International Conference on Financing for Development

Department of Public Information - News and Media Services Division - New York
Monterrey, NL, Mexico
18-22 March 2002

19 March 2002



Developed countries should use the special drawing rights (SDR) allocated to them as a novel form of international assistance to developing countries, Soros Fund Management President and Chairman George Soros proposed at a press conference this morning.

Mr. Soros said that such a use of SDR would be very helpful to poor countries in financing development. It would allow them to retain credibility, functioning as a sort of credit line when they did business internationally.

(The SDR is an interest-bearing international instrument created by the International Monetary Fund (IMF) and distributed among its members to supplement their existing reserve assets -- official holdings in gold, foreign exchange and reserve positions in the IMF.)

He said his proposal would ensure that international assistance was properly spent because it could be directed at specific projects. An impartial jury of experts would ensure the quality of the project, and the donors could then select which particular one to support. In that way, the interests of the recipient countries would be ensured before those of the donors instead of the reverse.

Earlier, United Nations Development Fund (UNDP) Administrator Mark Malloch Brown stressed that, between Monterrey and the World Summit on Sustainable Development in Johannesburg, there should be an effort to convert the focus of the official development assistance (ODA) debate from what should be spent to what concrete goals the spending would achieve.

Asked how developing countries would benefit from the use of SDR in financing for development, Mr. Soros replied that they would benefit directly by having additional monetary reserves and indirectly through "global public goods".

Another correspondent asked whether there was a risk of reserves being allocated to the best choice of the donor countries.

Mr. Soros said the choice would be in the hands of experts and, therefore, removed from political pressure. In the United States, there was strong public support for international assistance for education and health, he added.

Referring to countries where there was bad governance, another correspondent asked how assistance could be most effectively spent in the poorest countries while still respecting the recipients' sovereignty.

He replied that the donor countries must cooperate and agree on joint action. If each country was guided by its own national interest, the more general interest of promoting good governance would be lost. That could create the danger of a return to the days when donor countries funded their strategic allies irrespective of good or bad governance.

Why would governments contribute large sums to SDR while they had been unwilling to contribute to official development assistance? another journalist asked.

Mr. Soros said they would do so because they were democratic and responded to the wishes of their electorates.

Would it be possible to give assistance directly and without conditions to people suffering under bad governments? another correspondent asked.

Mr. Malloch Brown replied that the traditional criteria for assistance had been historic friendships or strategic considerations. The United Nations must provide humanitarian assistance to ensure such people were not penalized because of their bad governments. Mr. Soros' Open Society Institute and other such foundations could provide a second funding source, while a third was technical assistance such as that provided by the UNDP. Such assistance could not be diverted to defence expenditures and luxury items. There must be a strategy to help people living under bad governments.

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