UN-ESCAP Committee on Macroeconomic Policy, Poverty, Reduction, and Financing for Development
03 November 2023
[Video recording]
Your excellency, Armida Salsiah, Executive Secretary of Economic and Social Commission of Asia and the Pacific,
Distinguished delegates,
Esteemed colleagues,
Dear Friends,
It is with great honor to stand before you today at the opening of the fourth session of the Committee on Macroeconomic Policy, Poverty Reduction, and Financing for Development, organized by ESCAP.
I want to take this opportunity to praise once more my dear friend and colleague, Armida Salsiah, and her excellent team at ESCAP, with whom I have had the joy and the privilege of working very closely in these last two years, in the context of the UN Global Crisis Response Group, and the UN Finance Core Group. I look forward to continuing to do so in the future.
Dear Friends,
We convene at a critical moment for humanity.
As we gather here today, millions of people are suffering.
Cascading economic shocks; COVID-19, unrelenting climate disasters, war, geopolitics, and unbearable debt burdens are crushing the very fabric of our global society.
The common agendas we drafted together in 2015, in the belief that our destiny is shared, and our humanity is one, are in peril.
Only 15 per cent of the SDGs are on target to be met by 2030.
Recent events should remind us that SDGs are simply too big to fail.
They are much more than just a set of targets.
They are our last common agenda in a world that is more polarized than ever, a world in desperate need of solidarity, fraternity, and multilateralism.
Dear Friends,
The current macroeconomic climate is clouded by many challenges, including sluggish growth, weak investment, and trade slowdown.
Continuing inflation, rising interest rates shrinking fiscal space and a heavy debt burden are real obstacles to sustainable development affecting millions of individuals, families, and communities throughout the world and also through the Asia and the Pacific countries.
In recent research, ESCAP has put particular focus on the issue of debt, which is also a priority here for UNCTAD.
We are very happy to have worked together with ESCAP, and all UN Regional Economic Commissions, in the production of a UNSG report: The World of Debt.
Our report showed that, due to COVID-era debts and rising interest rates, 3.3 billion people now live in countries that spend more on debt than on either health or education.
What this means is that the debt crisis is not just a debt crisis – it is a development crisis.
This is an issue that is particularly important in the Asian and Pacific region.
In the last decade, the growth of public debt in Asia and the Pacific outpaced other regions.
Government debt-to-GDP ratios are now back to 1997 levels, during the Asian Financial Crisis.
While in the last couple of years, public debt to GDP ratios have come down sustainably, some hotspots remain, especially in the Small Island Developing States in the Pacific, who are facing rising sea levels with smaller fiscal space and lacking private investment.
This emphasizes one the main themes of discussion for today’s event: the interplay between investments in sustainability, and the sustainability of debt.
At heart of this discussion is the very word ‘sustainability’.
Traditionally, when people talk about debt sustainability, what they mean is whether debts can be repaid, no matter the cost.
But this model is outdated for a world of global systemic shocks, including climate change. If to pay my debts today, I have to cut hospital budgets, I have to cut school hours, I have to stop investing in infrastructure that is climate resilient – then this model is completely flawed.
We need to say this very clearly: sustainable debts need sustainable countries.
At the same time, it is important to recognize that the debt issue stems from a more structural problem.
The international financial architecture is too small to deal with the challenges at hand.
The World Bank is a fifth of the size it was in the 60s relative to world GDP.
The IMF can provide in crisis liquidity in a year what rich country Central Banks can print in a day.
And we lack a multilateral mechanism to deal with debt, even as we desperately need one.
All these issues are connected.
As MDBs underinvest, there is no private capital to crowd in into the big infrastructure projects the energy transition requires.
As emergency liquidity is too often lacking, countries are forced into ever more expensive debts.
As debts mount, they crowd out development spending and investment.
These are important considerations to take into account for the second theme of this meeting, which is closing the sustainable development goals, finance gap, and which UNCTAD estimates at 4 trillion dollars in the developing world, up from 2.5 trillion in 2015.
Excellencies, colleagues, dear friends,
In closing, we face urgent, interconnected challenges that require bold, collective action.
We must rethink our financial systems, prioritize sustainable development, and act with immediacy and solidarity.
Our decisions today are pivotal for the future we're building together.
We need to embrace this crucial responsibility.
I thank you.
