Remarks at the High-level side event at the 2017 ECOSOC Financing for Development Forum on Making finance work for sustainable development in Asia and the Pacific

Delivered at the High-level side event at the 2017 ECOSOC Financing for Development Forum on Making finance work for sustainable development in Asia and the Pacific in New York City, United States of America.

Excellencies, distinguished delegates, ladies and gentlemen,

Welcome to the high-level side event on “Making Finance Work for Sustainable Development in Asia and the Pacific”. ESCAP recently concluded the 4th High-Level Dialogue on Financing for Development in Asia and the Pacific in Bangkok. It was organized with the Ministry of Finance of Sri Lanka. Let me begin by setting out three core priorities which have emerged out of our four High-Level Dialogues between our member States. They must be actively pursued so that sufficient resources can be made available for the implementation of the 2030 Agenda for Sustainable Development.

Governments need to (i) enhance their capacity to mobilize and efficiently allocate public finance resources domestically; (ii) deliver financing for sustainable and resilient infrastructure through partnerships with the private sector; and (iii) deepen financial inclusion while ensuring financial stability. Allow me to provide more detail on each of these areas.

First, governments must improve their ability to mobilize and allocate public finance resources domestically. Public expenditure will have to shoulder the bulk of the financing needed to achieve the 2030 Agenda’s Sustainable Development Goals. Building more effective, efficient and accountable tax systems is a prerequisite for success. There is also a need to avoid a race to the bottom on tax incentives and tax competition. This has to involve nurturing global and regional cooperation to fight tax avoidance and evasion, with full and effective participation of developing countries in the on-going international tax cooperation agendas that are being promoted internationally.

Second, public finance is key to developing sustainable and resilient infrastructure. However, private capital and expertise is also necessary given the size of demand for financial resources. In this regard, public-private partnerships or PPPs, hold great promise. Governments often do not have the capacity to structure and implement these transactions in a way that ensures proper transparency, governance and oversight. Implementing PPPs across borders is even more complicated. Cross border PPPs are missing in our region and we need to exploit multilateral regional platforms to facilitate them. The integration of financial markets in our region could increase the financing available for infrastructure. But this requires greater harmonization of the regulatory architecture governing financial markets and services.

Last, promoting financial inclusion is a huge challenge in a region that is home to 55 per cent of the world’s population that does not have bank accounts, where women have a lower share of bank accounts than men, and where bank loans to SMEs only represent 19 per cent of total bank lending. A well-designed regulatory framework that strikes the right balance between increased financial inclusion, improved SME credit access and maintaining financial stability, is essential to address this issue. For instance, regulations that required all banks to allow free basic accounts would increase access to financial services. To facilitate SMEs’ access to finance and to lower the number of SME nonperforming loans, carefully calibrated capital adequacy and liquidity ratios are needed. The rapidly-developing fintech sector is already bringing a broader range of financial services to the region. It is incumbent on policy makers and regulators to ensure we can make the most of such innovations while proportionately managing new sources of risk as they emerge.

Since I last reported to you at the Financing for Development Forum side-event in 2016, ESCAP has continued to support the efforts of our member States in these three priority areas of financing for development.

Financing for development has been institutionalized within ESCAP. This year, we have set up a unit in ESCAP’s Macroeconomic Policy and Financing for Development Division dedicated to financing for development issues. We have also created an Eminent Expert Group on Tax Policy and Public Expenditure Management for Sustainable Development, comprising 18 leading global and regional experts, and policymakers. The group will help ESCAP in advising member States on developing an Asia-Pacific approach and vision on public finance reforms needed for the 2030 Agenda.

In the field of infrastructure financing, we have continued to provide capacity-building support and opportunities to share best practices between different parts of our region. This work is always underpinned by thorough technical analysis. In recent years, ESCAP has supported member States in their work to establish PPP frameworks which have helped the development of relevant national legislation and we have designed a PPP capacity building programme. We have also broadened the scope of our work on infrastructure financing beyond PPP by developing infrastructure financing strategies for sustainable development for countries through national and subregional workshops.

To support greater financial inclusion, we are planning several major activities that include inter-regional sharing of best practice, in particular with the Economic Commission for Latin America and the Caribbean as well as with other regional partners. These will also include research on SME financing and capacity building of member States.

In today’s important event, I count on the member States to share their experiences, encourage regional cooperation across priority areas, and provide ESCAP with further guidance on how we can support you.