Background
The Economic and Social Council (ECOSOC) met today in a special high-level meeting with the Bretton Woods institutions and the World Trade Organization (WTO) to consider implementation of the Monterrey Consensus of the International Conference on Financing for Development, two years later.
The primary purpose of the meeting –- devoted to the overall theme of “Coherence, coordination and cooperation in the context of the implementation of the Monterrey Consensus” -- was to take stock and to maintain the political momentum for implementing what had come out of the Conference. The event was a formally mandated part of the follow-up to the International Conference and part of the decisions taken by the General Assembly on how to follow up on Monterrey.
By agreeing on the Monterrey Consensus in 2002, the international community asserted its resolve to eradicate poverty, achieve sustained economic growth and promote sustainable development in the context of a fully inclusive and equitable global economic system. The text concludes with a commitment to strengthen the United Nations as the main organization to revamp the international financial system, working with the World Bank, the International Monetary Fund (IMF) and the WTO.
Special high-level meetings of ECOSOC have been a yearly occurrence since 1998. Early in the preparatory process towards the International Conference on Financing for Development, the Assembly, in resolution 54/196, recognized the WTO as a key stakeholder in both the preparatory process and the high-level intergovernmental event. The Monterrey Consensus, in March 2002, encouraged “the United Nations, the World Bank and the International Monetary Fund, with the World Trade Organization, to address issues of coherence, coordination and cooperation, as a follow-up to the Conference” at a spring meeting between the ECOSOC and the Bretton Woods institutions.
While the 2002 meeting focused on the outcome of the Monterrey Conference and the meetings of the Development Committee and International Monetary and Financial Committee, last year’s event provided an overall assessment of progress in implementation of the Monterrey Consensus at all levels. This year, in compliance with ECOSOC resolution E/2003/47, the meeting includes, for the first time, representation from the Trade and Development Board of the United Nations Conference on Trade and Development (UNCTAD).
The Council had before it a note by the Secretary-General, which provides background information and raises a number of questions for consideration at this year’s six round tables addressing the impact of private investment and trade-related issues on financing for development; the role of multilateral institutions in reaching the Millennium Development Goals; and debt sustainability and debt relief.
Opening Statements
MARJATTA RASI, President of the Economic and Social Council, said that for the first time, representatives of the UNCTAD Trade and Development Board would participate in the Council meeting with the Bretton Woods institutions. The Monterrey Consensus had sent a mandate to the ECOSOC for follow-up to that consensus, and compliance with that mandate could only be achieved jointly with all present. The presence of ministers and senior officials of MemberStates and key international development financial institution demonstrated the commitment to the Monterrey Consensus.
She said she was honoured to welcome the President of Finland, and also welcomed the Executive Directors of the IMF and World Bank. Their presence was the outcome of intensive efforts by the Council to deepen intergovernmental dialogue. She had also had fruitful preparatory discussions with the WTO and UNCTAD.
Today’s meeting would address the overall theme of coherence, coordination and implementation of the Monterrey Consensus, and would focus on more specific issues in round-table discussions. It was difficult to cover all aspects of the Monterrey Consensus in one short meeting, she said. The question of representation in international financial decision-making processes was of importance to many. That and other issues could be addressed in the round-table meetings. She called for a focus on least developed countries.
Secretary-General KOFI ANNAN said that now that four of the 15 years set for the implementation of the Millennium Development Goals had passed, the results were, at best, mixed. Even if the current recovery in the world economy sped up and spread more widely, that would not be enough to ensure that the world met the Goals. Only by building on the spirit and promise of the Monterrey Consensus -- the focus of today’s meeting –- would the international community have a fair chance. As things stood, two years after Monterrey Conference, the decisions taken there were not being implemented fast enough; and lack of coherence, so central to the Consensus, was as much a problem now as it had been then.
At the heart of the Consensus was a pact -- a recognition that, to build an open and equitable global economy, both developed and developing countries had specific responsibilities, he continued. Developing countries had agreed to improve governance, economic management, and their investment climates, and to build up their human resources. Even if not every developing country had made sufficient progress, there was strong evidence that, on the whole, the developing world had taken many positive steps in those directions. Developed countries, for their part, had increased official development assistance (ODA) and were paying greater attention to the issue of external debt. But in the area where progress was needed most -- trade -- the record was mostly disappointing. Indeed, with the failure in Cancún and a growing resort to bilateral trade agreements, “we have backtracked significantly”, he said.
It was not too late to regain the path on which the international community had set out with such hope, he said. “We can make a start today, by continuing your efforts to ensure that your policies and ministries do not work at cross purposes. We must demonstrate clearly, by next year’s review of the Millennium Declaration, that we are truly serious about reaching the Millennium Development Goals.” For all the problems the world was facing, it remained true today that almost every country could reach the Millennium Goals by 2015, as long as reforms were implemented and adequate external support was provided. But by next year, it might already be too late.
