H.E. Ibrahim Al-Assaf
Minister of Finance and National Economy

International Conference on Financing for Development 

Monterrey, Mexico
21 March 2002

Mr. President
Distinguished Audience

It is my privilege to address this international gathering on behalf of the Kingdom of Saudi Arabia. We welcome the long, intensive, and innovative process of consultation that has brought us to the current situation that had made that consensus possible. At the outset, We would like to state that the Kingdom of Saudi Arabia endorses the goals to eradicate poverty, achieve sustained economic growth, and promote sustainable development as we advance to a fully inclusive and equitable global economic system. Moving to achieve this worthy objective will indeed be the first step in a continuous but ambitious process aimed at ensuring that the 21st Century genuinely becomes the century of development for all.

One of the most important principles that we should agree upon in order to have an efficient financing for development is to ensure country ownership of, and responsibility for, development and increase the collective and active participation of developing countries in international dialogues and decision-making processes. This in turn implies understanding of, and respect for, the diverse range of individual cultures, traditions, and paths to development in different regions and at different economic levels. In this context, the international donor community should be mindful that efforts to support countries to achieve the Millennium Development Goals should complement countries' broader development agendas rather than impose externally driven objectives. International community should, also, avoid policies that unduly burden developing countries or target certain commodities, such as the Tobin and carbon taxes.

In this context, we do not see a need for the creation of new institutions and new financing mechanisms. What is needed in our view is to explore creatively how the existing institutions, including the Bretton Woods Institutions, can be used more effectively. This is something the respective international institutions themselves should take up for further examination.

One area which de facto can contribute to sources of development financing is a reduction of transaction costs. Efforts to harmonize donors' operational policies and procedures can in this regard lead to a substantial reduction in the cost of development assistance and allow recipient countries with limited institutional capacity to better manage aid programs. In this context, the success of the Coordinating Group, which was established by the Arab multilateral institutions, the Islamic Development Bank and the OPEC Fund, is worth noting. The Group has successfully developed voluntary common guidelines in areas ranging from project appraisal to project evaluation, supervision and monitoring. Positive lessons can indeed be drawn from this experience.

Mr. President
Distinguished Audience

Peace and development are mutually reinforcing. Without peace, countries may find it impossible to develop and may in fact retrogress. Let me cite the example of Palestine. The escalation of violence closure ,destruction of properties and the extreme measures taken by the occupying forces have caused much pain and suffering to the Palestinian. Saudi Arabia spared no efforts to relief their suffering. In this regard, I would like to refer to the recent proposals advanced by HRH Prince Abdallah bin Abdulaziz the Crown Prince of Saudi Arabia which have received tremendous positive reaction from the international community.

Mr. President
Distinguished Audience

we agree that, the bulk of development capital will continue to be domestically generated. To this end, prudent macroeconomic policies and strong institutions are needed to generate sustainable private- led growth and raise domestic savings. The above conditions will, of course, help attract foreign direct investment which complements domestic resources with associated benefits such as transfer of managerial and technical know-how and knowledge of external markets.

International trade as an engine for development is the single most important external source of development financing. Unfortunately, policies in the industrial countries which erect trade barriers against the exports of developing countries, complemented by trade-distorting subsidies and other trade-distorting measures have denied developing countries substantial financial resources. Subsidies and other support to agriculture alone have been estimated by the World Bank at well over $300 billion annually, which is roughly six times all official development assistance.

Thus, elimination of such subsidies enables countries with subsidies to free more resources for development assistance, and at the same time open markets for developing countries exports thereby financing development.

On the subject of increasing international financial and technical cooperation for development, it is a fact that, developed countries have been slipping even further back from the target of 0.7 percent of GNP as ODA to developing countries. International community should double its efforts to achieve this target.

Mr. President
Distinguished Audience

Allow me, Mr. President, to say a few words regarding the contributions that Saudi Arabia, itself a developing country, has made over the years to the financing of international development. Since mid seventies, Saudi Arabia's assistance developing countries, through bilateral and multilateral channels, amounted to more than $75 billion. Total assistance represents nearly 4 percent of Saudi Arabia's average annual GNP. Such assistance has been extended to 41 African, 23 Asian, and nine other developing countries, or 73 countries in all. Some $7 billion alone has been contributed through our bilateral aid agency, the Saudi Fund for Development, which was founded in 1974. This has financed 370 development projects in 65 developing countries, including many of the poorer ones. It is worth mentioning that the Kingdom's assistance is untied, and with a significant grant element. In addition to the developmental role, the Kingdom's assistance has a humanitarian and relief dimension. This is to support for refugee shelters and to providing extensive physical relief and aid in famine and natural disaster situations.

Worthy of special mention is the support that Saudi Arabia, in addition to bilateral assistance, has extended to Arab, regional, and international development organizations by contributing to their capital and financing their development projects in order to advance social and economic development in developing countries. Total Saudi contributions to such institutions have exceeded $21 billion. These organizations include, amongst others, the International Monetary Fund, the World Bank Group, the OPEC Fund, the Islamic Development Bank, the Arab Fund for Economic and Social Development, the Arab Monetary Fund, the Arab Bank for Economic Development in Africa, the African Development Bank, and the African Development Fund.

In the area of debt relief, Saudi Arabia has worked hard on the multilateral front through those institutions in which it is a major shareholder to advance the practical modalities of debt relief. The Kingdom has also contributed its full share to the HIPC Trust Fund at the IMF. On a bilateral basis, Saudi Arabia was a pioneer in debt relief when it wrote off $6 billion of poor countries debt.

Mr. President
Distinguished Audience

On the topic, of addressing systemic issues: enhancing the coherency and consistency of' the international monetary, financial, and trading systems in support of development. The main points I wish to make here, are: first the need to work with the existing institutions for promoting international development rather than to bring forth significant new proposals for institutional realignment. Second there is a need to improve the collective role of developing countries in the process of economic decisionmaking, to enhance their participation in the formulation of financial standards and codes, and to broaden implementation on a voluntary basis, taking into account the varying conditions of individual countries. Third, there is a need to work further on international economic policy coordination. In this context I would note that the major developed countries have a special responsibility in adopting pro-growth policies that would revive the global economy.

It is worth noting here that oil-producing countries have continued to demonstrate their constructive role and cooperative spirit in meeting the challenges confronting the for the international energy world economy. It remains appropriate for the industrial countries to review their policies of taxing oil and oil-based products, on efficiency grounds and as part for financing budgets. As a major oil oil-producer and exporter, Saudi Arabia believes that it is in the interests of both producers and consumers to cooperate to reduce instability and volatility in the oil markets. Our Crown Prince's proposal to establish secretariat for the international energy forum and offered to host this secretariat in Riyadh, the Saudi Capital, is meant to serve this objective.

In conclusion, I would just like to underline the importance of all parties represented at the Conference "staying engaged" as the consensus document rightly puts it. This will indeed be an ongoing and hopefully unremitting effort. This will ensure that the results of this Conference are carried forward on a regular basis. As an immediate next step, I endorse the suggestion that the topic of Development Cooperation in the 21st Century should become a main item for discussion at the Spring Meeting of the Development Committee next month. Given that the International Development Association (IDA) has been and remains the core instrument of development assistance to the poorer countries, we hope that the negotiations for the 13th Replenishment will soon be concluded.

With a good spirit of cooperation and consensus, we can all indeed take the further steps needed to ensure that the 21st Century becomes the century of development for all.

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