Executive Secretary of ESCAP,
Ambassadors of Fiji in Pakistan,
Excellencies, ladies and gentlemen.
Thank you for inviting me to speak at this important event.
The pandemic has exacerbated pre-existing debt vulnerabilities and exposed fragilities in the global financial architecture, says a press release received here today from Bangkok.
According to the International Monetary Fund, 56% of countries are in debt crisis, debt distress or face severe debt unsustainability. Six developing countries have defaulted on their debt; others may be obliged to do so.
Excellencies, ladies and gentlemen,
My Prime Minister called for a global debt initiative last April.
G-20’s debt suspension has provided some fiscal space to a number of low-income countries, including Pakistan.
But the relief for the 44 countries which have applied is only about $5.5 billion.
Nevertheless, we are glad that the G-20 has agreed to extend the suspension till the end of this year.
After deliberations, which started last May on debt in New York, the ministerial declaration adopted at the conclusion of the financing for development forum earlier this month has indicated some convergence on debt relief, sustainability and liquidity issues in the aftermath of the pandemic.
The G-20 framework can be elaborated, adopted globally and utilized to promote a deeper long term and sustainable debt restructuring program that is responsive to the needs of individual countries, greater use can be made of state contingent debt instruments, debt buyout, and debt swaps for climate health and SDG actions.
Ladies and gentlemen, 80% of the debt of the middle-income countries is owed to private creditors. Their participation is missing in the debt suspension initiative so far.
Apparently, the fear of credit downgrades and the problem of holdout creditors and vulture funds are obstacles to private sector participation.
National and international measures need to be adopted to incentivize the private sector and the creation of a public rating agency has been proposed to address the fear of downgrades.
Excellencies, obviously, much more needs to be done to support economic recovery in the developing countries and to prevent a debt and liquidity crisis in a number of developing countries.
The proposed creation of $650 billion in new SDRs and the proposed voluntary reallocation of unused SDRs will significantly enlarge the capacity of the IMF and multilateral development banks to provide much larger net inflows to developing countries.
The World Bank's IDA window should be at least doubled from the currently envisaged $30 billion dollars to $60 billion. ODA commitments of course, must be fulfilled.
The multilateral development banks should also significantly scale up financing by extending maturities, providing concessional financing for all developing countries, and expanding their non-concessional lending window.
Some of the new proposals for innovative financing deserve close consideration. Costa Rica and ECLAC have proposed the creation of FACE a concessional financing fund to recover from COVID, and the Economic Commission for Africa has proposed the creation of a liquidity and sustainability facility to mobilize low interest loans for developing countries which have market access.
Excellencies, ladies and gentlemen, our deliberations on the debt issue began in May last when Pakistan convened the first informal consultations at the UN. A large “menu of options” have been identified and consensus has been reached on several policy actions. ESCAP, which represents the most dynamic region in the developing world, is well placed to lead the way in addressing the global and regional challenge posed by the debt overhang the growing and enormous liquidity needs of the ESCAP region to recover from the COVID crisis, and come back on track to the implementation of the SDGs by 2030.
I Thank you.
Background :
The seventy-seventh session of the Economic and Social Commission for Asia and the Pacific (ESCAP) will be held virtually from 26 to 29 April 2021 under the theme, “Building back better from crises through regional cooperation in Asia and the Pacific.”
The theme study for the 77th Commission session analyses the socio-economic impacts of the pandemic in countries of Asia and the Pacific, takes stock of action so far, and sets out a policy agenda for building back better grounded in regional cooperation and centered around four critical interconnected areas: broadening social protection, investing in a sustained recovery, strengthening connectivity and supply chains; and mending a broken relationship with nature. The theme study for the 77th Commission session was launched on 20 April 2021.
Meeting at the ministerial level, the members of the Commission will discuss and decide on important issues pertaining to inclusive and sustainable economic and social development in the region and make recommendations to its subsidiary bodies and to the Executive Secretary. The proceedings will include regional perspectives, initiatives and subregional cooperation for scaled
up actions in response to the coronavirus disease (COVID-19) pandemic and take stock of its socioeconomic impact.
The Commission will also review the implementation of the 2030 Agenda for Sustainable Development in Asia and the Pacific, consider issues vital to the inclusive and sustainable development of least developed countries, landlocked developing countries and Pacific island developing States, and discuss management issues such as the proposed programme plan of ESCAP for 2022.
Debt relief in the aftermath of the pandemic: How can regional dialogue help?
Organized by the Government of Pakistan
In many developing countries the COVID-19 pandemic caused a significant contraction in economic activity, job losses, increases in poverty, and declines in foreign exchange inflows. The provision of liquidity support through a new allocation of Special Drawing Rights and the extension of the Debt Service Suspension Initiative until the end of 2021 are welcome global initiatives. However, the slow recovery from the pandemic along with limited fiscal space going forward threaten to increase the risk of debt crises. In the absence of additional financing, many countries will need to cut expenditures, which could harm both the recovery and the attainment of the SDGs. This side event convened by the Government of Pakistan in collaboration with the ESCAP secretariat will bring government officials from selected countries in the region with responsibilities in debt management to share experiences and discuss the suitability of current global initiatives to provide debt relief.
This side event convened by the Government of Pakistan in collaboration with the ESCAP secretariat will bring the global discussions on debt facilitated by the UN to Asia and the Pacific. The President of United Nations Economic and Social Council (ECOSOC), H.E. Mr. Munir Akram, will convey key messages from discussions at the 2021 ECOSOC Forum on Financing for Development related to debt. Government Officials with responsibilities on debt management from selected countries in the region and debt expert will share their experiences and discuss the solutions.
Opening remarks
Ms. Armida Salsiah Alisjahbana Executive Secretary of ESCAP
Special remarks
Ambassador Munir Akram
President of ECOSOC
Roundtable
Moderator
Mr. Hamza A. Malik
Director, Macroeconomic Policy and Financing for Development Division UNESCAP
Panellists
H.E. Mr. Shaukat Fayaz Ahmed Tarin
Minister for Finance and Revenue Pakistan
H.E. Mr. Ibrahim Ameer
Minister for Finance Republic of Maldives
H.E. Ms. Mungunchimeg Sanjaa
Vice Minister of Finance Mongolia
Mr. Ruslan Satylganovich Tatikov
Head of the Public Debt Department Ministry of Economy and Finance The Kyrgyz Republic
Ms. Alicia Garcia-Herrero
Chief Economist
Asia Pacific Corporate & Investment Banking
Closing remarks
Mr. Awais Manzur Sumra
Additional Finance Secretary Ministry of Finance Pakistan.
