Abstract

Meeting the financing requirements of the post-2015 development agenda presents significant challenges in light of unfulfilled Millennium Development Goals (MDG) targets and the likely increased development targets post 2015. With weak fiscal balances even in middle income Asian economies, it is necessary to promote efficient allocation of resources and enhance availability of financial instruments to catalyze commercial financing to meet development goals and complement fiscal resources. New partnerships and innovative sources of financing can complement traditional financing modalities and governments can pursue these options by establishing an enabling environment through sound macroeconomic policies and fostering a dynamic private sector. The adoption of enabling financial frameworks contributes to private finance mobilization. The adoption of new financing modalities is critical for expanding investments in infrastructure and manufacturing to boost employment, growth, and productivity. To provide the necessary incentives for sustained private investment, macroeconomic, legal, environmental policy, and regulatory frameworks that reduce risks and uncertainty for investors is necessary.
Further, a key aspect of ensuring that the benefits of growth reach all sections of society is to foster an inclusive financial system. Promoting “inclusive finance” implies providing financial services to poorer and disadvantaged groups through instruments tailored to provide savings, insurance, remittances, credit, and other financial services to people and enterprises at the bottom of the economic ladder. Inclusive finance enables and accelerates food security, nutrition, and rural development and critical for investment to (i) increase food production and consumption; (ii) contribute to greater food security; (iii) adopt climate change adaptation and mitigation technologies; (iv) protect from risks and unforeseen events; and (v) create new livelihoods, businesses, and nonfarm employment. Even outside the rural sector, an expanded set of financial services help agents strengthen their asset base to invest in income generation and create “buffer capital” for times of crisis.