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Financing Conference Could Provide Big Boost For Sustainable Development

11 March– An agreement that unlocks resources for development at the International Conference on Financing for Development in Monterrey, Mexico, from 18 to 22 March, would be a major stepping-stone to launching positive initiatives at the World Summit on Sustainable Development in Johannesburg this August.

The five-day Monterrey conference, the first Summit-level meeting to address key financial issues relating to development, is the latest link in a series of international conferences aimed at addressing the downside of globalization— the lack of resources available to fight poverty, marginalization and disease— and promoting development that improves the standard of living for everyone.

The Financing for Development conference brings the United Nations together with the International Monetary Fund, the World Bank and the World Trade Organization, and with representatives of civil society and business, in search of creative solutions to development finance problems.

While discussions on resources have figured in virtually every recent conference, United Nations Deputy Secretary-General Louise Frechette observed that this is the first time that countries are exclusively tackling resource issues. Noting that the UN conferences of the last decade had had a major impact, she was hopeful that Monterrey would make a big difference in mobilizing resources through a number of means, such as increasing official development assistance and levels of foreign direct investment in developing countries.

At the Millennium Summit held in New York in September 2000, 147 world leaders agreed, among other things, to halve the proportion of people living in extreme poverty in developing countries by 2015, and at the World Trade Organization meeting in Doha last November, governments agreed to launch a new "development round" of trade talks. Now, the goal of the Monterrey Conference is to put development concerns at the heart of the world's financial system.

Presently, it is estimated that 1.2 billion people live on less than one dollar a day, more than a billion people lack access to fresh drinking water, 2.4 billion people lack basic sanitation, and 11 billion children under the age of five die each year from preventable causes.

The outcome of Monterrey - which will be attended by as many as 50 world leaders including United States President George W. Bush, Brazilian President Fernando Henrique Cardoso, South African President Thabo Mbeki, and French President Jacques Chirac - is expected to play an important role in Johannesburg, where governments and partners from business and civil society groups, are looking for initiatives that bring real results.

In the ten years since the 1992 Earth Summit in Rio de Janeiro, where countries adopted Agenda 21 - the global blueprint for sustainable development - the lack of resources has hampered implementation efforts. At the time Agenda 21 was adopted, the estimated cost of implementation included $125 billion annually in official development assistance, grants or concessional financing from the international community.

Yet official development assistance has declined from $58.3 billion in 1992 to $53.1 billion in 2000. Private investment in developing countries has increased over the decade, but much of this investment has gone to only a handful of countries.

United Nations Secretary-General Kofi Annan has called on donor countries to almost double present levels of assistance, to $100 billion a year, in order to meet the Millennium Summit goals.

"Poor people in poor countries are not asking for a handout," the Secretary-General said in a speech at the London School of Economics. "What they want is a hand up." He added that the poor are enormous untapped reservoirs of initiative and entrepreneurship, but their energies are often held in check by poverty, misrule or conflict. "They would be the first to say that trade, not aid, is the path out of poverty."

The issue of official development assistance will be a major topic for discussion and action in Monterrey, along with efforts to make assistance more effective. Johannesburg Summit Secretary-General Nitin Desai said an important objective of the Monterrey conference was "rebuilding a constituency for official development assistance." In this rebuilding process, he said, "people want clarity of the goals," and that the Millennium Development goals can show why concessional resources are needed.

"The public in donor countries needs to be convinced that resources from their aid budgets go toward meeting these goals," Desai said. On the other hand, he stressed that there must be accountability and monitoring of how official development assistance is used.

World Bank President James Wolfensohn said the Bank estimates that it will take somewhere between $40 to $60 billion more a year to reach the Millennium Development Goals - roughly a doubling of current aid flows - to roughly 0.5% of gross national product, still well below the 0.7% target agreed to by global leaders years ago.

"Budgetary realities may make it impossible to double aid overnight. But if a 'New Partnership' is to work," he said, "we must commit to matching the efforts of developing countries step by step with a phased-in increase in aid - say an additional $10 billion a year for the next 5 years, building to an extra $50 billion a year in year five."

"Does anybody really believe that the goal of halving absolute poverty by 2015 is not worth this investment?" Wolfensohn asked.

Other issues that will dominate the discussions in Monterrey include a possible convention to fight corruption, improving the flow of investment resources to the poorest countries, the repatriation of money looted from developing countries' treasuries, and how efforts to reduce the debt burden of developing countries could be accelerated.

Countries have already agreed on a "Monterrey Consensus," and conference officials say that since negotiations on an outcome text are already completed, governments are now free to make concrete proposals and substantive announcements to improve development finance and the integration of all nations into the world economy.

Monterrey is not "a stand-alone event, but the first building block in a long and continuing process," stressed Shamshad Ahmad, Pakistan's UN Ambassador, who is co-chair of the Financing Conference's Preparatory Committee. Countries have agreed that there will be a follow-up process to the conference, an important point for developing countries and non-governmental organizations, who had fought for such an acknowledgement in the agreement.

The sixty-four paragraphs of the Monterrey Consensus tackle trade, aid, debt, investment, strengthening national capacities and coherence of global and regional financial structures. "Divergent positions" between the developed and developing countries remain, said Ambassador Ahmad. But these positions now have equal representation in a common ground for discussion and a coherent document that allows participating countries to follow up language with action in Monterrey.

For more information, please Klomjit Chandrapanya, 212-963-9495 or Nick Snyder, 212-963-4382, UN Department of Public Information, e-mail: mediainfo@un.org.

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24 August 2006