By Dr. Raymond Prasad, Economic Adviser, Pacific Islands Forum Secretariat

1. Financing the SDGs in the
Pacific
Dr. Raymond Prasad
Economic Adviser
Pacific Islands Forum Secretariat

2. Outline
Linkages:
SDGs and
Developme
nt Finance
Financing
Landscape
The
“Pacific”
Financing
Priorities &
Means
Financing
Instruments
& Enablers

3. The Pacific Islands

4. The Pacific Islands
Size of PICs
EEZ

5. The Pacific Islands
• The “Pacific” Economy
• Large-ocean States
oBlue Economy:
# Fisheries – Tuna # Deep Sea Mining (Potential)
# Coastal (Tourism) # Marine Protected Zones
• Larger PICs (Land based Natural Resources)
• PNG: # LNG # Gold # Copper # Logging # Agriculture
• Fiji: # Water # Gold # Bauxite # Copper # Logging # Agriculture
• Solomon Islands: # Gold # Logging # Agriculture
• Most Important – Its People, Culture & Tradition
# Remittances (Samoa|Tonga) # Traditional Social Safety Nets
# Culture & Dev. Financing

6. Financing Landscape
• Traditional Options:
• access to foreign capital (FDI and loans) and inflows of unrequited transfers (including
remittances and aid);
• build-up of domestic sources of finance ;
o mobilising domestic savings for private investment (US$3.5bn – Superannuation
Fund);
o private sector credit and financing;
o Inter-temporal transfer of potential economic growth through Sovereign Wealth
Fund (SWF) or Trust Fund (TF)
o generating/leveraging domestic financial resources
o (Lack of) Fiscal Space - debt to GDP ratios
• Generation of net foreign revenues
• Economic resilience (Disaster Insurance - PCRAFI, BoP Support, Regional Finance
Facility)

7. Financing Landscape
0
10
20
30
40
50
60
70
80
Cook Is. Fiji FSM Kiribati RMI Palau PNG Samoa Sol. Is. Tonga Tuvalu Van.
National Debt (% GDP) (2001-2014)
Debt/GDP Avg.('01 -'04) Debt/GDP Avg.('05 -'09) Debt/GDP Avg.('10 -'14) Benchmark (40%)

8. Financing Landscape
13
-13
13
20
-15
11 11
-10
23
-3
-8
19
-40
-30
-20
-10
0
10
20
30
40
Cook Is. Fiji FSM Kiribati RMI Palau PNG Samoa Sol. Is. Tonga Tuvalu Van.
Fiscal Space (% of GDP)
Fiscal Space Avg.('01 -'04) Fiscal Space Avg.('05 -'09)
Fiscal Space Avg.('10 -'14)

9. Financing Landscape
25 24 14 16 16 17 25 21 30 16 17 17
42
28
66
79
57
42
30
33
56
27
96
22
0
20
40
60
80
100
120
Cook Is. Fiji FSM Kiribati RMI Palau PNG Samoa Sol. Is. Tonga Tuvalu Van.
Total Revenue and Grants & Tax (% of GDP)
(Avg. 2010-2014)
Tax/GDP Avg.('10 -'14) Rev. + Grants Avg.('10 -'14)

10. Financing Landscape
-60
-50
-40
-30
-20
-10
0
Fiji FSM Kiribati Palau PNG RMI Samoa Sol. Is. Tonga Tuvalu Vanuatu
Current Account Deficit (% of GDP)
Current Account Deficit % of GDP(Avg. 2001-2014) Current Account Deficit Excluding Grants % of GDP (Avg. 2001-2014)

