203. The effective implementation of this Agenda, as well as of the decisions and commitments reached at the recent series of United Nations global conferences, summits and other meetings, requires the urgent mobilization and more efficient use of resources for development. It is critical to generate the political will to mobilize and make available the necessary resources _ public and private, financial and human, national and international _ if all States, the United Nations system and the international community as a whole are to mount a full and effective response to this Agenda. In formulating this response, attention has to be given to both the quantitative and the qualitative aspects of development as well as to time-frames for implementation.
204. All countries should continue to implement policies and measures to mobilize domestic resources according to national strategies and priorities and to achieve an appropriate level of domestic savings. Measures should include the maintenance of sound fiscal and monetary policies, efficient and equitable taxation systems, low budget deficits and an efficient allocation of budgetary resources in which due priority is given to productive expenditure.
205. Political institutions and legal systems that ensure the equitable distribution of domestic resources enhance the effectiveness and flexibility of national policy frameworks. Public expenditures offer significant opportunities for promoting growth and the equitable redistribution of resources.
206. All countries should explore new ways of generating new public and private financial resources, inter alia, through the appropriate reduction of excessive military expenditures, including global military expenditures and the arms trade and investments for arms production and acquisition, taking into consideration national security requirements, so as to allow possible allocation of additional funds for social and economic development.
207. The savings efforts of developing countries, in particular African countries and the least developed countries, to generate sufficient domestic savings need to be supplemented by external resources so as to raise investment to the levels necessary for adequate sustained economic growth. New and innovative ideas for generating resources for development should be explored.
(a) External debt
208. The international community, including the international financial institutions, is invited to continue to explore ways of implementing additional and innovative measures to alleviate substantially the debt burdens of developing countries, in particular of the highly indebted low-income countries, in order to help them to achieve sustained economic growth without falling into a new debt crisis.
209. In this context, the Heavily Indebted Poor Countries Debt Initiative (HIPC) endorsed by the Interim Committee of IMF and the Development Committee of the World Bank and IMF _ which is designed to enable eligible heavily indebted poor countries to achieve a sustainable debt situation through coordinated action by all creditors on the basis of adjustment efforts by the debtor countries _ is welcomed. It is recognized that the implementation of the Initiative requires additional financial resources from both bilateral and multilateral creditors without affecting the support required for development activities of developing countries. The importance of implementing the Initiative's eligibility criteria flexibly so as to ensure sufficient coverage of the heavily indebted countries is stressed.
210. All the members of the Paris Club are encouraged to implement fully the initiatives which aim at substantially reducing the bilateral component of the debt burden of the poorest and heavily indebted countries and at permitting countries sufficiently advanced in an adjustment strategy to exit from the rescheduling process. To achieve the first aim mentioned above, the Paris Club should continue to apply the Naples terms in a full, expeditious and constructive manner in order to contribute to a durable solution to the debt problems of these countries.
211. Private creditors and, in particular, commercial banks should be encouraged to continue their initiatives and efforts to address the commercial debt of developing countries.
212. The international community should implement fully the appropriate actions identified in the mid-term global review of the implementation of the Programme of Action for the Least Developed Countries for the 1990s concerning the external debt problems of those countries.
213. Multilateral debt accounts for a high proportion of the external debt of a number of heavily indebted developing countries. The international financial institutions are invited to examine further proposals to tackle the problems of a number of developing countries with regard to multilateral debt, taking into account the specific situation of each country. Such proposals need to preserve the preferred creditor status of the multilateral financial institutions, in order to ensure that they can continue to provide concessional financing for development to developing countries.
(b) Official development assistance
214. It is important to reverse the overall decline in ODA flows and to achieve internationally agreed ODA targets as soon as possible. Such assistance should focus on developing countries, with particular priority to Africa and the least developed countries. Some donor countries have achieved or exceeded the accepted United Nations targets to allocate 0.7 per cent of GNP for overall ODA and 0.15 per cent of GNP for ODA for the least developed countries and are encouraged to continue to do so. Other developed countries reaffirm the commitments undertaken to fulfil as soon as possible these targets. Countries which are in a position to do so should strive to augment their assistance in the framework of development cooperation. Countries should also honour their commitments in Agenda 21 to provide resources to promote sustainable development.
(c) Role and resources of multilateral financial institutions, including regional development banks
215. The multilateral financial institutions should continue to play a major role in development and in promoting the stability of the international financial system. In their responses to the development needs, priorities and specific circumstances of developing countries, the World Bank and IMF should continue to adjust to the wide-ranging changes in global circumstances. Their programmes should respond to the economic and social conditions, concerns and needs of each country, and should also explicitly include social development goals, in particular eradicating poverty, promoting productive employment, enhancing social integration, and supporting people living in poverty and vulnerable and disadvantaged groups of society. To this end, they are urged to increase cooperation with other development activities of the United Nations system. At the same time, both the World Bank and IMF need an enhanced capacity to fulfil their roles effectively. In particular, resources for the International Development Association (IDA) should be replenished adequately and in a timely manner.
