Many challenges to Asian development finance need tackling : Boao report

(ECNS) -- Many challenges need to be tackled facing development finance in Asia, and there is an urgent need to expand financing sources, said a report released by Boao Forum for Asia on Tuesday.

The report was named Sustainable Development: Asia and the World Annual Report 2023 —Public Private Joint Actions in Financing Asia's Development.

According to the report, over the past half century Asia has been one of the key destinations of development finance, which significantly contributed to Asia’s fast catching up. Over the past six decades (1960-2021), Asian countries received close to $2.6 trillion of official development assistance (ODA), accounting for approximately one third of total global ODA.

However, capital inflows dropped remarkably to negative $4 billion during the first half of 2022 due to the fiscal and monetary tightening of developed countries, the report says, adding that development financing gaps differ remarkably across the continent and need to be urgently curtailed in subregions.

Limited fiscal room in many Asian economies constrained public support to development finance. In addition, the current policy framework is not sufficient to provide bankable projects in many Asian economies. Moreover, synergies are not enough among all development finance actors as fragmentation risk rises, according to the report.

Given that Asia needs$1.5 trillion investment per year from 2016-2030 to meet the SDGs by 2030, around 5 percent of the region’s combined GDP in 2018, there is an urgent need in new sources and innovative models in development financing, the report says.

The report proposed eight recommendations, including top priority, actions from Multilateral Development Bank, actions from National Development Finance Institution, funding solutions for debt-ridden developing countries, role of institutional investors and financial infrastructure, role of Non-Governmental Organizations, Public Private Partnership framework, and global development cooperation.

According to the report, developing Asia is in great need of planning and building long-term sustainable health, green and digital infrastructure and capacities, to fairly share the benefits brought by technology advancement and green revolution, and narrow the development divide.

Fragmentation risk needs to be mitigated in global development cooperation, the report says. Synergies in the Belt and Road Initiative (BRI) and G7 Partnership for Global Infrastructure and Investment can bring a huge impetus to fill the funding gap and boost market confidence, so as to jointly address all-front development crises and difficulties in Asia and the world.