While the world struggles to adapt, mitigate, and recover from the COVID-19 pandemic health and socioeconomic impacts, progress towards the Sustainable Development Goals (SDGs), to achieve national development priorities, and to address the triple planetary crisis – climate change, environmental degradation, and pollution – is threatened. Never has identifying and mobilising financial resources in support of those transformational and multigenerational objectives been so fundamental then now.
Yet, too often, and across all countries, financial flows across the entire society –government, the private sector, and multilateral and bilateral partners and other stakeholders – have been insufficiently mobilised. Support to environmentally and economically unsustainable activities – which often also contravenes requirements under the Paris Agreement, is still too common, while contributions to social sectors, people’s wellbeing, and sustainability are lagging behind.
We, across all sectors, have a collective responsibility to rethink the role of finance in our societies and economies and replace it in service of our common objectives.
Against the backdrop of the expectations of LDC graduation in 2026, with challenges on debt management and revenue collection, further negatively impacted by the pandemic’s effects on economic activity, social well-being, and reduced contributions from the international and domestic private sectors to sustainable development, limited development finance has been recognized as a vital hurdle to overcome in Lao PDR, to recover from COVID-19, to address the planetary crisis at country level, to graduate from LDC and ultimately achieve a better, more equitable, and sustainable development for all.
In his address to 11th Party Congress in January, former Prime Minister, now President H.E. Thongloun Sisoulith, put fiscal vulnerabilities high on the agenda of the country. The recently released National Agenda on addressing economic and financial difficulties further emphasizes the urgency of taking steps to ensure macroeconomic stability.
His statement aligns with the global call made by His Excellency the Secretary General of the United Nations Mr. Antonio Guterres at the 2021 Economic and Social Council Forum on Financing for Development:
He highlighted that COVID-19 has exacerbated longstanding negative trends, and urged all Member States and all stakeholders to address, “the major finance gap” that may prevent us from achieving the 2030 Agenda for Sustainable Development, with “an enormous push (required) at the highest political level”.
“Many governments face an impossible choice between debt servicing or saving lives, with 25 countries spending more on debt service than on education, health, and social protection combined."
Ensuring recovery from COVID-19, through vaccination, increasing investments in human capital, and financing the management of environmental and climate challenges, indeed requires a radically different approach to development finance.
Targeted reforms of the State budget could support increased revenues, while optimising the use of currently available resources. Legal and regulatory reforms of the business environment could unlock the untapped potential of international and domestic private resources to support development, while limiting investments in unsustainable activities. Optimizing the use and coordination of Official Development Assistance targeting and coordination, considering declining global trends, could ensure that it continues to support, as it historically has, social sectors and the most vulnerable in our society, ensuring that no one is left behind.
This holistic approach, considering the State budget, the domestic and international private sector, including remittances from the large Lao workforce abroad, traditional Official Development Assistance (ODA), the increasingly large bilateral flows from neighbouring countries, in support of sustainable development, requires an inclusive multi-stakeholder process involving all relevant stakeholders, combined with a continued focus on anti-corruption and transparency measures.
Holism, participation, and inclusivity are key characteristics of the United Nations Joint Programme on Efficiency and Optimization of Lao PDR’s Public Budget to Finance SDGs through the National Plan, which built upon the 2015 Addis Ababa Action Agenda and the Integrated National Financing Framework (INFF). This coordinated initiative complements the many activities already led by the government and International Financial Institutions to put finance in service of common development objectives.
Through a cycle of evidence-based assessments, participatory dialogues on financing options aligned with the national plan, and monitoring of progress towards aligning financial flows to development priorities, this Joint Programme hopes to support many other actors in restoring macroeconomic and financial equilibrium and achieving the 9th NSEDP objectives and the SDGs.
Relevant stakeholders should be given a unique opportunity to contribute to a practical and realistic financing strategy, in support of national development priorities and the SDGs, within the next few months, through series of structured dialogues.
The first structured dialogue, which will intend to validate series of diagnostics and assessments on current financial constraints and investment needs, should lay the ground for future meaningful conversations on prioritization of development interventions and financing options.
It is our hope that, after the adoption of the 9th NSEDP by the National Assembly in March 2021, and through the collective efforts of the Government, development partners, the private sector, civil society, and other stakeholders overcoming the financial obstacles that are hindering progress towards our 9th NSEDP ambitions and other common aspirations should be our next urgent priority.
As His Excellency the Secretary General of the United Nations Mr. Antonio Guterres put it, it is our duty to “finance a resilient, inclusive, equitable and sustainable future for all”.
On the UN Joint Programme on Financing Efficiency: Three Agencies, Funds, and Programmes, have mobilised their specific expertise in support of the Government of Lao PDR – Ministry of Planning, Ministry of Finance, Ministry of Health – to lay the foundations for a renovated approach to development finance. UNDP, the technical lead, supports the Ministry of Planning and Investment in elaborating a high-level financing strategy building on evidence-based diagnostics, namely the Development Finance Assessment and the identification of investment needs in the 9th NSEDP. UNFPA contributes to the diagnostics, costing the health sector priorities, but also to the identification of financing options, identifying most critical interventions in the health sector. UNCDF sets up systems to monitor financial flows against the SDGs, supporting SDG-tagging of the budget. The UNRCO and the Department of International Cooperation of the Ministry of Planning and Investment ensure the smooth coordination and coherence of these various workstreams.