11. Financing Priorities & Means
Priorities:
• Climate Change Adaptation Finance
• Climate Proofing of infrastructure
• Food security – erosion of coastlines and
salinaiton of arable land
• Loss & Damage – Climate Insurance/Trust
Fund
• Disaster Finance
• Risk Transfer to financial markets
• Management and investment in Preparedness
• Oceans Finance
• Rehabilitation coral reefs & Sustainable
livelihoods – coastal fisheries/tourism
• Increasing returns from the blue economy –
fisheries
• Green Economy Finance
• Financing of renewable energy
• Waste Management – opportunities for energy
generation
Means:
• Private Sector Participation & Partnership
• CC Projects
• Risk Sharing
• Gender Empowerment
• Untapped potential almost 50%
• Social Safety nets
• Cultural/traditional Safety Nets;
• Community resilience, eg. micro-insurance;
• Promote Global Income Sharing
• Remittances (addressing De-risking issues)
• Labour mobility
• Financial Innovation & Integration
• Financial Resilience
• Limiting pressure on fiscal space
• Reducing macroeconomic volatility

12. Financing Instruments
• SME Credit Guarantees
• Insurance for Risk Transfer
• Counter-Cyclical Options
• Contingent Credit Lines
• Diaspora Bonds
• GDP Indexed bonds
• Debt-for-nature swaps
• Financial tax
• Travel levy
• Social levy
Tax &
Non-Tax
(Levy)
Bonds
Guarantee
&
Risk
Transfers
Loans

13. Financing Enablers
• Public Financial Management
• Strengthens linakages and accountability & transparency
• National Budgeting Systems (Immediate/Short-term)
• National Plans – usually 5 years (Medium-term)
• SDGs 2030 (Long-term)
• Pacific:
• Forum Compact - Peer Review Process – Assessment of National Systems &
Development effectiveness (PIFS)
• DFAA – Gap Assessment and linkages to National Systems (UNDP)
• Integrated Financing Agenda
𝑫𝒆𝒗𝒆𝒍𝒐𝒑𝒎𝒆𝒏𝒕 𝑭𝒊𝒏𝒂𝒏𝒄𝒆 =
𝑓
𝐴𝑑𝑑𝑖𝑠 𝐴𝑏𝑎𝑏𝑎 = 𝑓(𝑃𝑢𝑏𝑙𝑖𝑐 𝐹𝐼𝑛𝑎𝑛𝑐𝑒 + 𝑂𝐷𝐴 + 𝑃𝑟𝑖𝑣𝑎𝑡𝑒 𝑙𝑜𝑐𝑎𝑙 + 𝐼𝑛𝑡𝑒𝑟𝑛𝑎𝑡𝑖𝑜𝑛𝑎𝑙 𝑓𝑖𝑛𝑎𝑛𝑐𝑖𝑎𝑙 𝐹𝑙𝑜𝑤𝑠 + 𝑇𝑟𝑎𝑑𝑒)
+
𝑆𝑒𝑛𝑑𝑎𝑖 𝐴𝑔𝑒𝑛𝑑𝑎 = 𝑓(𝐷𝑖𝑠𝑎𝑠𝑡𝑒𝑟 𝑃𝑟𝑒𝑝𝑎𝑟𝑒𝑑𝑛𝑒𝑠𝑠 + 𝑀𝑎𝑛𝑎𝑔𝑒𝑚𝑒𝑛𝑡 + 𝑅𝑖𝑠𝑘 𝑡𝑟𝑎𝑛𝑠𝑓𝑒𝑟)
+
𝐶𝑂𝑃𝐴𝑔𝑒𝑛𝑑𝑎 = 𝑓(𝐶𝑙𝑖𝑚𝑎𝑡𝑒 𝐶ℎ𝑎𝑛𝑔𝑒 𝐴𝑑𝑎𝑝𝑡𝑎𝑡𝑖𝑜𝑛 𝑎𝑛𝑑 𝑀𝑖𝑡𝑖𝑔𝑎𝑡𝑖𝑜𝑛)

14. SDGs & Development Financing
High
Financing
Cost
Coherence
Long-term
Low
Immediate
Policy
Implementation
(time lag)
Political Coherence &
Support
Incoherent
SDGs
2030
Regional
Plans
National
Plans
National Financing
Constraint
Regional Financing
Constraint
Global Financing
Constraint

15. Thank You.