Fifty-eighth General Assembly
48th Meeting (AM)
POINTING TO ‘MIXED REPORT CARD’, SECRETARY-GENERAL URGES UN, PARTNERS
TO STEP UP EFFORTS TO IMPLEMENT DEVELOPMENT FINANCING COMMITMENTS
Referencing the international community’s “mixed report card” on development financing over the past 18 months, Secretary-General Kofi Annan today urged senior United Nations officials and finance ministers meeting in New York to help reverse the “negative balance sheet and fix the system so that all countries, and all people, especially the poorest, can benefit”.
While official development assistance (ODA) had increased to some $57 billion in 2002, the modest gains had been dramatically offset by the largest-ever net resource transfer -- some $200 billion -- from the developing world, he said, addressing the General Assembly’s High-level Dialogue on Financing for Development. The meeting kicked off yesterday and aims to provide an opportunity for a broad spectrum of stakeholders to discuss issues relating to trade, investment, aid and international financial architecture.
“Even taking all subtlety and nuance into account, the overall result defies common sense”, the Secretary-General said, adding that funds should be moving from developed countries to developing countries, but those numbers revealed the opposite was occurring. “Funds that could be promoting investment and growth in developing countries, or building schools and hospitals, or supporting other steps towards the Millennium Development Goals, are instead being transferred abroad”, he continued.
With that in mind, he said there was no shortage of urgent work ahead, recalling the recommendations he had included in his report. Ultimately, progress depended on leadership: leadership that could overcome domestic constraints, that recognized the deeply fused fates of the world’s people and was committed to multilateralism as the pragmatic path to shared prosperity.
General Assembly President Julian Robert Hunte (Saint Lucia) said the Monterrey Consensus, adopted at the 2002 International Conference on Financing for Development, held in Monterrey, Mexico, reflected the critical decisions taken “to address the challenges of financing for development around the world, particularly in developing countries”. Its distinctive approach had made it possible to bring together all stakeholders to address comprehensively key cross-sectoral issues of trade, finance and development.
The present High-Level Dialogue should constitute an open and frank discussion of all the issues challenging the successful implementation of the commitments and agreements reached at Monterrey, be they at the national, international or systemic levels, he said. Among the questions to be addressed, one must ask whether the United Nations system was positioned adequately to impact the development-funding process. Had sufficient steps been taken to improve coherence and efficiency among donor agencies? Furthermore, what should be the role of the Economic and Social Council in tracking progress made and proposing further steps to implement the Monterrey Consensus?
World Bank President James Wolfensohn said it was really no secret that much remained to be done if the aims of Monterrey were to be met. The incentive to meet the objectives of the Monterrey Consensus was the making of a better world for everyone. The industrialized countries must lead the way by living up to past commitments. But again, with the failure of the World Trade Organization’s (WTO) recent Cancun Round, lagging development assistance and abiding inequities in the international trade system, it was clear, that more cooperation, dialogue and action were needed.
Horst Kohler, Managing Director of the International Monetary Fund (IMF), said that, with the firming of prospects for a recovery in the advanced economies, led by developments in the United States, the global economic outlook was improving. That was good news for emerging market and developing country economies as well, which had also benefited from a supportive financial market environment. But he cautioned that risks remained; chief among them were the excessive dependence of the world economy on growth in the United States and the resulting global current account imbalances.
He believed resolving those imbalances in an orderly manner should be the primary objective of international economic policy. That required a cooperative approach involving all major countries and regions. Sound and sustained global growth remained the single most important condition for making decisive progress in the fight against poverty.
Also speaking this morning were the President of the Economic and Social Council, the Deputy Director-General of the World Trade Organization (WTO), the Secretary-General of the United Nations Conference on Trade and Development (UNCTAD), the Administrator of the United Nations Development Programme (UNDP), the Vice-President of Finance and Administration of the Asian Development Bank, and the Executive Secretary of the Economic and Social Commission for Western Asia (ESCWA).
The High-Level Dialogue will reconvene this evening immediately following the conclusion of the informal interactive dialogue on development financing.
The General Assembly met today to hear a number of addresses within the context of its High-level Dialogue on Financing for Development. For background on the two-day event, see Press Release GA/10186 issued on 29 October.
Statement by Assembly President
JULIAN ROBERT HUNTE (St. Lucia), President of the General Assembly, said the Monterrey Consensus, adopted at the International Conference on Financing for Development, reflected the critical decisions taken “to address the challenges of financing for development around the world, particularly in developing countries”. Its distinctive approach had made it possible to bring together all stakeholders to address comprehensively key cross-sectoral issues of trade, finance and development. Moreover, it had been ensured that implementation and follow-up of commitments taken at Monterrey would not be left to chance; the present meeting constituted the beginning of a biennial process of assessment and forward planning.
