More efficient government spending practices can address critical funding gaps to achieve the UN’s Sustainable Development Goals (SDGs), according to a report.
The sheer size of public spending, typically 15-30% of GDP, made it “a powerful force for change”, and focusing on strategic procurement can promote social and environmental sustainability, said the report, by the Economist Intelligence Unit and the UN Office for Project Services (UNOPS).
The SDGs, which were set out by the UN in 2015, focus on issues such as gender equality, responsible consumption and production, and sustainable infrastructure.
The report - The future of public spending: Why the way we spend is critical to the Sustainable Development Goals - estimated between $3tn and $5tn will be needed every year in order to meet the SDGs by 2030. However, the annual funding shortfall among developing economies could be as high as $2.5tn.
“Effective public spending can help to ease this strain through less wasteful and more efficient spending practices – which free up resources – and the procurement of goods and services in ways that promote social and environmental sustainability,” said the report, launched at the World Economic Forum’s annual meeting in Davos.
The report noted barriers to better procurement varied according to a country’s level of economic maturity.
In developing countries, urgent problems such as combating extreme poverty and disease distracted from the implementation of refined procurement strategies.
Market immaturity, lack of purchasing options and supply constraints also meant sustainability initiatives cannot always be implemented immediately.
“Short-term thinking – obtaining the cheapest price today rather than looking at the financial, social and environmental cost of a product over its lifetime – has dominated public procurement to its detriment,” the report said.
“Governments can be hampered by outdated or inefficient systems. Multiple operational, organisational and regulatory barriers – as well as risk-averse organisational cultures and, in many cases, corruption – prevent the public sector from implementing spending practices that are efficient, transparent and cost-effective as well as sustainable, ethical and equitable.”
UNOPS executive director Grete Faremo said: “How and what governments spend their money on can have a huge impact. It can drive innovation, help build jobs and local economic growth. It can drive behaviour and help contain levels of carbon emissions.
“As governments face severe funding gaps to achieve their development agenda, they have a unique opportunity to use their purchasing power strategically to make substantial progress in meeting the SDGs.”
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