The three least developed countries in ASEAN – Cambodia, Laos and Myanmar – all have more than 10% of their Covid-19 expenditure from loans, but they have some of the lowest expenditure per person for the region, ranging from US$121, 0.46 and 8.12 per person respectively. What are the stimulus packages financing?
ASEAN member states’ Covid-19 stimulus expenditure as proportion of population and GDP
ASEAN national stimulus packages are focused on health and economic recovery. There is little in the packages that is targeted towards sustainable development. However, there are some stimulus packages that appear to be aligned to specific SDG priorities of ending poverty, health, economic growth and jobs, and food security.
In terms of SDG 1 on ending poverty, the Philippines’ Cash-aid program for low-income households as an economic stimulus focuses on reducing poverty as well as supporting households through the Covid-19-induced economic downturn. SDG 2 focuses on delivering zero hunger and Food aid by Indonesia and support packages for households: cash payout to all Singaporeans, and additional payments for lower-income individuals and the unemployed’ are two examples of achieving both SDG targets and economic stimulus.
Alongside SDGs 1 and 2, ASEAN Covid-19 stimulus packages are most aligned with SDG 3 on health and well-being and SDG 8 on decent work and economic growth, especially in least developed countries. Indonesia and the Philippines support healthcare and the social safety net through cash transfers. Thailand and Laos support the healthcare sector through equipment and cash. Malaysia and Singapore promote employment and growth through incentives such as grants for training workers in affected industries and job support schemes. Indonesia and Vietnam run enterprise finance schemes for small and medium enterprises, while Laos, Thailand and the Philippines are arranging loan restructuring.
We propose five pathways to an SDG-driven recovery for ASEAN nations:
It is not just about growing GDP anymore: nations are required to deliver SDGs and the Paris Agreement through reducing poverty and inequality and enhancing environmental outcomes. As such, Covid-19 recovery must have a mission that is central to all decision-making, such as decarbonization and a circular economy, and incorporates efforts aimed at environmental protection, including conserving biodiversity, reducing air pollution, protecting ecosystem services and more sustainable use of natural resources.
Design stimulus packages with SDG alignment
When and how planned expenditure should align with SDGs must be considered right at the start of the planning process. This requires a transformation in how stimulus packages are designed so that they consider all 17 SDGs, including social equality, justice and equitable distribution, as central to the portfolio of options, rather than just using traditional risk-adjusted returns and returns on investment over the short term.
Catalytic investment in priority areas
Financial expenditure by development banks (multinational, national or public) is necessary to deliver a long-term certainty to the nations and stimulate catalytic private investment. Accordingly, financial stimulus from governments should align to the recovery mission and on investments that can support social and environmental outcomes and “higher-risk” options while creating space for private sector investment.
Establish sustainability standards for financing
Combined environmental and social governance indicators are needed to deliver transparency, accountability and harmonization to all recovery investments. These should be coherent across scale to promote and encourage coherent reporting. Delivery of the recovery package flows should be monitored and evaluated for the lifetime of the measures to allow progressive adjustment and adaptation to quickly changing conditions.
Social compact for partnerships
Partnerships within and across nations, and with financial investors, such as banks, are driving Covid-19 recovery. Without a realignment of the compact between partners to ensure mutualistic and not parasitic relations, along with agreement on the long-term mission and clarity of roles, there will never be a coherent ecosystem of SDG-driven financial recovery.