First, it was necessary to make sure that national policies, resources, and strategies were focused on reaching the Goals, he continued. Domestic resources were the largest source of financing for development, and could be especially effective if focused on education, health, infrastructure, capacity- and institution-building, and efforts to improve regulatory frameworks and public administration. Then, it was necessary to ensure greater foreign investment in developing countries, especially those that had taken steps to improve the investment climate. Also, the Doha negotiations needed to produce real gains for developing countries, such as unhindered market access and the elimination of subsidies. Also needed was more and better aid, with action on some of the promising ideas that had been proposed, such as the Global Finance Facility. And finally, it was necessary to address the high debt burdens of low- and middle-income countries not covered by the Heavily Indebted Poor Countries Debt Initiative.
Expressing hope that the participants would use today’s meeting to determine “how we can do better in all of these vital areas, and to strengthen the coordination and cooperation that are so crucial for achieving any progress”, he said it was also necessary to strengthen the voice and participation of developing countries in international economic decision-making. The Monterrey Consensus had set in motion a process that had taken the first steps in that direction, recognizing rightly that democratizing global economic governance was as essential as any development project, and was vital for building confidence in the system.
In conclusion, he said that while high-level meetings were a very important complement to the work of the Council, there came a time to take stock and see how to improve their effectiveness. The questions that needed to be addressed related to means of making them better focused, sustaining momentum and making the most of joint discussions of common challenges.
JULIAN R. HUNTE (Saint Lucia), President of the General Assembly, said the theme of the high-level meeting of the Economic and Social Council with the international financial and trade institutions called to mind Monterrey’s focus on coherence, and its viewpoint on the essential need for the WTO to be among those organization playing a critical role in the area of financing for development. With the first-time participation of UNCTAD, an important player to the group of key organizations had been added.
He said all stakeholders -– governments, international institutions, civil society and the private sector –- had committed themselves to the goals of the Monterrey Consensus. It was encouraging that the created partnerships had remained intact. Those partnerships ensured a frank and open exchange on the progress made at the High-level Dialogue on Financing for Development of the General Assembly in October 2003.
He said the persistent and critical issues requiring further and urgent attention were well known. Numerous developing countries had made determined efforts to create an enabling environment for foreign direct investment (FDI), but FDI had not been forthcoming. Furthermore, the reduction in the levels of ODA had shown that it was not a source of development financing on which developing countries might rely.
International trade was a key element of the international development framework, but it could only become an engine to drive growth and development in a dynamic and fair multilateral trading system. Every indication in that regard showed, however, that that goal had not been reached. Debt continued to be an immediate, short- and long-term challenge to many developing countries. Debt cancellation, particularly for Heavily Indebted Poor Countries (HIPC), might be a better strategy than debt maintenance.
He was pleased that the three critical factors mentioned –- aid, trade and debt –- taken together with the Millennium Development Goals, would be discussed in the round tables. “If we are to silence the sceptics [of the Millennium Goals], we must make a determined and urgent effort –- through advocacy, mobilization of resources and capacity-building, in particular –- to meet the 2005 targets and to make progress towards meeting the 2015 targets”, he said.
Development challenges were multifaceted, highly complex, and interconnected, as underscored by the integrated approach taken in Monterrey, he continued. Coherence was about maintaining the integrated approach across concerned organizations and groups, to ensure, through coordination and cooperation, that the common objectives and complementary interests converged for the best possible results.
In conclusion he said, there was a growing sense of urgency, particularly in the development world, that the international community needed to move more quickly to assist with national efforts for poverty eradication, sustainable economic growth, sustainable development and overall, for a more equitable global economic system.
Statements by Intergovernmental Representatives
YOUSEF HUSSAIN KAMAL, Minister of Finance of Qatar, speaking on behalf of the “Group of 77” developing countries and China, said that despite the fact that prospects for global economic growth had improved in the current year, the fundamental challenges remained the same as at the last meeting: how to eliminate poverty and ensure that developing countries participated effectively in that global economic recovery and prosperity. Clearly, the efforts of developing countries to improve their lot had not been met with commensurate economic performance and reward. The topic of today’s debate –- coherence, coordination and cooperation in the context of the implementation of the Monterrey Consensus –- was very opportune against that background.
Globalization was a challenge that would continue to occupy the international community because of its failure to respond to the particular needs of developing countries, he continued. Increasing economic disparities between developing and developed countries must force the international community to question the fairness and sustainability of the international economic system in its present form. There had been, as yet, a failure to adopt the new approaches and policies that could make globalization and the phenomenal growth of global prosperity of the last three decades a shared opportunity, from which developing countries could benefit. That constituted a threat both to the livelihood of billions of people and to international peace and security. In that connection, he supported the establishment of the Panel on Threats, Challenges and Change as a tangible demonstration of the leadership the United Nations could provide on that issue.