Thus far, the assessment report on implementation of the Monterrey Consensus showed mixed results, he said. On the positive side, there had been a 4.8 per cent increase in official development assistance (ODA) immediately following Monterrey. Some donor States had reached the United Nations ODA goal of 0.7 per cent of gross national product (GNP), and had committed to reaching one per cent during the period 2005-2006. Others had set time frames to reach 0.7 per cent. There were also nascent and encouraging signs that the debt crisis might be resolved, given proposals for a “comprehensive, statutory approach to restructuring the external debt of governments” and the use of collective action clauses. For their part, many developing countries and countries with economies in transition were working to create enabling environments at the national level by strengthening economic governance and enhancing democratic participation.
On the other hand, net private financial flows to a significant number of developing countries had declined or become negative, he noted. There had been little change with respect to challenges, such as market access, special and differential treatment, debt, the deteriorating situation of commodity-dependent countries, agricultural subsidies and the lack of participation of developing countries in the decision-making of international financial institutions. Special circumstances had hampered progress in meeting the objectives of the Monterrey Consensus; civil strife and military conflict, for example, hindered development in numerous vulnerable countries. Moreover, much remained to be done in allocating the additional $50 billion in ODA needed annually to achieve the Millennium Development Goals.
The present High-level Dialogue, he concluded, should constitute an open and frank discussion of all the issues challenging the successful implementation of the commitments and agreements reached at Monterrey, be they at the national, international or systemic levels. Among the questions to be addressed, one must ask whether the United Nations system was positioned adequately to impact the development funding process. Had sufficient steps been taken to improve coherence and efficiency among donor agencies? Had sufficient efforts been made to engage civil society and the private sector in partnerships, nationally and internationally? Furthermore, what should be the role of the Economic and Social Council in tracking progress made and proposing further steps to implement the Monterrey Consensus?
Statement by Secretary-General
KOFI ANNAN, United Nations Secretary-General, said there was one stark fact that should be borne in mind during the current dialogue: in 2002, for the sixth consecutive year, developing countries made a net transfer of resources to other countries. Moreover, last year’s was the largest such negative resource transfer ever: almost $200 billion. Of course, that was a complex question. Aggregate numbers could mask varied performance, and there was some good news here and there. “But, even taking all subtlety and nuance into account, the overall result defies common sense”, he said. Funds should be moving from developed countries to developing countries, but those numbers revealed the opposite was occurring.
“Funds that could be promoting investment and growth in developing countries, or building schools and hospitals, or supporting other steps towards the Millennium Development Goals, are instead being transferred abroad”, he continued. Despite promising investment opportunities in the developing world, and improved economic policies, fear and uncertainty were keeping resources from being deployed where they were needed most. “If what we say about financing for development is not to ring hollow, if financing for development means anything, we must reverse this negative balance sheet and fix the system so that all countries, and all people, especially the poorest, can benefit.”
That was the goal that had brought the international community together in Monterrey last year, he continued. Given the dramatic events that had occurred since then –- from the war in Iraq and its aftermath, to the setback in the trade negotiations at Cancun -– that Conference might seem a world away. Still, it was useful to recall that even though Monterrey was not free of tension, some breakthroughs were achieved there. Along with new commitments that reversed a decade of decline in ODA, the Monterrey process also broke new ground by bringing together all relevant stakeholders, cementing the view that poor people and poor countries were partners in the development process, and promoting the notion that both developed and developing countries acknowledged their mutual responsibilities and mutual accountability.
That new approach to dealing with the myriad issues of development finance must be sustained, he said, noting that his recent assessment on the implementation of the Monterrey commitments had revealed a “mixed report card”. While ODA had increased, it was still far short of what was required to meet the Millennium Goals. Everyone had seen what trade could do to create jobs and wealth, but it was equally clear that subsidies and tariffs were stifling poor countries’ ability to compete fairly so they could “trade their way out of poverty”. He added that foreign direct investment in the developing world was down and that too many developing countries continued to carry too much debt, making it clear that perhaps the Heavily Indebted Poor Countries (HIPC) Debt Initiative had been over-optimistic and that perhaps there needed to be an international framework for debt restructuring.
He said there was no shortage of urgent work ahead, recalling the recommendations he had included in his report. He added that he had called for steps that would get more out of the annual spring meeting between the Economic and Social Council (ECOSOC), the World Trade Organization (WTO) and the Bretton Woods institutions. That meeting needed better, more focused preparation if it were to fulfil the special role given to it by the Monterrey Consensus as a guardian of coherence, coordination and cooperation. Ultimately, progress depended on leadership: leadership that could overcome domestic constraints, that recognized the deeply fused fates of the world’s people and was committed to multilateralism as the pragmatic path to shared prosperity.
