Weaknesses in the system of global governance - to identify vulnerabilities in a timely manner and mobilize international economic cooperation in reforming institutions, strengthening regulatory frameworks, and macroeconomic coordination - is a root cause of the crisis. These weaknesses have to be rapidly overcome in coordinating recovery policies. Events since August 2007 have exposed serious weaknesses in international crisis response. Discussions on the systemic causes and responses to the crisis are taking place within the framework of the Financing for Development process which in Monterrey in 2002 called for a holistic approach to the interconnected national, international and systemic challenges of financing for development.
In March 2002, Heads of State or Government adopted the Monterrey Consensus at the International Conference on Financing for Development in Monterrey, Mexico, where the challenges of financing for development around the world, particularly in developing countries have been addressed. The goal is to eradicate poverty, achieve sustained economic growth and promote sustainable development as the world advances to a fully inclusive and equitable global economic system.
At the Financing for Development Conference in Doha in December 2008, Member States reaffirmed the Monterrey Consensus and adopted by consensus the Doha Declaration on Financing for Development. The Declaration highlights a new sense of solidarity and goodwill among Member States and is an important milestone in the struggle for development.
In the midst of the ongoing financial and economic crisis of far-reaching but yet unknown consequences, Member States have not only strengthened commitments to innovative cooperation for financing for development, they have also taken the first steps to agree on major changes in the international financial governance.
It is certainly the hope that the current crisis can be brought under control so that a devastating global depression can be avoided. But there can be no doubt that fundamental change is now imperative. The Doha Declaration is clear that nations must seize this opportunity to make the world’s global financial system more equitable, sustainable and stable.
A coordinated and coherent action in responding to the crisis as well as in formulating national development strategies that adequately reflect the interests of developing countries will be important. An essential part of a stable and equitable system will require the reform of all international economic institutions and standard setting bodies to ensure adequate representation of least developed countries.
A global conference will assess the crisis that has devastated the world economy, from 24-26 June 2009 at the United Nations Headquarters in New York. It was mandated by world leaders at the Financing for Development Conference in December 2009 in Doha and will address the impact of the crisis on development as well as on the ongoing international discussion on reforming and strengthening the international financial and economic system and architecture.
Member States must continue to monitor the unfolding crisis and step up the search for viable responses to its underlying causes. Developing countries are particularly adversely affected by the systemic flaws in the global financial system and have limited capacity to respond with counter-cyclical policies. In addition, the current crisis comes on top of the 2008 food and energy crisis.