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TWN
Info Service on UN Sustainable Development (Sept21/13) Kathmandu, 20 Sep (Prerna Bomzan) — At the final session of the high-level Asia-Pacific Regional Review meeting of the Fifth United Nations Conference on the Least Developed Countries (LDC5), national challenges compounded by the COVID-19 pandemic and structural issues including fiscal space were highlighted. Several LDCs shared their national experiences in tackling financing for development in the LDCs, especially in the challenging context of financing a recovery from the COVID-19 pandemic. The conference, at the Heads of State/Government level, is scheduled to take place on 23-27 January 2022 in Doha, Qatar. The session on “Road to Doha: an ambitious agenda for the next decade through reinvigorated and innovative financing for development of the Asia-Pacific LDCs”, formed a seven-part thematic series in the review meeting held in hybrid (in-person and virtual) format in Geneva from 30 August to 2 September 2021. The meeting was convened by the Office of the High Representative for the LDCs, Landlocked Developing Countries and the Small Island Developing States (OHRLLS), the UN’s focal point for the LDC5 conference preparations, in partnership with the UN Economic and Social Commission for Asia and the Pacific (ESCAP) and the government of Bangladesh. It was led by Co-Chair Ambassador Rabab Fatima (Bangladesh) while a pre-recorded opening statement was delivered by Co-Chair Ambassador Robert Keith Rae (Canada). Nepal, Lao PDR, Timor-Leste, Bhutan, who are in different stages of graduation from the LDC category, shared their respective financial landscape, national policies and strategy planning including specific recommendations in relation to financing for development in LDCs. Madhu Kumar Marasini, Secretary of the Ministry of Finance of Nepal, shared expectations that Doha “focuses particularly on Financing for Development for the LDCs, and Nepal has targeted to graduate from LDCs by 2026 and there are some concerns as well regarding what happens after 2026 as our commitment to graduate was before the pandemic”. He stated that due to the pandemic Nepal’s conditions have become more vulnerable “so we may need to reconsider continued support for Nepal taking into account the COVID created conditions as well”. Marasini stressed on aid that supports the creation of a “sustainable revenue” base, rather than being heavily dependent on official development assistance (ODA), and also focused on foreign direct investment and blended financing. “The LDCs have been confronted with added fiscal pressure as we need extra money to buy vaccines, otherwise that money could have gone to build better infrastructures, better schools or to other needy areas of the economy. But because of the pandemic we are [under] too much pressure and we are very much in resource constraint stage because we are in need to prepare for COVID health facilities”, he added. Soulivath Souvannachoumkham, Director-General of External Finance and Debt Management of the Ministry of Finance, Lao PDR, said that in recent years, the economy has faced many challenges by both external and internal factors, such as the “impact of competition and barriers to trade and investment, and the volatility of the global capital markets”, which have also affected other countries, including the “unavoidable impacts” of COVID-19. He shared the country’s recently approved “national agenda” to address financial and economic difficulties amid the COVID-19 pandemic and its growing debt burden, in which measures are outlined and designed in response to fiscal concerns to prevent Laos from being dragged into economic crisis. He also referred to the ministry’s Public Finance Development Strategy to 2025 and Vision to 2030, which would help to “create conditions for Lao PDR to graduate from the LDC status by 2024, while achieving green growth and sustainability for the future”. Helder Lopes, Alternate Governor of Timor-Leste for the Asia Infrastructure Investment Bank and former Vice Minister of Finance, provided an overview of the financial sector development in the country, highlighting its challenges and opportunities and concluded with key actions required to underpin preparation for LDC graduation. [In the March 2021 triennial review of LDC graduation, Timor-Leste was considered for graduation recommendation (its second consecutive time); however, the decision was deferred to the next review in 2024]. Lopes shared “institutional capacity constraint and fiscal sustainability concern” as two key challenges with regard to financing for development. He detailed seven key actions required for mobilisation of financial resources to underpin Timor-Leste’s preparation for LDC graduation: (i) introduce innovative partnerships; (ii) restructuring the financial landscape; (iii) promoting private sector investment to diversify the economy; (iv) more fiscal space for human capital development; (v) enhancing public service delivery with e-government; (vi) promoting evidence-based policy making process; and (vii) a national committee for LDC graduation. The evidence-based policy making process would “evaluate” graduation preparation while the national committee would prepare for a “smooth graduation” by identifying “international support measures, such as financial and trade facilities”. Bhutan emphasised “innovative financing” and issuance of sovereign bonds, apart from ODA, FDI, remittances and tax reforms towards building economic resilience as part of COVID-19 recovery efforts. Drawing on lessons learned from national responses, it underlined the need to the make the LDC5 outcome document, a “roadmap for LDCs and recently graduated countries” to realise the 2030 Agenda for Sustainable Development Goals (SDGs) and the Paris Agreement under the UN Framework Convention on Climate Change, among others. As graduating LDCs, “we’re made to believe as being less vulnerable”, Bhutan remarked, “however, we