Developing countries need $3T to fill SDG gaps

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DEVELOPING countries, including the Philippines, will require additional investments of about $3 trillion annually in order to finance the Sustainable Development Goals (SDGs) and undertake “stronger climate action,” according to the United Nations Economic and Social Commission for Asia and the Pacific (Unescap).

Unescap said the latest estimates of the G20 Independent Expert Group report also showed that two-thirds of this amount is expected to come from domestic resource mobilization and local finance.

The UN agency also said external financing commitments are expected to contribute to the remaining $1 trillion, which will be “split evenly” between both official development assistance (ODA) and private capital.

“The imperative for the significant needed additional investments in SDGs is colored by an increasing number of countries experiencing rising debt distress. In this environment, a key policy challenge is how to accelerate investments in SDGs while maintaining public debt sustainability in the long term,” said Armida Salsiah Alisjahbana, Undersecretary-General of the United Nations and Executive Secretary of Unescap.

Unescap said the Covid-19 pandemic, fallout from the war in Ukraine and other global turbulences over the last several years have left many governments in Asia and the Pacific short on public funds to meet their commitments on the 2030 Agenda for Sustainable Development, which is already at midpoint this year.

The UN agency said identifying long-term financing solutions to get the SDGs back on track and incorporating investment requirements while assessing debt risks. This is the main discussion point at the fourth session of the Committee on Macroeconomic Policy, Poverty Reduction and Financing for Development.

Unescap said the “SDG Stimulus to deliver the 2030 Agenda for Sustainable Development” aims to tackle the high cost of debt, scale up long-term financing for development and expand contingency financing to countries in need.

Competing pressures, however, have resulted in ballooning debt for many regional economies, with the public debt-to-GDP ratio reaching an 18-year high by 2021 and exposing an increasing number of countries to the risk of debt distress.

Unescap contends that a high level of public debt is not necessarily bad; what matters is how it is used.

Its analysis recommends adopting a long-term approach to assess the risk of debt distress and shows that debt levels can indeed go down if the socioeconomic and environmental gains of investments in SDGs are taken into account.

The Committee is scheduled to deliberate on debt sustainability and sustainable finance issues and hear from the experience of participants to increase understanding of the need for, and the policy implications of, a long-term public debt sustainability analysis that takes into consideration investments in the SDGs and climate action.

The Committee will also review the 10 broad principles underpinning the actions to be undertaken by governments, regulators and private finance entities to scale up sustainable finance in Asia and the Pacific.

These 10 principles are guiding ideas that are in line with the Paris Agreement and the 2030 Agenda to support financing for the SDGs and climate action, rather than binding commitments by member-states.

Image credits: Nonie Reyes