As the socio-economic impacts of the COVID-19 pandemic spread across the length and breadth of Asia and the Pacific, finance ministries are continuing their relentless efforts to inject trillions of dollars for emergency health responses and fiscal packages. With continued lockdown measures and restricted borders, economic rebound seems uncertain.
Compared to 2019’s economic situation, over the past six months, countries in Asia and the Pacific have been experiencing sharp drops in foreign exchange inflows due to declines in export earnings, remittances, tourism and FDI. This is worrying as policymakers are tackling difficult choices over how to prioritize development spending, while continuing to expand their squeezed fiscal space.
The United Nations is contributing through a global initiative on Financing for Development in the Era of COVID-19 and Beyond, co-convened by Canada and Jamaica, to articulate a comprehensive financing strategy to safeguard the Sustainable Development Goals (SDGs).
Governments are united together to ensure that adequate financial resources are available to steer an inclusive, sustainable and resilient post-COVID recovery. In the Asia-Pacific region, several countries have already adopted financing plans in three key areas. They aim to address the challenge of diminished fiscal space and debt vulnerability; to ensure sustainable recovery, consistent with the ambitions of the Paris Agreement and the 2030 Agenda; and to harness the potential of regional cooperation in support of financing for development.
The development arm of the United Nations in our region, the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) has recently launched its first-ever Regional Conversation Series on Building Back Better. We are joining forces with ministers, decision makers, private sectors and heads of international agencies to share collective insights in sharing pathways to resilient recovery from ongoing health pandemic and economic collapse.
To improve the fiscal space and manage high levels of debt distress, a growing call for extending the debt moratorium under global initiatives like the Debt Service Suspension initiative (DSSI) is timely. Central Banks can continue to keep the balance right of supporting the economy and maintaining financial stability. This further involves enhancing tax reforms and improving debt management capacities, while using limited fiscal space to invest in priority sectors. Exploring sustainability-oriented bonds and innovative financing instruments options such as debt swaps for SDG investment should be explored further.
In addition to economic considerations, the policy paradigm and financing architecture for recovery plans must mainstream affordable, accessible and green infrastructure standards, while promoting social equality and environmental sustainability principles as enshrined in the Paris Agreement. As we scale up the use of digital technology and innovative applications, the financing support of micro, small and medium-sized enterprises (MSMEs) must go hand in hand with these national job-rich recovery strategies.
The Regional Conversation on Financing for Development highlighted that no country could take this agenda forward alone. Regionally coordinated financing policies can restart trade, reorganize supply chains and revitalize sustainable tourism in a safe manner. Thankfully, several countries in the region have valuable experiences to share.
Across Asia and the Pacific, governments must pool financial resources to create regional investment funds in areas such liquidity funds for sustainability, funds for resilience and travel funds to relaunch our economies. Strengthening regional cooperation platforms to ensure that all countries receive an equitable number of doses of the vaccine on short notice to everyone everywhere is particularly essential. Without an end to the pandemic, the economic and social costs can’t be contained.
Through ESCAP, we can scale these efforts across the region, working closely with our member States, the private sector and innovators to build a collective financing response to mobilize the necessary additional resources. Together, we can chart financing strategies of Asia and the Pacific which can enhance societal well-being and economic resilience to future pandemics and crises.