2018 DRR Financing 6.1 Ben Slay

Financing the SDGs in Middle-
Income Europe and Central Asia
Ben Slay
Senior advisor
UNDP Regional Bureau
for Europe and CIS
4 October 2018

2015—Inter-governmental conferences
Sustainable
Development
Summit
(UNGA)
Sendai Disaster
Risk Reduction
Conference
Paris Climate
Change
Summit
Addis Ababa
Finance for
Development
Conference
Key principles:
1) Coherence
2) Sustainability
3) Risk and resilience
4) Leave no one behind
5) ODA is not enough

Potential finance for the
SDGs, Sendai implementation
• Key questions:
– Finance demand: How much will this cost?
– Finance supply:
• How much money is out there?
• How much of “development finance” can be treated as “potential
SDG (or Sendai) finance”?
• Key problems:
– These questions are usually answered via global estimates
. . . What about national estimates?
– Demand side: Until SDGs, Sendai are “nationalized”, they
can’t really be costed
• Supply side: Potential funding/financing availability
can be estimated

“Traditional” finance for
development approaches
Global finance for development flows
Source: <<Opening Doors: Financing the UN Development System>>, p. 55

Problems with such approaches
• Financing development is not only about net transfers of
capital from developed to developing countries
– It’s also about boosting development potential, competitiveness
• Not all developing economies are net recipients of
international capital flows (current-account deficits)
– Azerbaijan, Kazakhstan, Turkmenistan, Uzbekistan are net
international capital suppliers (current-account surpluses)
• SDG, DRR finance is not only external
– Domestic financial flows (e.g., government budget) matter—but
are not captured
• Financial services also matter—but are not captured
– Particularly relevant for insurance ☺
• Who are the national stakeholders, partners?

To address these weaknesses,
we need a narrative that can:
• Help finance national achievement of SDGs,
implementation of national Sendai DRR
strategies
• Be supported by national data
• Include public finance data
• Be understandable to non-specialists
This presentation seeks to build such a narrative

Methodological challenges—
and some answers
Questions (challenges) Answers
Combining international (BoP)
and national (fiscal) data 
issues of:
• Comparing/blending “apples
and oranges”
• Avoiding double counting
Double counting avoided by:
• Not counting domestic investment
• Measuring government by budget revenues
(not expenditures)
International (BoP) data: Gross
or net?
• Why?
Gross financing data used, because:
• The numbers are much “better behaved”
• UNDP: closer to inflows than outflows
Which flows do (not) contribute
to sustainable development?
• Especially important for
government budget finance
“Albanian rule of thumb”
• Finance Ministry consultants estimated that
60% of Albania’s multi-year 2015-2017
budget can be linked to specific SDGs
• 60% of government budget = “SDG finance”

Data sources
• National balance of payments statistics:
– International capital flow data
– International financial service transactions data
• (Re)insurance
– Remittances • OECD-DAC: ODA data
• IMF-World Economic
Indicators data base:
Domestic public finance
data
Exclusive reliance on
publicly available data

Albania
Shares of potential SDG finance from all sources (annual averages, 2008-2016)
17%
1%
6% 1%
12%
6%
58%
FDI Stocks and bonds Bank loans Financial services
Remittances ODA State budget

Armenia
11%
2%
14%
0%
37%
7%
29%

Azerbaijan
15% 3%
19%
1%
6%
1%
56%

Belarus
12%
1%
15%
1%
6%
1%
64%

Georgia
17%
3%
0%
2%
15%
9%
54%

Kazakhstan
32%
4%
-1%
1%
0%0%
63%

Kosovo*
(* as per UNSCR 1244 (1999))
10% 5%
5% 1%
20%
15%
43%

Kyrgyzstan
12%
0%
5% 0%
40%12%
30%

Macedonia, fYR
11% 4%
9%
1%
12%
6%
57%

Moldova
4%
0%
19%
0%
35%
8%
32%

Montenegro
21%
3%
4%
2%
12%
3%
56%

Serbia
10%
3% 2%
1%
12%
3%
69%

Turkey
4% 4%
6%
1%
1% 1%
84%

Ukraine
9%
2%
6% 2%
15%
2%
64%

By source of finance: State budget
(* as per UNSCR 1244 (1999))
Annual averages (2008-
2016), shares of total
finance (from all sources)
84%
69%
64% 64% 63%
58% 57% 56% 56% 54%
43%
32% 30% 29%

By source of SDG finance: Remittances
(* as per UNSCR 1244 (1999))
40%
37%
35%
20%
15% 15%
12% 12% 12%
6% 6%
3%
1% 0%

By source of finance: ODA
(* as per UNSCR 1244 (1999))
15%
12%
9%
8%
7%
6% 6%
3% 3%
2%
1% 1% 1% 0%

Commercial financial flows
Annual averages (2008-2016), shares of
total SDG finance (from all sources)
(* as per UNSCR 1244 (1999))
0%
10%
20%
30%
40%
15%
32%
12%
21%
11% 11%
17%
4%
17%
10% 9%
12% 10%
4%
3%
4%
1%
3%
2%
4%
1%
3%
5%
2%
0%
3%
4%
19%
-1%
15%
4%
14% 9% 6%
19%
5%
6%
5% 2%
6%
FDI
Stock and bonds
Bank loans
Financial services
38% 37%
30% 29%
27%
26% 25% 24% 23%
21%
18% 18%
16% 15%

Critical next step: Unpacking
domestic public finance
15%
13% 13% 13%
11%
9%
9%
7%
5%
4%
• Albanian example:
– 2015-2017 budget
reviewed
– 61% of budget lines
could be linked to
individual SDGs
Source: Albania <<MAPS>> report, p. 87
• Could/should
something similar be
done in your
country?
• Should a similar
exercise be
attempted for
commercial flows?

Some take-aways
• State budget finance is critical
– More sophisticated treatment of fiscal data needed
• ODA still matters in some places
– Especially for global leaders in remittance inflows
(Kyrgyzstan, Armenia, Moldova, Kosovo, Georgia)
• This underscores the importance of “blending”
remittances with ODA, budget finance
• On commercial flows:
– FDI, bank loans are larger than flows associated with stocks
and bonds, financial services
– In economies with largest commercial flows (Azerbaijan,
Kazakhstan), most of this goes to the extractive sector

Thank you very much!
(ben.slay@undp.org)

2018 DRR Financing 6.1 Ben Slay

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2018 DRR Financing 6.1 Ben Slay