Focusing on the themes of investment, trade, finance and the participation of developing countries in world economic decision-making, it was necessary to identify the set of policies and actions in those areas that could make possible an effective and beneficial participation of developing countries, he said. The challenges of development should be treated as a coherent whole in order to foster sustainability. It was impossible to continue to assert that the international community supported the efforts of developing countries by providing them aid while, at the same time, denying them market access on practical and beneficial terms.
Neither was it possible to continue to say liberalization was good for growth and development, but in practice implement it selectively. “We must match liberalization in the movement of capital with liberalization in trade and in the movement of natural persons”, he said. It was necessary to recognize the burden that the imperative to ensure a balance among the three pillars of sustainable development -– economic growth, social responsibility and environmental sustainability -– imposed on the meagre resources of developing countries.
Turning to the need to enhance the voice and participation of developing countries in global economic decision-making, he called for urgent action in that respect. The Group attached particular importance to the developing countries’ participation in the work of the WTO, the World Bank and the IMF. Members of the Group were keenly following the ongoing consultations on the capacity of developing countries for effective representation and involvement in the work of those institutions, including providing leadership at the highest levels. Negotiating the right policy mix and the type of interventions that were urgently required on the part of the international community, including in implementation of the agreements already reached, continued to be a sore point. Urgent action was needed in the area of trade, investment and financial flows.
In trade, priorities related to the plight of commodity-dependent countries, he said. Other priorities included market access for products of developing countries’ export, the role of harmful subsidies and other developed countries’ policies, and technical and financial support. Special and differential treatment should be viewed as an essential component of the multilateral trading system in recognition of the changing realities of world trade and globalization. The Group continued to support the Doha round, but it insisted that it be given genuine development content. It was in that area that the Group expected developed countries to demonstrate real good will. It had been steadfast in its support of an open, rule-based multilateral trading system for the promotion of global trade and eradication of poverty worldwide.
Direct foreign investment was one of the keys to unlocking the productive potential of developing countries, he said. In order for developing countries’ policies to succeed, they needed to be complemented by support from their development partners. Therefore, governments needed to work together with the private sector to forge mutually supportive arrangements that made finance, trade and investment true instruments for poverty eradication. In pursuing all those initiatives and because of the dire economic and social conditions, developing countries would continue to depend on ODA. That matter was most crucial for the weakest economies.
He welcomed the many initiatives announced in Monterrey and called for their speedy and full implementation. The biggest problem with aid over the years was the fact that it had been inadequate or came too late. Improving the effectiveness of aid required its timely provision and use in those areas where its catalytic role could be maximized. Aid also should not be encumbered by unnecessary conditions. At the same, lasting solutions were needed to the problems of external debt. Such solutions lay in part in giving aid on more concessional basis and partly on ensuring that developing countries could participate effectively in international trade. External debt relief should be explicitly linked to the achievement of the goals and targets of the Millennium Declaration.
CHARLIE MCCREEVY, Minister for Finance of Ireland, speaking on behalf of the European Union and associated States, said one of the most innovative and constructive aspects of the process leading to the Monterrey Consensus was the integrated and coordinated contribution of the United Nations, the Bretton Woods institutions and the WTO. It was essential to preserve and build on that collaborative approach between organizations that played a key role in financing for development. At the Development Committee, during the spring meetings of the Bretton Woods institutions in Washington, the global monitoring of the Millennium Development Goals and debt sustainability had been discussed. Those were also among the issues which would be discussed today.
He said today’s meeting took place against the background of major reports that highlighted the faltering progress of many countries in sub-Saharan Africa towards achieving the Millennium Goals. The situation in sub-Saharan Africa was of profound concern to the European Union, he said. The Union had recognized the progress made in the region in consolidating democratic principles, good governance and respect for the rule of law and human rights. HIV/AIDS and conflict were among the many challenges to the region. He encouraged efforts to improve the quality of governance, including through greater accountability, transparency and control of corruption in a strengthened public sector. The European Union and its memberStates accorded €11.5 billion annually to Africa.
The Union fully supported the basic principles of and political priorities addressed by NEPAD, he continued. The achievement of the Millennium Development Goals would require strong pro-poor growth in the region and an enabling climate for domestic and foreign investment. He, therefore, supported the renewed focus on the critical role of the private sector in promoting economic growth and development. Achievement of the Millennium Goals required that all countries, both developed and developing, lived up to their commitments and played their parts in achieving those goals.
He said the European Union had a strong commitment to its own responsibilities under the Monterrey Consensus. The European Union Council had adopted eight explicit commitments (the so called “Barcelona Commitments”), which defined the Union’s contribution to the International Conference on Financing for Development. The European Commission had been mandated to report annually on the extent to which the UnionmemberStates and the Commission were implementing those commitments. He invited other partners to consider undertaking similar reporting.
