SDGs must be funded with local resources: experts

The government should mobilise funds from domestic sources in an innovative way and improve institutional efficiency to achieve the Sustainable Development Goals, experts said yesterday.  Foreign assistance is not increasing in line with the demands of the SDGs, said said Mustafizur Rahman, a distinguished fellow of the Centre for Policy Dialogue. “So, the government would have to mobilise domestic resources and ensure good value of money. And to ensure good value for money we need to enhance the institutional capacity and efficiency.”

Rahman’s comments came at a dialogue styled “Financing for SDGs implementation in Asia-Pacific Region” organised by the CPD in cooperation with the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) at the Brac Centre Inn in Dhaka.

With its present level of efficiency, Bangladesh can collect revenue amounting to only 10 percent of its GDP.

“If the tax to GDP ratio reaches 16 percent, Bangladesh will be able to earn hundreds of thousands of crores of taka from domestic sources, which could be used to finance SDGs.”

Bangladesh should improve its export capacity and diversify products to mobilise additional resources from external sources, he added. Trillions of dollars will be required to finance the SDGs, said Abul Kalam Azad, principal coordinator of SDGs at the Prime Minister’s Office.

“Who will give this additional fund? We need to manage this with our own resources as well as adopt innovative ways to bring money from external sources.” Private sector financing through public-private partnership could be a good source of SDG financing, he added.

Full financing for implementing the SDGs will have to come from the country’s own pocket, said Debapriya Bhattacharya, another distinguished fellow of the CPD. In the last 10 years at least $75 billion siphoned out of the country. “These funds could help construct three Padma bridges,” he added. Bangladesh has the lowest tax to GDP ratio among the Asian countries, said AB Mirza Azizul Islam, a former adviser to a caretaker government.

Subsequently, he called for enhancing institutional efficiency to boost revenue and tax-to-GDP ratio, much needed for SDG financing. Islam went on to criticise the tax structure. “Tax collection is dependent on indirect tax — it is one of the major problems in the tax system.  It should be reshuffled to increase the tax to GDP ratio.” He advised the government to issue bonds in foreign markets to fetch funds from external resources to fill the SDG financing gap.

Out of the total financing needed to implement the SDGs, the government would get only 15 percent in foreign assistance, said Kazi Shofiqul Azam, secretary of the Economic Relations Division. The rest would have to come from the country’s own resources, he added. The government will have to find traditional and non-traditional sources to mobilise domestic resources, said Fahmida Khatun, executive director of the CPD. Economic growth in the Asia-Pacific region continues to improve on the back of firmer global demand and stable inflation, said Vatchrin Sirimaneetham, economic affairs officer of the UNESCAP. Financial risks and protectionist trade measures weigh on the near-term macroeconomic outlook, while medium-term challenges, such as lifting the region’s potential for economic growth and reducing poverty on a sustained basis, persist, he added. Nihad Kabir, president of the Metropolitan Chamber of Commerce and Industry Dhaka, also spoke.