Session 7 of the Asia-Pacific Regional Review Meeting on the Implementation of the Istanbul Programme of Action for Least Developed Countries, 30 August-3 September 2021.
Excellencies, Ladies and gentlemen,
A warm welcome to all participants in this Session 7 of the High-level Asia-Pacific Regional Review Meeting on the IPoA.
Innovative financing remains at the heart of advancing progress towards the SDGs among the Asia-Pacific LDCs.
A sharp fall in GDP growth rates and the associated loss in revenue receipts were triggered by growing travel restrictions and a slump in tourism demand in LDCs.
These economies further witnessed thousands of jobs lost in both the formal and informal sectors, which exacerbated poverty and socio-economic vulnerability.
The pandemic has also resulted in a decline in foreign direct investment, remittances, and Official development assistance.
The pandemic triggered many challenges to governments’ ability to ensure sustained economic recovery and finance amidst the rising fiscal distress across LDCs.
At the same time, the Asia-Pacific LDCs are facing growing climate change-related disaster risks and economic losses, as documented in ESCAP’s latest publication, 2021 Asia-Pacific Disaster Report.
As countries prioritize speedy economic recovery, there is a risk that less attention will be paid to tackling climate adaptation and mitigation.
There is a clear argument to reinvigorating the landscape to promote innovative sources of financing for health care, supporting economic recovery and mobilizing financing options for climate action.
The UN Secretary-General’s global initiative and the associated high-level meetings on the financing for development agenda has been instrumental in highlighting the financing policy priorities to assist LDCs, including small island developing States or SIDS.
In view of this, please allow me to share for your further discussion, deliberation and consideration three important financing instruments to mobilize additional resources.
The first one is that the governments in LDCs can work towards raising fiscal revenues and strengthening the administrative efficiency for allocating budgetary resources to support lives and livelihoods.
The government revenues of the Asia-Pacific LDCs (excluding grants) increased to 22.8 per cent in 2019, up from 19.1 per cent of GDP in 2011. And the median tax-to-GDP ratio increased to 18.8 per cent from 13.5 per cent over the same period.
Despite this encouraging trend, not all LDCs have sufficient tax revenues. Several of them have government revenues below 10 per cent of GDP in 2020.
Our policy analysis indicates that there is still plenty of room to broaden tax bases, tackle tax avoidance and tax evasion by upgrading their national tax systems, modernizing taxpayers’ databases and streamlining revenue collection processes.
Second, Policymakers in LDCs need to work with development partners and the private sector in taking advantage of expanding global markets to access new financing for the SDGs, such as green bonds, social bonds, sustainability bonds and climate bonds.
There are encouraging developments in our region. For example, in 2020, Bhutan issued its first domestic sovereign bonds with technical assistance from ESCAP, and Cambodia passed a law that will allow the government to issue bonds.
To take these initiatives forward, building institutional capacities to issue sovereign bonds is an essential step.
And third, LDCs can harness the potential of digital financing to expand financial inclusion.
The pandemic has unveiled the importance of digital solutions and finance technologies to support business recovery and economic growth, especially to empower women entrepreneurs.
Digital technology in particular has been facilitating the delivery of government-to-person (or G2P) digital cash transfers. It significantly lowers the cost of international remittances while supporting reductions in poverty and promoting economic equality.
ESCAP is working with several governments to devise mechanisms to facilitate improved flows of finance to MSMEs, including in Bangladesh and Nepal.
Excellencies, ladies and gentlemen,
I would like to reiterate that we must ensure financing economic recovery policies in line with the Paris Agreement and the 2030 Agenda.
Finally, I am pleased to inform you that ESCAP’s upcoming Committee on Macroeconomic Policy, Poverty Reduction and Financing for Development, to be held in October of this year, will focus on these financing issues, including innovative climate finance instruments.
The Committee intends to discuss the potential of these innovative financing instruments, good practices as well as opportunities in their deployment in the Asia-Pacific region, especially for the LDCs.
ESCAP stands ready to continue our support for LDCs in identifying development financing through cooperation, partnership, and multilateralism.
I thank you very much. Thank you, Madam Chair.