Remarks by UN Resident Coordinator Marc-André Franche at the ESCAP Policy Dialogue: Rethinking Public Debt for the Sustainable Development Goals

Distinguished guests, government representatives, and fellow stakeholders gathered today,

Good morning.

I am honored to have the opportunity to address you on this important occasion, albeit remotely.

I would like to acknowledge the Treasury Secretary Mr. Mahinda Siriwardena, the Direct General, of the Department of Fiscal Policy Dr. Kapile Senanayake, and the Assistant Director for Capital Markets, Investments and Sustainable Financing Division Ms. Shashini Withana for their leadership on this crucial issue for the country as the engagement continues with the IMF and the country formulates its new budget.

I extend my thanks to ESCAP for their initiative in arranging this policy dialogue, and the continued thought leadership in support of SDG acceleration across Asia-Pacific through the Economic and Social Survey.

There is no place in the world more relevant to discuss the relationship between public debt and the SDGs than Sri Lanka at the moment.

As you well know, In 2022, interest payments on public debt accounted for more than three quarters of total government revenue, totaling more than public expenditure on health and education combined.

This clearly illustrate the effects of debt crises for countries like Sri Lanka.

However, what I would like to bring to your attention today is something equally important, but not fully revealed by statistics.

I want to outline the potential for Sri Lanka’s debt crisis to become an equity crisis.

Key messages from ESCAP’s 2023 Survey highlight the need to balance reducing fiscal and debt distress with investing in the Sustainable Development Goals, and for fair treatment of all stakeholders in sovereign debt restructurings.

What we have seen from the economic crisis to date is that it has imposed hardship on some of the country’s poorest through:

Sharp increases in acute food insecurity among Sri Lankan households;

Inflationary pressure underpinning a near-doubling in projections of poverty; and

Input shortages affecting the livelihoods of some of Sri Lanka’s most vulnerable groups, such as daily wage earners and smallholder farmers.

The recently-implemented domestic debt optimisation process also sees the burden of adjustment fall on Sri Lankan workers. The same workers who have seen inflation vastly diminish the purchasing power of their retirement incomes.

How is progress toward the SDGs relevant in a situation like this?

While acknowledging who bears the heaviest burden of this crisis we need to recall the underlying principle of the SDGs to leave no-one behind.

To leave no-one behind is to make sure our support reaches those in most need, and reaches them effectively.

This can be done by better processing of claims for assistance under the Aswesuma scheme.

This can be done by securing uninterrupted provision of school meals for food insecure families.

This can be done by prioritising the availability and safe provision of essential medicines and health services.

I commend the dedication and effort of government on reforms in these areas. I would also encourage us to continue to take forward these reforms with efficiency and fairness in equal measure.

I look forward learning on your deliberation on how to Achieve this balance towards a more inclusive, equitable and resilient Sri Lanka.