All European Union member States had reaffirmed their commitment to achieving the United Nations ODA goal of dedicating 0.7 per cent of gross national income to development. Four States had already achieved that goal, while others had established time frames in which they would strive to reach it. At Monterrey, the Union had made a collective commitment to achieve an average ODA of 0.39 per cent. The latest European Commission report showed that the European Union was on track. He said that on 1 May, the Union would welcome 10 new member States, and acceding countries’ efforts had been included in the progress report. All acceding States had begun to make the transition to becoming donors.
In addition to increased resources, it was essential that donors and international organization and their developing countries partners worked to make aid more effective, he continued. It required enhanced joint planning between donors, focused on alignment with nationally owned development strategies, such as the Poverty Reduction Strategies, as well as alignment with country systems and procedures. The need for coordination was particularly true in the area of HIV/AIDS. The European Union was also committed to provide trade-related assistance to developing countries.
Regarding the HIPC Debt Initiative, he said all Union member States were committed to going beyond the requirement of HIPC by providing 100 per cent debt relief on their pre cut-off date claims towards HIPC countries. It was vital to look beyond the HIPC Initiative, he said, and address issues related to long-term debt sustainability of low-income countries.
He concluded that it was clear that a significant challenge was faced in achieving the Millennium Development Goals in sub-Saharan Africa. The implementation of the Monterrey Consensus, and a strong commitment by governments and international organization to promote coherence, coordination and cooperation, would be crucial to make required progress. That integrated approach needed to be promoted and developed in the years ahead, if progress was to be made in lifting millions of people out of extreme poverty.
NGOZI OKONJO-IWEALA, Acting Chair of the Development Committee and Minister of Finance of Nigeria, informed the participants regarding the outcome of yesterday’s meeting in Washington, D.C., which was held to assess progress based on the first Global Monitoring Report on the decisions taken at Doha, Monterrey and Johannesburg. The Development Committee [a forum of the World Bank and the IMF that facilitates intergovernmental consensus-building on development issues] had strongly reaffirmed its commitment to reducing poverty in developing countries and implementing the Millennium Development Goals. Success, however, would require a continuous effort on behalf of all players. That was a task and a challenge for the international community.
In adopting the Millennium Declaration, the international community had established strategies and actions that needed to be implemented to succeed, she continued. Reviewing the report, the Committee had recognized progress on many fronts, including significant reforms implemented by developing countries and important gains in reducing income poverty. However, it was very concerned that, based on current trends, most Millennium Goals would not be implemented in most developing countries, particularly in sub-Saharan Africa. All parties, developing and developed countries and international institutions, must urgently enhance concerted action to accelerate progress towards those goals.
Action in all areas was needed, she said, in particular in improving the climate for private sector activity, strengthening reforms and improving the quality of governance, fighting HIV/AIDS epidemic and scaling up effective investment in infrastructure and improving access to health care, education and other basic social services. The Committee also had stressed that specific priorities must be determined at a country level, in the context of country-owned and monitored development strategies, as reflected in Poverty Reduction Strategy Papers in the case of low-income countries and respective national strategy frameworks in middle-income nations. The Committee welcomed the efforts of the World Bank to support stronger investment climates in developing countries. The efforts to improve the climate for private sector activity would be discussed at the Committee’s next meeting in October.
As set out in Monterrey, stronger support from developed countries was needed, she said, in particular as far as access to markets was concerned. The Committee had called for a constructive and determined effort to move the multilateral trade agenda forward, stressing that it was essential for developed countries to do more to liberalize their markets, facilitate trade and eliminate trade-distorting subsidies. More aid was also required, which needed to be predictable, timely, long term and effective.
Noting a progress report on financing modalities, the Committee looked forward to a report at its next meeting on aid effectiveness, absorptive capacity, results-based measurement mechanisms and mechanisms for mobilizing additional resources, she continued. More effort was needed to implement the Declaration of the Rome High-Level Forum on Harmonization and the Core Principles of Marrakech, including strengthening country capacity to manage for results. The Committee had also recalled that international financial institutions were accountable for their contribution to implementing the Monterrey Consensus.
Also reviewed at the meeting was implementation of the HIPC Initiative, she said. The Committee had urged the Bank and the Fund to help facilitate countries’ rapid access to HIPC debt relief when their outstanding issues were addressed. Careful consideration also needed to be given to options to deal with the HIPC sunset clause, which was scheduled to take effect at the end of this year. The meeting had broadly supported the principles underlying the proposed framework for debt sustainability in low-income countries, while acknowledging that the modalities and operational implications remained to be clarified. A consistent and coordinated approach should be promoted among borrowers, creditors and donors, to ensure that resources to low-income countries were provided on appropriate terms.
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