Download 3/16/2015 Session 4 Mobilizing financial resources for development and capacity development in

3/16/2015
Session 4
Mobilizing financial resources for
development and capacity development in
the LDCs (priority g)
Financing strategies for LDC graduation:
trends, effectiveness and prospects
Siem Reap, Cambodia
4-6 March 2015
Dr. Ayul Hasan
Director,
Macroeconomic Policy and Development Division
ESCAP
1
Outline
•
Setting the stage
•
Framework for mobilizing resources and trends
•
Prospects for raising financing
•
Possible policy reforms
2
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Issue 1
Setting the stage
3
Income divergence
Per capita GNI gap of 57 times
between LDCs and
Developed Countries in Asia-Pacific
60
50
40
30
Per capita GNI gap of 25 times
between LDCs and
Developed Countries in Asia-Pacific
20
10
0
1970-1972
2010-2012
LDCs
Developed economies
Source: ESCAP calculations
Note: LDCs-AP consists of 12 countries (US Dollars current prices) and Developed-AP consists of Australia, Japan
and New Zealand
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Lack of financial resources
ESCAP estimates
Requirements:
Asia-Pacific region would need to invest $2.1 trillion to fund
a comprehensive agenda for sustainable development
LDCs requirements vary across economic, social and environmental dimensions
Stock of public and private savings:
$50 trillion in 2013, but mostly outside of LDCs
LDCs and Ultra-wealthy
5
Source: ESCAP calculations
Challenges in public service provisions
Health expenditure
Logistics performance
10
9.3
Singapore
Japan
9
Australia
8
Turkey
7
China
Per cent of GDP
Malaysia
6
Thailand
5.1
5
4.1
Bangladesh
4
Lao PDR
3
Cambodia
2
Solomon Islands
Bhutan
Myanmar
Afghanistan
1
Nepal
Timor-Leste
0
Developed
Developing
LDCs
0
1
2
3
4
LPI (1=low to 5=high)
5
Source: ESCAP
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Issue 2
Framework for mobilizing
resources and trends
7
Framework for mobilizing financial
resources for development
8
Source: ESCAP
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Domestic public resources:
tax revenues
Tax-to-GDP ratio in selected Asia-Pacific countries, 2011
New Zealand
Japan
Australia
Kazakhstan
Papua New Guinea
Fiji
Georgia
Mongolia
Russian Federation
Other A-P
countries
Kiribati
Vanuatu
Lao People's Dem. Rep.
Nepal
Bhutan
Cambodia
Bangladesh
Afghanistan
Myanmar
Timor-Leste
LDCs
0
5
10
15
20
25
30
35
% GDP
Source: ESCAP 2014
9
External public resources:
Official Development Assistance
14
10
ODA
ODA/GDP
12
Tuvalu
9
Solomon…
Afghanistan
8
Kiribati
7
6
8
5
6
4
3
4
2
2
1
Per cent of GDP
in $ billions
10
Vanuatu
Bhutan
All LDC
Cambodia
Timor-Leste
Lao PDR
Nepal
Bangladesh
UMI*
0
0
2000 2002 2004 2006 2008 2010 2012
Source: ESCAP
0%
10%
20%
30%
40%
50%
% GDP
Note: * UMI refers to upper middle income countries.
Source: WDI database
10
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Domestic private resources
Domestic credit to private sector as
percentage of GDP in selected LDCs
OECD
158%
World
133%
EAP**
129%
UMI**
99%
Vanuatu
68%
Nepal
58%
Bangladesh
48%
Cambodia
45%
Bhutan
44%
Solomon Islands
34%
All LDCs
25%
Lao PDR*
21%
Timor-Leste
Afghanistan
Cambodia registered a 7-fold
growth in domestic private
credit between 2000 and 2013,
11%
4%
0%
50%
100% 150% 200%
% of GDP
UMI refers to upper middle income countries;
EAP refers to developing countries of East Asia and the Pacific.
Source: WDI database
11
Domestic private resources
Equity markets
Stock markets have emerged
in several LDCs.
100
Percent of population (age 15+)
Financial inclusion
• low access to financial
services and low financial
literacy and capability in
LDCs.
90
Account at a formal financial institution
80
Loans from a financial institution in the past year
70
60
50
40
30
20
10
0
Cambodia:
• stock exchange in 2011
• 2 listed companies
Source: ESCAP, based on World Bank, G20 Financial Inclusion
Indicators dataset (accessed 10 March 2014).
Note: (1) Most of the data was collected in 2010-2011 period
12
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External private resources:
FDI
7
$600,000
3.5
FDI
ESCAP developing economies ex LDC
FDI/GDP
6
3
$500,000
ESCAP LDC
Cambodia:
FDI10% GDP
in $ billions
$300,000
2.5
4
2
3
1.5
2
1
1
0.5
Per cent of GDP
5
$400,000
$200,000
$100,000
$-
0
0
2000
2002
2004
2006
2008
2010
2012
13
Source: ESCAP
External private resources:
remittances
Migrant remittances in Asia-Pacific economies
25
12
Remit
Remit/GDP
Timor-Leste
21.0%
10
20
Bangladesh
6
10
Afghanistan
% of GDP
in $ billions
8
15
6.2%
3.5%
Nepal
1.7%
Bhutan
1.0%
Myanmar
0.7%
4
5
2
0
Tuvalu
0.1%
Solomon Islands
0.1%
0
2000 2002 2004 2006 2008 2010 2012
0%
10%
20%
% of GDP
30%
14
Source: ESCAP
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Blended finance
Private infrastructure investment in selected Asia Pacific LDCs, 2008-2012
Maldives
India
Turkey
Malaysia
Fiji
Lao PDR
Cambodia
Bhutan
Vanuatu
Bangladesh
Nepal
Afghanistan
Timor-Leste
Kiribati
Cambodia: One of the highest private
infrastructure investment to GDP ratios
0
0.05
0.1
% of GDP
0.15
0.2
Source: ESCAP, based on data from the World Bank
15
South-South cooperation
Knowledge building, capacity-assistance and sharing development experiences
• New opportunities for South-South cooperation (SSC) and triangular
development cooperation (TDC)
• China and Turkey have spent over $2.8 billion and $2.5 billion respectively
on SSC related activities in recent years
• Other important contributors to SSC activities in the region include the
Republic of Korea, India, the Russian Federation, Thailand and Indonesia.
• Key areas to enable LDCs graduation efforts: poverty alleviation, gender,
agriculture and rural development, food security, infrastructure projects,
ICT, environment, disaster relief and reconstruction, debt relief, banking,
training of civil servants, governance, capacity-building and advisory
services, and humanitarian aid
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Issue 3
Prospects for financing
17
Prospects for raising financing
40
4
35
Required to meet
conservative
estimate
Conservative estimates
30
Meeting ODA commitments
US$ billions
15
25
20
38
Embracing tax potential
15
11
Fostering greenfiled FDI
10
4
5
Reducing remittance costs
4
0
Prospects
Needs
18
Source: ESCAP calculations
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Issue 4
Possible policy reforms
19
Possible Policy Reforms
1. Raise tax-to-GDP ratios.
2. Strengthen banking sector, and developing financial sector.
3. Strengthen legal and regulatory framework for FDI inflows.
4. Expand the use of remittances for productive activities.
5. Advocate and position blended finance for development.
6. Create a pool of resources for climate change consequences
7. Promote complimentary role of South-South cooperation.
8. Strengthen the role of ODA flows.
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Thank you
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