EDITORIAL: It’s interesting to note that Planning Commission Deputy Chairman Dr Mohammad Jahanzeb Khan quoted from a World Bank report from 2018 when talking about developing countries and Sustainable Development Goals (SDGs) during a virtual forum organised by the United Nations Economic and Social Council (ECOSOC) just the other day. Speaking on ‘Accelerating Infrastructure for a Sustainable and Resilient Recovery and Restoring Trade’, he pointed out that almost three years ago the Bank estimated that financing required for developing countries to implement SDGs was at least $1 trillion per year. At that time, the epic decade-long bull-run in international financial markets hadn’t yet run its course, emerging markets were red hot and developing countries were also growing well enough to record slow reduction in poverty; even if implementing SDGs was still a pipedream. And this still seemed like an astronomical figure, of course, because all the debt that had been and was still being incurred left little room for borrowing more for SDGs, etc.
Now, the tide has truly turned and at least a few of the poorest countries could well have been wiped out, or at least defaulted, by now if it hadn’t been for the debt moratorium offered by the G20. In the last year-and-a-half alone, country after country has seen the good work of decades go waste as millions of people fell back below the poverty line. It’s true that developing countries never even really came close to implementing SDGs in the correct sense, but they still provided a sense of direction and there was just enough money sprinkling around to maintain a slow march forward. Now that balance has been badly shaken. And if it took a trillion dollars a year just to maintain course back then, surely it would take a lot more now to get back on track.
Pakistan is of course one of the best examples of countries facing this predicament. On the one hand, it’s an impressive emerging market that is able to keep interest rates high enough, even in this environment, to attract hot money like fish to water and take pride as the rupee is able to punch above its weight in the currency market. On the other hand, it is the poster child of the typical developing country constantly cutting its development budget and barely staying above water even with all the borrowing. That is why we can understand why SDGs, though very important, might not exactly be at the top of the priority list in Islamabad. Right now it’s about surviving the bout of painful contraction that could come from complying with the International Monetary Fund (IMF) conditions, which has already cut the development budget, and surviving to borrow for SDGs another day.
Dr Khan explained at the forum how deeply the Covid-19 pandemic had affected the real economy, especially in areas like consumer demand, financial sector activities, supply chain management, technology resilience, workforce employment, lives and livelihoods. One can only imagine how much additional money would now have to be put aside to address all these problems and more. It is unfortunate, as he rightly noted, that private sector creditors were not included in the Debt Service Suspension Initiative (DSSI) of the G20. These are hard times, after all, and everybody is clearly feeling the pinch. And it’s no surprise that private sector institutions are in no mood to do the right thing if it takes a bite out of their budgets.
Fortunately, the UN can be relied on to keep such issues alive even in the worst of times because short-term adjustments should not be allowed to turn attention away from long-term necessities. The next debate should focus on finding ways of generating the money that will have to go into SDGs. That is where the input of struggling developing countries like Pakistan will be very important. Prime Minister Imran Khan has already been very vocal about this matter. The first thing to do should be easing the immediate pressure on debt repayment obligations of such countries. And nothing will do that quite like extending the duration and scope of the G20 debt moratorium.
Copyright Business Recorder, 2021