The COVID-19 pandemic has had a deep socioeconomic impact across Asia and the Pacific. The dwindling revenue and increasing expenditure pose a unique challenge to the administrations.
Due to the continued lockdown measures and restricted borders, countries in Asia and the Pacific have been experiencing sharp drops in foreign exchange inflows due to declines in export earnings, remittances, tourism and FDI.
Countries are having to inject trillions of dollars for emergency health responses and fiscal packages.
The United Nations is steering an initiative called the Financing for Development in the Era of COVID-19 and Beyond, to articulate a comprehensive financing strategy to safeguard the Sustainable Development Goals.
The United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) has recently launched its first-ever Regional Conversation Series on Building Back Better.
This would involve ministers, decision-makers, private sectors and heads of international agencies to share collective insights on sharing pathways to resilient recovery from health pandemic and economic collapse.
The Global Debt Service Suspension initiative calls for extending the debt moratorium to help the countries manage debt distress.
Financing plan: The finance plans should, apart from aiming to address the challenge of diminished fiscal space and debt vulnerability, also envisage a sustainable recovery, consistent with the ambitions of the Paris Agreement and the 2030 Agenda.
Apart from economic considerations, the policy must promote social equality and environmental sustainability principles.
Harness the potential of regional cooperation: Given the limited abilities of the individual nations to deal with such a huge disruption, there is the need to harness the potential of regional cooperation in support of financing for development. Governments must pool financial resources to create regional investment funds.
Regionally coordinated financing policies can restart trade, reorganise supply chains and revitalise sustainable tourism in a safe manner.
Tax reforms: The administration should consider enhancing tax reforms and improving debt management capacities.
Tax reforms would ensure higher tax compliance.
Prioritise investments: The government must use the limited fiscal space to invest in priority sectors.
This could involve enhanced financial support to micro, small and medium-sized enterprises and other such employment-intensive sectors.
The government will also need to prioritize the needs of the most vulnerable sections in society.
Innovative financing instruments: Exploring sustainability-oriented bonds and innovative financing instrument options such as debt swaps for SDG investment should be explored further.
Role of UNO: The United Nations and its specialized agencies will have to coordinate an inclusive, sustainable and resilient post-COVID-19 recovery given their global reach.
Role of Global financial institutes: The global financial institutes like the World Bank and the IMF will have to mobilize resources to ensure sufficient financial resources for the recovery process.