have also seen how those economic indicators can change overnight and subject small vulnerable economies to vagaries of market fluctuations with huge impact on trade and economic activities”. Bhutan called for a holistic approach that goes beyond market and income indicators and further referred to the additional “threat” of climate change impacts, which would be one of its key efforts to ensure “irreversible” graduation in 2023. UN Women pointed out the agreement by development partners on the 0.7 per cent target of ODA, including of untied and predictable aid. In response to Nepal’s statement on efforts needed to eventually avoid ODA dependency, it asked upon graduating and/or graduated LDCs to start redefining a development agenda beyond aid and “hinge a lot more on industrialisation and manufacturing”. It also urged for institutionalising Gender Responsive Budgeting. The UN Conference on Trade and Development (UNCTAD) focused on two aspects, the financing gap for the SDGs in LDCs as well as the administrative and state capacities of LDCs. It referred to its 2021 LDCs report which has undertaken country by country estimates of financing costs as a “first” time exercise specifically for LDCs, adding that the financing requirements are much “higher” for structural transformation. Given huge financial requirements from both domestic and international sources, UNCTAD said to “leverage” these sources it would require “enhanced administrative capacity and superior state capacity” to manage bilateral and multilateral donors, private investors and blended operations. “So a priority of the next programme of action is supporting and strengthening state capacities”, it added, underlining not only raising of funds but also managing these according to national development plans. The Office of the High Commissioner for Human Rights underscored the need for an accountability framework and for specific recommendations to ensure accountability and monitoring mechanism of the next programme of action, highlighting “deliverables” from development partners on a development finance package for LDCs. The International Labour Organization said that the LDCs need renewed partnership which addresses the decent work gap, with COVID-19 emphasizing the problem of jobs, disruption of employment and labour income. It also said that international support measures on trade and finance is necessary for fiscal space. Under-Secretary-General and High Representative Courtenay Rattray (OHRLLS), also the Secretary-General of the LDC5 conference, recapitulated the “real critical headline issues” that emerged during the meeting, such as debt, COVID-19, the need for structural transformation and resilience building. He further recalled other highlighted pressing issues such as the need to tackle institutional capacity constraints, the need for more fiscal space for human capital development, the need to promote e-governance in public service delivery including the concept of e-government, and the need for evidence-based policy making. Rattray said that the outcome document needs to be agreed before going to Doha in January 2022, with negotiations expected to be completed by mid-December. He said that the “G77 are united on it but they are negotiating together with development partners and that needs to be agreed”. He underscored the key aspect of having to “operationalise” the outcome document and suggested to put it into “programmatic” terms so as to implement it in practical ways and thus get concrete outcome from the next ten-year Doha programme of action. [The first reading of the zero draft of the outcome document was completed in July at the second meeting of the LDC5 preparatory committee. See TWN Update.] Prior to ending the regional review meeting, a political declaration was adopted by the ministers at the closing session chaired by Finance Minister A.H.M Mustafa Kamal (Bangladesh). In his closing remarks, Foreign Minister Eisenhower Nduwa Mkaka (Malawi), speaking as Chair of the LDC Group, focused on successfully completing the Doha outcome document that gives LDCs the “best fighting chance” towards achievement of sustainable development and the 2030 sustainable development action agenda. He expressed hope for an outcome document that is owned and propelled forward through its implementation by all stakeholders. Under-Secretary-General and High Representative Courtenay Rattray (OHRLLS) said that the ideas and insights shared in the meeting constituted important input for the next Doha programme of action. He highlighted that LDC5 is a timely opportunity to introduce new and concrete international support measures that target graduation needs of LDCs in the areas of trade, intellectual property rights and financing for development, in order to ensure the development trajectory of graduating LDCs is not disrupted. Under-Secretary-General and Executive Secretary Armida Salsiah Alisjahbana (ESCAP) shared key takeaway messages of strengthening resilience to overcome vulnerability by LDCs and the support required to address the growing challenge of climate change. She also stressed the need for inclusivity and equitable access to vaccines. In relation to supporting graduation of LDCs in the region, she underscored that preparation for graduation must require holistic focus on “sustainability”. Finance Minister A.H.M Mustafa Kamal (Bangladesh) shared the successful growth history of Bangladesh evolving over the years since its independence in 1971, citing that in the last five years prior to COVID-19, Bangladesh had achieved 4.5 per cent growth, at par with China and India. He emphasised women’s empowerment and the importance of human resource as a demographic dividend to achieve development and growth as is the case in Bangladesh where the median age of its population is very low at 25. He showcased the historical story of Bangladesh that has come a long way to finally graduate out of the LDC category in 2024. +
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