• As High-Level Political Forum Enters Second Week

By Godson Umejiego, Correspondent USA

Experts July 12 explored ways to scale up public and private financing for post-pandemic economic recovery, climate action and the 2030 Agenda for Sustainable Development, as the 2021 high-level political forum on sustainable development, convened under the auspices of the Economic and Social Council, entered its second week.

Conducted via video-teleconference, the panel discussion focused on the theme “Investing in the Sustainable Development Goals:  How can public and private financing be scaled up to unlock catalytic investments for the achievement of the 2030 Agenda for Sustainable Development”.  It came as a lack of fiscal space and the risk of sovereign debt distress loom large as key stumbling blocks for achieving the Goals.

Moderated by Senior Fellow and Deputy Director for the Global Economy and Development Programme at the Brookings Institution in the United States, Homi Kharas it featured presentations by Executive Secretary of the Economic Commission for Latin America and the Caribbean (ECLAC) Alicia Bárcena; Managing Director and Chair of Global Research at JPMorgan Joyce Chang; and Professor at Georgetown University, United States and a non-resident senior fellow at the Peter G. Peterson Institute for International Economics, Anna Gelpern.

Global United Nations Conference on Trade and Development (UNCTAD) advocate for Women in eTrade and former Minister for Finance of North Macedonia, Nina Angelovska and  Executive Director of The African Forum and Network on Debt and Development (Civil Society Financing for Development Group), Jason Rosario Braganza were lead discussants.  European Commissioner for International Partnerships Jutta Urpilainen; Minister for International Cooperation of Egypt  Rania al-Mashat; and Minister for Finance, Economic Planning and Trade of Seychelles, Naadir Hassan were ministerial respondents.

Mr. Kharas said that there were many questions surrounding the topic under discussion, including whether new financing instruments need to be developed and how private finance can best be mobilized to support the Sustainable Development Goals.  He drew attention to the fact that six countries defaulted on their debts in 2020 while several others were downgraded.  The recovery from the COVID-19 pandemic has also been uneven.  Foreign direct investment in Latin America fell by 37 per cent last year, while, in Asia, it dropped by only 4 per cent.  Going forward, the world is facing huge financing needs for vaccines, the transition to a green economy, nature preservation and conservation, and climate adaptation and resilience — on top of the large investments required to close the financing gap.

Ms. Bárcena said that Latin America has been particularly hard hit by the pandemic.  Equitable access to vaccines is the immediate priority, as the region lacks the same access to vaccines as developed countries do.  “We are in a world of global asymmetries that need to be filled in,” she said.  She welcomed the provision of $650 billion in special drawing rights by the International Monetary Fund (IMF), saying it is the biggest in recent history, but it must be accompanied by other measures.  She also stressed the need to take advantage of investors’ interest in social and sustainable bonds and that serious consideration must be given to the idea of moving away from the notion of gross domestic product (GDP) per capita as a yardstick for determining a country’s income status.

Ms. Chang underscored the magnitude of the post-pandemic debt crisis, saying that, globally, debt has grown by US$15 trillion since 2019.  Emerging markets are experiencing their biggest single-year surge in debt burden on record.  Not only have some countries’ debt fallen from investment‑grade status, but there are now more than 30 emerging markets that find themselves in the single B category or lower, meaning they have no private capital market access.  Many could default on their debt.  She went on to say that 2020 was an explosive year for green social and sustainability bonds, rising seven-fold to US$147 billion.  Since the beginning of 2021, another US$10 billion of environmental, social and governance funds have been announced.

Ms. Gelpern said that the world is not ready for a major debt crisis.  Something more comprehensive is required, though what that should be is a complex proposition.  Debtors, creditors and debt instruments are very diverse, while economic shocks are increasingly damaging.  “COVID is not the last of it,” she said, citing climate change as an example.  It is a crying shame that public debt is one of the least transparent asset classes at hand.  Much information is available, but it is neither comprehensive nor intelligible.  The world must also get away from the current system of national income categories, which is not credible at a time when a single storm can turn a middle-income country into a negative-income country.  Stressing the need for equity, she added that formal categories such as “official” or “private” should no longer be used.  Any common framework going forward must be comprehensive and not limited to a few countries with debt vulnerability.  All debtors and creditors must be part of the solution, she noted.

Ms. Angelovska, the first of the lead discussants, pointed out that, while the prevailing notion is that the COVID-19 crisis erased progress made towards infrastructure development, gender equality and poverty reduction, it is evident that the world has not been on track to achieve the 2030 Agenda on schedule even before the pandemic.  She stressed that the international community must consider how to build a new, faster track “that can take us where we want to go sooner”, which must include greater participation for women in technology, entrepreneurship and policymaking.’

Mr. Braganza pointed out that imbalanced debt-relief initiatives threaten to slow Africa’s recovery from the COVID-19 pandemic even further.  A power imbalance is present in the pursuit of “building back better”, as inequalities remain, developing countries continue to be voiceless and the neo‑colonial power structure is becoming further entrenched.  He stressed that, if Africa is to emerge from this crisis more robustly, the international community must instead work towards “building forward together” and afford developing countries an appropriate say in such efforts.

When the discussion turned to the ministerial respondents, Ms. Urpilainen said that the international community, in its COVID-19 recovery efforts, must consider how to incentivize the right investments, in the right regions, towards the right goals.  For its part, “Team Europe” has invested more than €40 billion to address the consequences resulting from COVID-19 around the world, and supports measures to address debt and liquidity challenges.  The European Union also aims to facilitate investment in partner countries that would otherwise not occur, including by working with Governments to develop sustainable, comprehensive financial strategies.