216. Regional development banks should continue to play an important role in the financing of development. In this context, the adequate and timely replenishment of their concessional mechanisms is essential. Regional development banks should respond effectively to development priorities.
(d) United Nations financing for development
217. The fulfilment of the United Nations system's role in development and in promoting development cooperation requires resources to be provided on a sound, predictable, continuous and assured basis. The international community should support the development efforts of the United Nations system by providing a substantial increase in resources for operational activities commensurate with the needs of the developing countries and the overall resources of the United Nations. This requires both political commitment by all States and an appropriate balance in terms of resources devoted to all United Nations activities and to development. New approaches to financing the international development cooperation activities undertaken by the United Nations, including innovative funding sources, should continue to be examined.
(e) Private investment flows
218. Special attention should be given by all countries to measures aimed at promoting international investment flows and enhancing their contribution to development. In order to encourage domestic investment and to attract FDI, it is essential to have in place a stable, supportive, effective and transparent legal framework. Intellectual property protection is an essential component of an environment conducive to the creation and international transfer of technology. Investment agreements which signal that investment is valued and that all investors will be treated fairly also promote investment. Governments in the developed countries should facilitate long-term investment flows to developing countries. All countries should take measures to ensure that these flows have a positive impact on development, equitable growth, productive capacity, infrastructure, transfer of technology, eradication of poverty, trade expansion, employment and social programmes.
219. The globalization and growth of financial markets has given rise to the need for improved measures to address the negative effects of the volatility of international capital flows. The prevention of financial crises will require enhanced early warning mechanisms, including improved and effective surveillance of national and international financial market developments. If prevention fails, responding to financial market distress will require enhancing the capacity of multilateral institutions to respond in a quick and coordinated fashion. Financial mechanisms need to be developed for this purpose as well as to meet the challenges of the twenty-first century. In this context, the international community should explore ways to broaden appropriate enhanced cooperation and, where appropriate, coordination of macroeconomic policy among interested countries, monetary and financial authorities and institutions, so as to enhance preventive consultation arrangements between such institutions as a means of promoting a stable international financial environment conducive to economic growth, particularly in developing countries, taking into account the needs of developing countries as well as situations that may have a significant impact on the international financial system.
220. The quantitative efforts set out above should be complemented with measures to improve the qualitative aspects of international development cooperation, particularly: a better focus on its distribution; greater national capacities to coordinate national and international resources; improved national ownership of externally financed programmes; international cooperation based on national priorities, involving other development partners, including civil society; and strengthened national capacities to plan for, manage, monitor and evaluate the impact of development cooperation.
221. To translate the Agenda for Development into practical action, it is essential that further steps are taken to enhance United Nations performance in development. Maintaining adequate levels for funding for United Nations operational activities must be coupled with continued improvements in their performance, including monitoring and evaluation and the measurement of output rather than input.
222. If development activities are to have a lasting impact, the future provision of technical cooperation must focus on strengthening national capacities rather than using international expertise, which is often expensive, and procuring equipment tied to aid. The United Nations system needs to scrutinize whether its activities contribute to the promotion of national ownership and capacity-building. Such promotion should be the central objective of its field-level activities.
223. The international community, including the United Nations system, shall give preference, wherever possible, to the utilization of competent national experts or, where necessary, of competent experts from within the subregion or region or from other developing countries, in project and programme design, preparation and implementation and to the building of local expertise where it does not exist.
224. National execution should be the principal modality for the implementation of programmes by the United Nations system. The pace at which national execution is utilized by recipient countries must depend upon their needs and capacities. Effective national execution also requires both the United Nations system and other actors involved in the provision of technical assistance to give increased priority to assisting recipient countries in building and/or enhancing the necessary capacity to undertake services at the field level.
225. The need to promote capacity-building and national execution should be taken into account in the design stage of development programmes. Governments will need to take a lead role in identifying such needs at the planning stage and in ensuring that there is adequate national ownership of the programmes as well as in maximizing projects' and programmes' efficiency by keeping overhead costs to a minimum.
226. The United Nations system must also be prepared to address the capacity requirements of different national development partners, including, in addition to Government, members of civil society, such as the private sector, and NGOs.
227. When building national capacities a number of issues will need to be taken into consideration. These include the articulation of clear development goals, strategies and priorities that are nationally prescribed and supported, where necessary, by external partners; effective performance of functions through a well-trained human resource base; competent organizations and management to effectively utilize and retain skilled people; a policy and institutional environment that can facilitate the performance and accountability of the public sector and other national institutions; and sensitivity to the overall social, economic and cultural environment in which capacity development is to take place.
228. Technical and economic cooperation among developing countries is an instrument that can make important contributions to building national capacities through exchange of information, experiences and expertise.