Policy change in the area of sustainability does not happen in a vacuum. To effectively bridge the sustainable finance gap in the Asia-Pacific region, policy coherence among key governmental ministries, regulators and other stakeholders is essential.
Recognising this, the fifth edition of ESCAP’s Financing for Development Series, “Sustainable Finance: Bridging the gap in Asia and the Pacific”, highlights the importance of inter-ministerial coordination as one of the ten principles of action to bridge the sustainable finance gap - namely Principle 3: Policy coherence and capacities are developed across key government ministries such as finance, energy, transport, and environment, ultimately reducing the costs of financing.
Governments need to invest in building the institutional capacity to improve coordination and to make policy more coherent. Doing so will not only enhance internal alignment of policies but also position governments to collaborate more effectively with external partners such as multilateral development banks, development finance institutions and other development partners, and help the achievement of national and global sustainability targets.
The strategic role of ministries of finance
Ministries of finance have a key role in supporting sustainable development by devising and implementing appropriate fiscal policies that can facilitate investments in sustainable development. Their broad mandate—which includes oversight of public revenue, public spending, including on development, tax policies, public assets and public debt —gives them a central role in aligning economic policies with sustainable development priorities.
As financing remains a cornerstone for achieving the Sustainable Development Goals (SDGs), ministries of finance are well-placed to lead inter-ministerial efforts in this regard.
Not only are they vital in directing funding towards priority areas, their policies also importantly enable and shape the work of other line ministries—such as those responsible for energy, agriculture, and the environment—through well-designed budgetary support, subsidies, tax incentives, and investment frameworks.
Among others, initiatives like the Coalition of Finance Ministers for Climate Action is a good example to mobilise finance ministries to take a leading role in addressing the climate crisis. Collaboration across government institutions is therefore essential for enabling a coherent and comprehensive approach to sustainable economic transformation.
Lessons from Thailand: Cross-inisterial collaboration for sustainable agriculture and limate action
Thailand offers a good example of how inter-ministerial coordination, particularly between the Ministry of Finance and the Ministry of Agriculture and Cooperatives, can support both sustainable livelihoods, financing and environmental goals.
A key institution in this collaboration is the Bank for Agriculture and Agricultural Co-operatives (BAAC), a specialised financial Institution under the Ministry of Finance. BAAC plays a central role in providing financial services to farmers, who make up approximately 60 per cent of its clients.
\Working closely with the Ministry of Agriculture and Cooperatives, the Ministry of Finance channels financial and fiscal tools to promote more resilient and inclusive agricultural development. Several initiatives illustrate this partnership:
- Supporting livelihoods through targeted lending: The Ministry of Finance and BAAC launched a large-scale loan project aimed at village and city community funds, farmers, agricultural cooperatives, and community enterprises. With a total loan facility of 50,000 million baht, the project has already approved loans for 6,734 clients, amounting to 29,463 million baht.
- Debt relief and skill development: To ease financial burdens, a 12-month debt moratorium was introduced for farmers with loan obligations of up to 300,000 baht. About 1.7 million farmers registered for the program, covering loans worth over 238,000 million baht. Complementing this, BAAC partnered with other state agencies to provide skills training for 300,000 farmers to help them boost productivity and income.
- Expanding climate resilience through insurance: In response to growing climate risks, the Ministry of Finance and BAAC expanded crop insurance schemes to protect farmers against natural disasters. In 2022, the corn crop insurance scheme provided coverage worth 188.24 million baht to 71,642 farmers, while the rice crop insurance scheme disbursed 2,890.26 million baht in premiums to nearly 1.94 million farmers.
- Embedding sustainability in financial institutions: Under its five-year policy framework for Specialised Financial Institutions (2022–2026), the Ministry of Finance aims to integrate sustainable finance and technological innovation into institutional mandates. BAAC’s ongoing efforts include a financial literacy and digital access project, which has recorded 576,824 digital transactions and trained 118,658 clients in financial management.
These examples demonstrate how coordination between financial institutions and ministries, guided by coherent government policies, can serve as powerful mechanisms to support sustainability.
Aligning policies that are consistent between ministries across different sectors, keeping in view the over-arching ambitions of sustainable development, is crucial for bridging the financing gap for sustainable development. The principles set forth by ESCAP advocating for enhanced coordination and knowledge sharing among agencies are integral to this process.
Thailand’s efforts show that meaningful progress is possible when ministries of finance take an active leadership role in promoting cross-sectoral collaboration. However, challenges remain in several developing Asia-Pacific economies particularly in strengthening inter-agency cooperation and improving institutional mechanisms for knowledge transfer.
Moving forward, there is a pressing need for a further unified policy approach and ongoing investment in capacity-building and expertise across government agencies.
By sharing knowledge and experiences, governments can enhance policy coherence, unlock more effective financing strategies, and ultimately drive broader economic and environmental transformation—offering lessons not only for Thailand, but for the entire Asia-Pacific region. ESCAP stands ready to work with governments in the region in this endeavour.
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