Developing Asia: Achieving Inclusive and Sustainable Growth with Sound Fiscal Management

IMF News, February 13, 2020

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Authors: Mitsuhiro Furusawa
Published: February 13, 2020

Conference context and purpose

Welcome remarks by Mitsuhiro Furusawa, Deputy Managing Director, IMF.
Event: Fifth IMF-JICA Conference, Welcome Remarks at IMF-JICA Conference, February 12-13, 2020, JICA Research Institute, Tokyo, Japan.
Conference focus: sharing lessons on achieving inclusive and sustainable growth while balancing pressing investment needs for development with sustainable debt in developing Asia.
Emphasis on prudent public financial management practices, further revenue mobilization, and improved debt management practices.

Financing needs for the SDGs and key statistics

The Sustainable Development Goals (SDGs) are used as a framework to assess progress toward inclusive and sustainable growth.
Investment priorities highlighted: education, health, roads, electricity, water and sanitation.
Key estimated additional annual spending requirements by 2030:
- Developing countries: 15 percentage points of their combined GDP in 2030.
- Emerging market countries: just over 4 percentage points of their GDP.
- Emerging and developing Asian countries: 10 percentage points of their GDP in 2030.
Conclusion drawn: "countries cannot borrow their way to achieving the SDGs."

Findings on public spending efficiency

IMF estimates suggest that, on average, over one-third of government investment is lost due to inefficiency.
Illustrative example: resources budgeted to build 10 kilometers of roads will only build about 7 kilometers.
Implication: significant potential savings are achievable through improved spending efficiency.

Policy recommendations and priorities

Generate more domestic tax revenue:
- Achieved through structural reforms that support SDG objectives, including strengthening economic management, improving governance, combatting corruption, fostering transparency and accountability, and creating a sound and stable business environment.
Spend better — improve government spending efficiency:
- Implement public financial management reforms that support improved spending efficiency and prudent management of public resources to secure savings.
Strengthen public debt management:
- Boost debt transparency by providing accurate, comprehensive, and timely data.
- Responsibility shared by both creditors and debtors.
- Expected benefits: increased trust with investors, support for domestic capital markets, and reduced debt service costs.
Mobilize external support where domestic resources are insufficient:
- Domestic efforts alone are insufficient, particularly for low income developing countries.
- Additional support needed from the private sector, donors, philanthropists, and international financial institutions.

Expectations for the conference

Goal: interactive, lively peer-to-peer discussion covering the highlighted issues and other important topics.
Call to participants: share country experience and expertise during discussions.

Developing Asia: Achieving Inclusive and Sustainable Growth with Sound Fiscal Management — Mitsuhiro Furusawa, Deputy Managing Director, IMF; Welcome Remarks, February 12, 2020.