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Speech Transcripts

February 2, 2017

Keynote Speech by Dr. Shinichi Kitaoka at the IMF-JICA Conference on "Regional Development: Fiscal Risks, Fiscal Space and the SDGs"

JICA Research Institute, Tokyo

Distinguished guests,
Ladies and gentlemen,
Good morning,

As a co-host of this conference, I would like to express a very warm welcome to all to Tokyo. I am delighted to host this 4th conference, together with the IMF, to assist our partner countries and analyze macroeconomic needs to help each country achieve its Sustainable Development Goals. Particularly, I am happy to host many people representing the financial authorities of the countries which are very close to us. We have a lot of activities with those countries.

Today, I would like to touch upon current development issues and quickly discuss my hope for this conference.

As we start 2017, we are at a very important juncture. One and half years ago, in September 2015, many countries universally agreed to the Sustainable Development Goals, the SDGs at the United Nations. In December the same year, we also agreed to adopt the Paris Agreement. These two historically important agreements were made possible under the belief that global cooperation and multilateralism benefit all those on earth.

However, last year, we observed some different events that demonstrated a shift toward the opposite way, a rise of populistic nationalism based on the general discontent with globalism. A large proportion of the population believes that globalization does not benefit all, as was expected. Rather, they believe it has created a system of winners and losers - a concentration of wealth for some, and less wealth to others. This anti-globalization sentiment can widen the political divide and foster nationalism. I am particularly concerned about the situations in the United States which is the country that started and created the international financial system, as early as, as a historian I would like to say, in July 1944 by convening the Breton Woods conference. There is a new leader elected who might possibly change the U.S.'s role in this international system.

The global agreements of 2015, and the subsequent rise of populism in 2016, show us both the opportunities and the challenges of globalization. We are seriously concerned about challenges, but at the same time, we have to take the opportunities right now. We are now at a crossroads of two opposing vectors; one to promote global cooperation, and the other to oppose such cooperation. This is an issue that we all must think carefully about. Not only because this is critical for organizations which are mandated to promote global cooperation, such as JICA and the IMF, but because this is fundamental to what kind of world we would like to create for our future.

This brings us to our discussion today. Today, we will cover a wide range of topics on fiscal risks, fiscal space and the way we can achieve the SDGs in Asia and the Pacific.

In recent years, we have seen changing trends in terms of the global population and the world's economic growth. Now more than half of the global GDP comes from developing countries. And in particular, the population and economy in Asia is rapidly increasing more than in any other continent. These trends are expected to continue, making Asia's inclusive, resilient, and sustainable growth exponentially more important to secure the world's peace and prosperity.

But there is a significant financing gap that needs to be filled in order to achieve the SDGs. According to the UNCTAD, developing countries will need 3.9 trillion USD in investments each year in SDG-related sectors to meet global targets. This includes investments in basic infrastructure, food security, climate mitigation, among others. According to some estimates, Asia will require more than half of all emerging and developing country investments if it wishes to meet 2030 goals.

While challenges are vast, there are things that can be done now to accelerate our progress toward the SDGs. First, we must make sure the SDGs are country-led through strong political leadership with support from fiscal and monetary authorities and financial regulators. Since the SDGs are wide-ranging, strong leadership is indispensable to establish cross-sectorial approaches and coordination. JICA is ready to support these country-led efforts. In Indonesia, for example, we began to provide assistance to the country to help set and monitor its SDG targets.

Second, the role of authorities and regulators like you is crucial to fill the investment gap and support robust economic growth. It is up to you to ensure countries efficiently and effectively mobilize and allocate domestic and international, and public and private finance. As the private sector plays a greater role, our common challenge is to create favorable market conditions and use scarce public finances to realize sustainable growth through improved productivity and structural transformations. In the case of resource-rich countries, changing commodity revenues into productive investments is an additional challenge.

Third, economic resilience is needed to achieve and maintain peace and stability in Asia. We must establish protections that assure no one is left behind as our economy grows. Without protections, development outcomes that took many years to achieve can instantly disappear in the face of global shocks. Whether it is natural disasters, economic and financial crises, or volatile commodity prices, shocks disproportionately affect lower income levels and cause the most devastation to the already vulnerable.

There are various options that should be considered to improve resilience and protect people. We can use fiscal measures to equip them with appropriate social safety programs and social insurance systems. Another option is investing in education or when it comes to natural disasters, environmental protection and other preventive measures aimed at risk reduction. Assessing how to best mix and match these options is a role that I believe fiscal and monetary authorities should undertake in the SDG era.

Today's event is a unique opportunity to share the latest research and discuss diverse experiences and practices on how we can create a more enabling environment to implement the SDGs. Let's use this venue to foster more international cooperation at this very critical juncture and help meet these policy challenges back at home.

Thank you very much.


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