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Development Account Projects

Strengthening capacity in mitigating the impact of the financial crisis and sustaining dynamism and inclusive development in Asia and the Pacific

Despite impressive growth rates over the past few decades, the Asia-Pacific region continues to be home for more than 50 per cent of the world's poor, with limited access to food, education and health-care. The recent financial crisis coupled with food and fuel crises has further aggravated the situation by causing massive job losses and income insecurity for the poor and vulnerable sections of society. While some countries of the region have achieved faster than expected recovery, the continuing uncertainty regarding the recovery of the advanced economies, especially the US, raises a question on their ability to resume their role as growth engines for the rest of the Asia-Pacific region, as well as for the rest of the world. The other source of concern has been resurgence of rise in food and fuel prices. Amidst many of these uncertainties and pressures, Asia and the Pacific region has to develop new engines for sustaining its dynamism and inclusive development. A new engine for region's growth could be the expansion of domestic consumption through inclusive policies putting purchasing power in the hands of the poor. In this context, regional cooperation especially in financial and monetary fields could provide engine of growth by creating a regional framework for deploying the region's savings for productive purposes to benefit the poor and thus helping to narrow the development gaps.

As a part of its mission of providing a platform for regional dialogue and consensus building and sharing of solutions and experiences for mitigating adverse impact of the crises, ESCAP initiated several activities with its member countries. ESCAP and the Government of Indonesia organized the high-level regional policy dialogue on "The food-fuel, financial crisis and climate change: Reshaping the Development Agenda" in December 2008. As a follow-up of the recommendations of the UN Conference on Financial Crisis, ESCAP also organized a high level capacity building workshop on "Strengthening the Response to the global Financial Crisis in the Asia-Pacific: The Role of Monetary, Fiscal and External Debt Policies" in July 2009 in Dhaka, jointly with the Bangladesh Bank. Subsequently, responding to the special request by the Government of Bhutan, the national workshop on "Strengthening the Response to the Global Financial Crisis in Bhutan: The Role of Monetary, Fiscal and External Debt Policies" was held on 9-11 December 2009 in Thimphu, Bhutan in partnership with UNDP. ESCAP is planning yet another national workshop to be held in Cambodia in June 2010.

In view of the above, and building on the achievements of other related ESCAP's work, this project aims to enhance the capacity of senior government officials and policymakers to formulate and implement a coherent regional response to mitigate the impact of the financial and economic crisis, ensure fast recovery and develop regional crisis management mechanism to increase the region's resilience against future crisis. This regional initiative in turn is expected to enable policymakers to design effective development strategies and appropriate national policies. The project will be implemented by ESCAP, in collaboration with the national and regional development agencies and institutions, including South Centre, Geneva, an intergovernmental organization of developing countries

The project will take into account the recommendations made at the United Nations Conference on the World Financial and Economic Crisis and its Impact on Development held on 24-26 June 2009 in New York that highlighted the challenges faced by developing countries such as their plight with the sudden reversal of private capital flows, large and volatile movements in exchange rates, falling revenues and reduced fiscal space for taking corrective measures besides loss of demand for their products and services with contracting economies across the world. The Conference recognized the fact that developing countries needed a larger share of additional resources for both --short term liquidity as well as long-term development financing and adopted an outcome document containing some proposals for addressing the concerns of developing countries specially the poorer and smaller ones not represented in G-20. The Conference also recognized the importance of regional financial cooperation and its potential to complement global initiatives besides emphasizing the importance of South-South and regional cooperation for assisting the developing countries in recovery.

Under this project, ESCAP will follow-up with a number of similar activities over the next few years to discuss and share the experiences of different countries in the region and assist in evolving a coherent regional response to ensure fast recovery from the recent crisis and assist the region to achieve inclusive and sustainable development.

This project intends to contribute to increased availability, understanding and use of policy tools by policymakers and other stakeholders in developing post-crisis national development strategies.

This proposed project also represents a response of ESCAP to assist the member countries in this time of need, that sets it apart from other DA projects implemented so far in the region.

Objective:

The main objective of the project is to assist Member States amongst countries of Asia-Pacific to mitigate the impact of the financial and economic crisis, ensure fast recovery and sustain dynamic and inclusive development, through the promotion of regional integration

Expected accomplishments:

  • Increased knowledge of national policy makers on ways to enhance regional coordination of macroeconomic policies, design coherent and effective regional architecture for financial cooperation, and to develop common regional positions to mitigate the adverse impact of the crisis.
  • Increased capacity and skills of national policy makers in formulating regionally coordinated macroeconomic policies; coherent and effective regional architecture for financial cooperation; and common regional positions to ensure fast recovery and take preventive measures for possible occurrence of future crisis.
  • Enhanced consensus building among countries of the region through regional inter governmental processes in support of a coordinated approach to regional crisis management to ensure long-term inclusive and sustainable development.

Implementation status:

Despite impressive economic growth in past decades, poverty continues to be a major challenge in Asia-Pacific, particularly in the least developed countries. The global financial and economic crises, coupled with higher food and commodity prices, aggravated the situation by causing massive job losses and income insecurity. The global slowdown was a stark reminder that the problem of poverty cannot be tackled without closer attention to the broader macroeconomic environment. In view of the above, this project aims to enhance the capacity of senior policymakers to formulate and implement coherent policy responses to financial and economic crises and thereby ensure a swift recovery.

After two successful meetings in Manila, the Philippines and Dhaka, Bangladesh in 2011, ESCAP conducted a high-level policy dialogue for the Pacific Island Countries in Nadi, Fiji on 8-9 October 2012, in collaboration with the Ministry of Finance, UNDP and ADB. The event was targeted at senior finance, planning, central bank and energy officials, and focused on the inter-linkages between the macroeconomic and energy challenges in the Pacific, where heavy reliance on imported fossil fuels had resulted in economic vulnerability to rising commodity prices. The meeting highlighted how well-coordinated and targeted fiscal and monetary policies could help achieve the national energy security agendas.

These policy dialogues have stimulated much-needed policy discussions and debate as to the most suitable set of policy options for the Asia-Pacific developing countries. Their outcomes strengthened the deliberations of key inter-governmental meetings, and received wide media coverage. Their impact was also reflected in the participants’ evaluations: “Through the presentation of analyses, sharing of experiences and exchange of views, the high-level regional policy dialogue contributed to… enhanced capacities to deal with current and future macroeconomic policy challenges.”