Presentation by Ahmed M. Saeed, ADB Vice-President, Operations 2, at the 25th ASEAN+3 Finance Ministers’ and Central Bank Governors’ Meeting, 12 May 2022
Your Excellencies, Governors, colleagues from international organizations, good morning.
It is my honor to participate with you in this meeting and to briefly highlight some important policy priorities for an inclusive and sustainable recovery from COVID-19 pandemic which has unfortunately reached every aspect of society, sparing no one including the economies of ASEAN+3.
As those of us in this meeting are well aware, our region in the world already confronted important structural and deep-rooted challenges even before the onset of the pandemic. Growth has been slowing across the developed and developing countries, raising questions about growth and economic models. Inequality—a pernicious foe if ever there has been one, has been successfully addressed in some areas, but migrated and continues to migrate to other challenging fronts. And of course, the risks of climate change continued to persistently loom larger.
Today, the structural challenges which have already been exacerbated by COVID-19, as I noted are complicated even further by a series of rapidly emerging headwinds. Commodity prices are rising, we appear to be coming to the end of a long period of low interest rates and fiscal pressures also continue to rise especially because fiscal space has already been restricted by necessary urgent and important COVID-19 response efforts.
Heightened geopolitical instability adds additional pressure making recovery prospects even murkier. This is to say the least a complex, dynamic, and challenging mix of issues. In order to help the countries of ASEAN+3 and our developing member countries more broadly meet this challenge, at ADB we're thinking from first principles in designing a series of appropriate responses. I'll briefly highlight two areas where we're working here. First, in rethinking how we conduct macroeconomic analysis and provide policy advice, and second, in our approach to partnerships.
Let me first highlight three ways we are seeking to rethink our approach to policy solutions and economic tools. First, COVID-19 taught us the importance of an interdisciplinary approach to complex issues. We saw for example, during the pandemic, that knowledge about disease propagation, the province of epidemiologist, needed to be integrated with macroeconomic modeling. Cross disciplinary collaboration will be critical in a broad number of areas that we must successfully address going forward. Second, macroeconomic models must be updated so that appropriate development and especially climate transition advice can be given. We all know that climate change demands a paradigm change across society and across the economy. But we cannot optimize our trajectory along this path with static equilibrium models, near term optimization, and an approach that treats technology as an endogenous variable. What are the macroeconomics of paradigm change? And what implications does this have for broader development strategies? These are questions that we are asking and seeking to start developing answers at ADB alongside others.
Finally, our institutions, I'm speaking now primarily of institutions like mine, need to pivot to much more “open architecture” business models. In the last 25 years, development has gone from being the concern primarily of the official sector, to a complex ecosystem with a broad array of SDG motivated actors. Institutions like the ADB have unique insights and unique institutional legitimacy. We must build business models that allow us to make our unique capabilities available for greater impact to our ecosystem of common actors with different capabilities and talent.
At ADB, as we seek to create a more open business model for new and comprehensive partnerships in development, I wanted to provide just a few examples of some of the things that we have been doing. Much of our activity in this space recently has been in the arena of climate transition. We're mobilizing finance for climate change through new partnerships with philanthropies and bilateral donors in the corporate sector, all of whom are looking for high impact solutions to facilitate transformational changes in developing member countries. For example, we recently created a new sustainable finance infrastructure fund with equity support from Singapore’s sovereign wealth fund Temasek as well as from HSBC. We have been working very closely with the Government of the Philippines and especially with the Government of Indonesia, on an energy transition mechanism, which is a blended finance vehicle designed to accelerate the decommissioning of coal fired power and in a number of other areas highlighted on this page. These are, I would note, merely illustrative examples of what can be accomplished through greater partnership.
Let me conclude by noting our continued support for the region’s pursuit for shared prosperity and sustainable development. We welcome the new ASEAN+3 working group on infrastructure financing and are pleased to be working with it on a study to identify policy options and opportunities for financing infrastructure across the region. Thank you for your time and we are very grateful for the opportunity to participate today. Thank you.