Hon. Trevor Manuel
Minister of Finance Republic of South Africa and 
Chairman of the Development Committee

at the International Conference of Financing for Development

Monterrey, Mexico
18th March 2002

Mr. Chairman:

It is an honour to address the plenary today in my capacity as Chairman of the Development Committee.

We meet in an extraordinary time. One in which humanity is confronted with a wide spectrum of challenges in the world economy, environment, and relations between peoples and states. Of those many challenges, we meet here in Monterrey to seek ways of ensuring that more people are lifted from poverty and that more people share in the benefits associated with globalisation and economic development.

At our meetings in Ottawa last November, members of the IMFC and the Development Committee of the IMF and World Bank had an opportunity to discuss issues related to this Conference with Secretary- General Kofi Annan. They expressed strong interest in
the success of the Conference and offered views on a number of points which were reflected in their communiqué. As incoming Chairman of the Development Committee, I am pleased that these have been largely incorporated in the draft outcome document, which is before this meeting.

In particular, I believe both documents reflect a partnership compact between developing and developed countries. The primary responsibility of each country for its own economic and social development and the importance of sound national policies and good governance as prerequisites for poverty reduction and sustained growth is strongly underlined. Delivery of these policies calls for cooperation by developed partners in ensuring that the necessary finance to support development is available.

During 2000 our Heads of State and Government made a commitment with the adoption of the Millennium Declaration, which includes the Millennium Development Goals. In that Declaration they stated "We are committed to making the right to development a reality for everyone and to freeing the entire human race from want".

To address these challenges effectively there is a need to approach the issues of development differently from how we have tended to approach them up to now. I think it is important to highlight that during the preparatory process on the Conference of Financing for Development, a consensus emerged among participants that there was a need for an enhanced partnership between developing and developed countries and that such a partnership should be premised on clearly defined responsibilities.

The consensus is to be heartily welcomed, but we cannot slip into complacency as a result of this work. The risk of failing to implement the consensus is large, not least because implementation may be undermined by a "business as usual" attitude towards development.

In this regard, developing countries have accepted the responsibility for their own economic and social development. There is furthermore an acknowledgement of the importance of sound national policies and good governance as prerequisites for poverty reduction and sustained growth. These principles form an integral part of the New Partnership for Africa's Development (NEPAD), which sets out an example of how the commitment to sound policies and good governance might be approached. For many developing countries, however, innovative regional plans and sound policies will not be enough. For that reason, the efforts of developing countries should be complemented by action on the part of developed countries and international financial institutions to ensure that the necessary finance is made available to support development.

Domestic constraints facing governments and civil society in developing countries mean that economic growth, development and poverty alleviation will only be effective if it is comprehensive and sustainable. Domestic efforts must, therefore, be complemented by international action in areas such as trade, market access, ODA, debt relief and capacity building. The concessional resources made available by multilateral development institutions also constitute an important source of financing to developing countries that do not have access to other forms of financing. In view of this, it is imperative that an agreement is reached on the replenishment of the African Development Fund and the International Development Association.

There is general consensus that globalisation provides an opportunity for countries to improve standards of living, but it is not an end in itself - there is nothing inherent about the process of economic integration that leads to poverty reduction. Therefore, while this is captured in the Monterrey Consensus, it is critical to recognise that the architect designs and the builder constructs foundations that can carry complex edifices many times their size.

The key challenge is to attempt to manage globalisation in such a way that it does lead to poverty reduction. While domestic policy reforms and institution-building are critical to ensuring that people are able to benef it from greater openness to trade, capital flows, and technology, an appropriate policy response by national governments must also encompass the international arena. In other words, while national governments must consider how international structures, institutions, markets and relationships impact on their domestic policies, international institutions must equally consider how their policies and goals affect individual countries.

Trade, market access, development assistance, innovative financial vehicles, and domestic resources constitute those important policies.

Indeed in an important sense, the outcomes of Monterrey are crucial to ensuring that the Doha agenda is truly developmental and that finance supports trade.

Moreover, they must do it coherently, and this means, among other things, ensuring that international institutions effectively consider the extent of overlapping agendas and policies and how they may conflict. Why is this important? Because, conflicting policies serve no one, especially not the poor.

I would also like to add a further element to this equation by including reform of international financial governance. Reform of international financial governance is critical to ensuring that developing countries benefit from globalisation through participation.

The consensus on enhanced partnership, which would entail clearly defined responsibilities for all stakeholders, cannot be met by a reluctance to change the status quo regarding international financial governance. The two need to go hand in hand if partnership is to be meaningful.

One way of linking reform of financial governance and partnerships for development is for the parties to the Monterrey consensus to exercise the same political will shown in the adoption of the Millennium Declaration with respect to increasing developing country participation in international economic decision-making and standard setting processes.

Our imagination and political will are also needed to address further challenges, such as:

The need for increased flexibility, dialogue and technical assistance in the implementation of codes and standards.

The need for increased market access.

The need for stronger commitments by developed countries on ODA to reach the agreed 0.7 percent target of GNP.

We also need to ask ourselves the question: will the debt relief provided by the HIPC Initiative lead to sustainable debt levels? If the answer is no we would need to look at ways to address the areas of concern of the HIPC framework.

Finally, this Monterrey Consensus requires support. In the international arena too many fine documents are produced that fail from the start for the simple reason that the ways and means for ensuring their continuity as 'living' agendas are not conceptualised and implemented. Coherence requires that we make a concerted effort, in partnership, to see that the poor reap the benefits of international consensus on sustainable development as embodied in the Monterrey Consensus.

In conclusion I can assure you that the Development Committee stands ready to play its full role. We will be meeting in Washington on April 21 and the follow-up to this Conference and the issues it is addressing will be at the heart of our discussions.

We must all, in our respective spheres of responsibility, commit to taking the next steps. The World Summit on Sustainable Development presents a unique opportunity to carry the outcomes of the Monterrey Consensus on financing development to a broader audience and to place it at the heart of a dynamic and comprehensive agenda for sustainable development.
The Development Committee welcomes the active collaboration of the multilateral agencies in this long effort to turn multilateralism into an active and sustainable vehicle for development and international cooperation.

We must recognize that global governance, in the absence of global government, is a very complex process and that progress will require a collaborative effort by all. Only through cooperation will we advance.

Thank you

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