Bangkok, Thailand, 17 December 2007
Multi-stakeholder Consultation on
“Financing for Development
in Asia and the Pacific”
Organized by the Financing for Development Office, UN-DESA, in cooperation
with the Association of Development Financing Institutions in Asia and the Pacific
Jomo Kwame Sundaram
Assistant Secretary-General for Economic Development
Department of Economic and Social Affairs (DESA)
United Nations
Financing for Development process

Monterrey Consensus, adopted at 2002 UN
Conference on Financing for Development,
recognized global partnership for development
central to achieve internationally agreed
development goals.

Follow-up International Conference on Financing
for Development (Doha, Qatar, 29 November - 2
December 2008): historic opportunity to review
implementation of Monterrey Consensus, and
address new challenges and emerging issues.
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Mixed track record in implementation

Since 2002, considerable advances in some
areas, while progress modest or
stagnation/regression in others.

Despite decreasing share of poor in world
population, poverty still increasing in many
countries. Inequalities among and within
countries also increasing.
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Net transfer of financial resources
from South to North



Net outward financial flows from developing
to developed countries increased from $728
bn in 2006 to $760 bn in 2007. Continued
increases since 1998. Increase has not
slowed in East and South Asia.
Tying up investible funds as reserves
reduces domestic investments, e.g. for
infrastructure and services.
Reserves build-up raises interest rates.
4
Net transfer of financial resources
from South to North
200
Billions of US dollars
0
-200
-400
-600
-800
-1000
1995
1996
1997
Developing economies
1998
Africa
1999
2000
2001
2002
Eastern and Southern Asia
2003
2004
Western Asia
2005
2006
2007
Latin America
Source: UN World Economic Situation and Prospects 2008 (forthcoming)
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Multi-stakeholder consultations on
Financing for Development



How to reverse paradox of net transfers from South to
North to mobilize resources for development.
The Financing for Development Office (FfDO) of UNDESA has conducted various multi-stakeholder
consultations in different regions on how to mobilize
financing for development.
Two current tracks deal with:
Rethinking role of development finance institutions
/National Development Banks (NDBs)
Financing access to basic utilities for all
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A. Rethinking role of development finance
institutions/National Development Banks
B. Financing access to basic utilities for all
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A. Rethinking role of NDBs:
Diversity of institutions



Wide range of types of development financing
institutions among and within regions.
In Asia and the Pacific, at least five different subregions (Central Asia, South Asia, Northeast Asia,
South East Asia, and the Pacific).
Development Banks operate at different levels
 Global level (e.g. Islamic Development Bank),
 Regional level (e.g., Asian Development Bank,
China Development Bank, Bank of Japan)
 National level, where they can be further divided
into more specific categories (e.g. sectoral,
provincial).
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A. Rethinking role of DFIs/NDBs:
Consultations

FfDO organized multi-stakeholder consultations
in Europe, Africa and Latin America, involving
national development banks, governments,
international organizations, financial institutions,
private sector and civil society.

Consultations reveal that NDBs/DFIs have critical
role in economic and social development.
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A. Rethinking role of DFIs/NDBs:
General conclusions (I)

DFIs have a development objective. Raisond’être is to bring finance to specific clients or
projects that lack access to credit, particularly in
medium and long term. Thus, DFIs should fill
development gaps and address both market and
state failures (e.g., in infrastructure investment).

DFIs provide not only financial instruments
(grants, loans, credits, guarantees, etc.), but also
non-financial services (policy advice, technical
assistance and capacity-building).
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A. Rethinking role of DFIs/NDBs:
General conclusions (II)

Additional resources needed to develop financial
instruments.

When DFIs are banks, they have access to resources
through clients and government deposits, but banking
legislation imposes restrictions. When DFIs are not
banks, harder to mobilize resources, but DFIs have
greater flexibility to use them.

DFIs often have complex structures. Different models
to coordinate commercial and development activities
(single organization or separate entities) seem viable.
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A. Rethinking role of DFIs/NDBs:
Action-oriented proposals

Organize systematic sharing of information and
cooperation among interested DFIs through regional
associations:
 on regional, sub-regional and national development
projects
 on best practices
 on governance and management
 on financial guidelines
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A. Rethinking role of development finance
institutions (DFIs)/National Development Banks
(NDBs)
B. Financing access to basic utilities for all
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B. Financing Access to basic utilities for all:
Consultations

Consultations organized by Friedrich Ebert
Foundation (FES), in cooperation with FfDO.

Meetings held in Africa and Latin America, brought
together experts from governments, utilities, civil
society, private sector, and academia to develop
policy options to improve financing for basic
utilities in developing countries and to increase
access for poor to water and electricity.
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B. Financing Access to Basic Utilities for All:
General conclusions (I)



Discussions held from vantage of publicly owned
utilities, taking into account domestic and
international capital markets, macroeconomic
factors, and internal revenue generation.
Major conclusion: infrastructure spending needs
increasing rapidly in developing countries. Central
governments need sufficient policy space to set
right spending priorities.
Expenditure ceilings for municipalities should
be reevaluated to make more resources available
for infrastructure and social spending.
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B. Financing Access to Basic Utilities for All:
General Conclusions (II)



Public providers can explore new innovative
mechanisms for raising finance. Potential instruments
include municipal bonds, pooled financing
arrangements, and mechanisms provided by financial
intermediary institutions.
Emphasis should be on local currency mechanisms to
minimize exchange-rate risk.
Government subsidies remain indispensable.
Government-subsidized entities, like national
development banks, have proven effective for
infrastructure financing in many developing countries.
Experience shows government-subsidized institutions
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can help develop local credit markets.
B. Financing Access to Basic Utilities for All:
General conclusions (III)



Rather than crowding out investment, prudent
public spending increases productive capacity and
attracts private investment.
In long run, citizens pay for provision of services,
either through taxes or user fees. In short run,
however, full-cost recovery often not realistic, if
utilities to be provided to poor.
More financial resources needed to help utilities
invest in service extension and upgrade systems.
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B. Financing Access to Basic Utilities for All:
General conclusions (IV)




Simplification, rationalization, and indexation of
tariffs can help lower average charges to
consumers and increase revenues.
Reductions in connection or reconnection fees can
help reach the poor and increase the revenue base.
Increased focus on access subsidies, because
they help extend networks and include poor,
unconnected households.
Services should remain affordable to the poor.
Cross-subsidies successful in many countries.
Most effective where administered simply.
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Outcome of Multi-Stakeholder
Consultations
Outcome publications of multi-stakeholder
consultations serve as substantive inputs to the
Follow-up International Conference on Financing for
Development (Doha, 29 November - 2 December
2008).
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Thank you
For more information please consult FfD website at
www.un.org/esa/ffd
or DESA website at
www.un.org/esa
Acknowlegements:
Daniel Platz, FfDO, DESA, UN
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