakers are now faced with a very difficult task: How to ensure a sustained socio-economic recovery, which will require continued fiscal support, while finding the means to finance the rising fiscal deficit and tackle debt sustainability concerns.
At the same time, policymakers are keenly aware that we are only less than nine years away from 2030 and the Asia-Pacific region is behind in its path towards achieving all of the Sustainable Development Goals.
Without adequate financing for the needed investments, the likelihood of achieving these Goals looks even more distant.
In 2020 and 2021, a major financial crisis was avoided because of timely, proactive and innovative policy interventions by several countries, supported by abundant emergency lending by the international financial institutions and the G20’s Debt Service Suspension Initiative or DSSI.
Going forward, with the DSSI ending this year and the recovery from the pandemic remaining uncertain, continued policy support and the use of innovative financing instruments will be critical.
However, it will not be easy, as fiscal deficits and debt levels rise and financing them becomes more demanding. Such challenges may increase further in 2022 if the current spike in inflation, due to incipient economic recovery and constraints in global supply chains, becomes entrenched and requires central banks to increase interest rates.
Similarly, as countries prioritize a speedy economic recovery, there is a risk that less attention will be paid to tackling climate change. Indeed, early assessments, as highlighted in the 2021 edition of ESCAP’s flagship publication, the Economic and Social Survey of Asia and the Pacific, reveals that the significant policy packages rolled out by Governments may have missed the opportunity to promote low-carbon, climate-resilient and green development pathways.
Within this policy panorama, common to all countries globally, the purpose of this regional conversation is to turn the focus to Asia and the Pacific.
We want to learn what measures countries have taken to deal with the situation. How do they intend to manage debt vulnerabilities while continuing to finance needed investments in sustainable development? What innovative sustainable financing instruments and strategies are being used in this regard to close the financing gap?
One example of a mechanism that can simultaneously address debt and climate risks is debt-for-climate swaps. It will be very important to learn about the potential for scaling up this mechanism in the region as a tool to reduce debt risks and increase investments in climate action.
To address these and other important questions, we are privileged today that high-level policymakers and distinguished experts have joined our Conversation on financing sustainable development.
I very much look forward to your insights and suggestions.
Thank you very much.