Ms. Al-Mashat said that, to attract investment, countries need to distinguish themselves “by having compelling stories”.  Egypt is doing this through several initiatives, including by pursuing economic diplomacy, publishing mapping exercises for the Sustainable Development Goals and being the first country in the region to issue “green bonds”.  She also underscored the need to look for ways to mobilize further resources, whether from international markets, development partners or the private sector by providing a clear indication of where such finances are going, which Goals have been met and where gaps remain.

Mr. Hassan said that, for small island States like the Seychelles that rely heavily on tourism, COVID-19 has had a disproportionate impact on GDP.  Noting his country’s difficulty in negotiating debt suspension with IMF due to its high‑income status, he said that, if the international community is serious about achieving the Sustainable Development Goals, donor countries must include vulnerability issues in their development cooperation programmes and not solely consider income, but other factors, such as population, geographic location and biodiversity.

In the ensuing discussion, the representative of Thailand said his country has established the framework for sustainable financing to align projects with the global Goals.  Its inaugural sustainability bond in 2020 is the first environmental, social and governance sovereign bond in the Association of Southeast Asian Nations (ASEAN).  The Bank of Thailand has been encouraging financial service providers to embed the concept of sustainability into their business.  In 2019, the Thai Bankers Association launched the guidelines to shift their operation to align with the 2030 Agenda and the Paris Agreement on climate change.  Members of the Global Compact Network in Thailand pledge to invest US$43 billion in more than 1,000 projects until 2030.

The representative of Madagascar, noting that COVID-19 hit his country hard, called for new financial measures to better help developing countries avoid post‑pandemic socioeconomic stagnation.  Financing mechanisms should be more centred on national development priorities.  Responsible lending and borrowing practices must also be established, including improved loan terms from official creditors

A speaker representing the Major Stakeholder Group for Communities Discriminated on Work and Descent warned that project investment violated human rights of this group by excluding, exploiting and discriminating against it. Environmental, social and governance impact assessment should include the concerns of this group, as well as the indigenous and other marginalized communities.

The representative of Norway welcomed the six-month extension through December of the Debt Service Suspension Initiative by the Group of 20 and the Paris Club, adding, however, that it is disappointing to see private creditors not participating in that effort.

The representative of Nepal said that the shock of the pandemic is making the Goals an increasingly distant dream for least developed countries.  Nepal welcomes financing from all sectors, both public and private, and domestic and international.  He called for equitable access to vaccines and for development partners to live up to their financing commitments.

The representative of Finland said blended finance can be a good way to increase the amount of resources for sustainable development in developing countries.  Finland was the first European country to establish a €114 million(US$134.4million) blended‑finance vehicle for clean technology in 2017.  It recently submitted for evaluation a national recovery and resilience plan, under which green recovery is supported by €1 billion and scaled up another 300 per cent with private sector financing.

The representative of the Asia Pacific Regional Civil Society Engagement Mechanism said that public-private partnerships should not relieve States of their fundamental responsibility to ensure essential services.  She also called for the elimination of trade rules which compromise the ability of States to mobilize domestic resources.  Member States should also agree on a declaration to ensure a multilateral commitment to invest in the Goals.

The representative of Guatemala said that his country has worked with ECLAC to align its national development plan with the Sustainable Development Goals. Further, it aims to address these issues in a national context by including indigenous groups in a democratic development process that encompasses multi‑ethnic, multicultural and multilingual concerns.  While noting that the Government invested US$8.6 billion in 2020 towards economic recovery, he said that additional effort is needed to address shortcomings in the education and health‑care sectors.

The representative of Indonesia, noting that many countries currently face significant financial constraints due to the COVID-19 crisis, detailed national measures to address this issue, including a 2020 Government regulation to meet the increased need for State spending to maintain the national economy.  He also said that public-sector funding alone is insufficient to achieve the Sustainable Development Goals; private-sector financing must be increased, as well.  For its part, Indonesia works to facilitate international cooperation on financing partnerships towards this end.

Also speaking were representatives of France and Jamaica, as well as the non-governmental organization major group and the women’s major group.

Also today, the political forum began its voluntary national reviews — a mechanism to examine country-level progress on the 2030 Agenda and facilitate the sharing of experiences and lessons learned in the implementation of its 17 Goals.

In her opening remarks, United Nations Deputy Secretary-General Amina Mohammed said that this mechanism has become “a centrepiece of the high-level political forum” and “a success story in the implementation of the 2030 Agenda”.

With 177 countries having presented at least one report to date, she said that “they are a testament to the enduring commitment of national Governments to implement the 2030 Agenda and achieve our global Goals”.

This year, 42 countries will be presenting their reviews, which shed light on the social and economic devastation wrought by the pandemic while taking a hard look at efforts to implement the Goals, she said.  They demonstrate the diversity or measures taken to ensure social protection, health care, vaccination, economic recovery, food security, education, mental health, inclusion or employment.  And they highlight the need for debt relief, disaster resilience, digitalization and systematic approaches to overcome multiple challenges.

The experiences presented by the 42 countries will allow the forum to discuss the kind of recovery plans or strategies that can get countries on track to achieve the global Goals, she said.  This may include integrating the Goals into national policy frameworks, budgets, stimulus packages, investments or evolving from emergency social protection measures towards inclusive social protection systems.  Ultimately, these reviews create space for Governments and their partners to identify what is needed to keep the promise of the Goals.