GERT ROSENTHAL (Guatemala), President of the Economic and Social Council, said he was convinced that the International Conference on Financing for Development was the most significant contribution made to the development effort by the United Nations throughout its history. Only the United Nations had been capable of bringing together so many heads of State and government at the same time. Moreover, perhaps only the United Nations could have elaborated as lucid a road map for development as the Monterrey Consensus.
That Consensus had surpassed mere rhetoric in setting out what must be done, who must do it, how domestic and international responsibilities should interact, and how to organize for proper implementation, he added. The accent on partnerships reflected the spirit of cooperation fostered in the Charter of the United Nations. The Consensus offered clear guidelines for policy makers at the national and international levels, and set in place a follow-up mechanism, the perfection of which was the task presently before those assembled.
The Economic and Social Council, he continued, had held its first post-Monterrey meeting with the Bretton Woods institutions last spring and had experienced encouraging results. The general thrust of the dialogue had emphasized increasing coherence, cooperation and coordination among all stakeholders for the implementation of the Monterrey Consensus. One notable innovation had been the presence of an intergovernmental representation of the WTO.
As in all complex processes, he concluded, there had been progress, as well as setbacks. Certainly, the result of the WTO’s Cancun meeting fell into the latter category. However, in persistence, one could find success; he pledged, on behalf of all ECOSOC member countries, to do all in his power to play the role assigned to the Council within the Monterrey Consensus. That included helping to illuminate the way forward when roadblocks appeared.
JAMES WOLFENSOHN, President of the World Bank, noted that today was the first time the Bank’s President had addressed the Assembly on any subject. But the financing for development partnership made continued cooperation and coordination between the two bodies critical. By way of early observation, he said the Assembly’s work, debates and discussions on issues, such as sustainable development, poverty eradication and the environment following Monterrey, had given the Bank and other international financial institutions a good idea of where the implementation process stood.
And while there had been slight increases in ODA following Monterrey, and some significant resource flows had been identified during the past year, it was really no secret that much remained to be done if the aims of Monterrey were to be met, he said. The incentive to meet the objectives of the Monterrey Consensus was the making of a better world for everyone. The industrialized countries must lead the way by living up to past commitments. But again, with the failure of the WTO recent Cancun round, lagging development assistance and abiding inequities in the international trade system, it was clear that more cooperation, dialogue and action were needed.
The World Bank was particularly concerned with the imbalances that existed, especially regarding the amounts of assistance provided to developing countries. The statistics were troubling, such as instances in which some $800 billion had been spent for defence budgets while only $56 billion went to development assistance. It was necessary for all countries and international institutions to increase their effectiveness, and to build a more coordinated effort. The Bank’s desire was to work closely with the United Nations system and its friends in civil society and the private sector. He believed that there had been progress, but much remained to be done.
HORST KÖHLER, Managing Director of the International Monetary Fund (IMF), said that, with the firming of prospects for a recovery in the advanced economies, led by developments in the United States, the global economic outlook was improving. That was good news for emerging market and developing country economies, as well, which had also benefited from a supportive financial market environment. But he cautioned that risks remained; chief among them were the excessive dependence of the world economy on growth in the United States and the resulting global current account imbalances.
He believed resolving those imbalances in an orderly manner should be the primary objective of international economic policy. That required a cooperative approach involving all major countries and regions. Such an approach had to strengthen the domestic forces of growth, particularly in Europe and Japan, building on the new momentum for structural reform. Sound and sustained global growth remained the single most important condition for making decisive progress in the fight against poverty. In the Millennium Development Goals, the international community now had measurable objectives. The two pillars of the Monterrey Consensus -– reflected also in Africa’s own New Partnership for Africa’s Development (NEPAD) –- provided a common policy framework defining the responsibilities of the developing countries and of the international community in working towards those objectives.
The IMF, he continued, would continue to play its role in implementing the Monterrey Consensus. In its work with low-income countries, the Fund was concentrating on its core areas of competence: helping them establish a framework for sound macroeconomic policies and institutions. To that end, it had reduced the scope of its conditionality by focusing it on those areas that were central to achieving key macroeconomic objectives. Looking ahead, the Fund was engaged in a comprehensive consultation with its members, donors, and civil society to guide it in its future work with low-income countries. The key objective was to ensure that its engagement complemented that of other development partners in working towards a common goal: decisive progress towards achieving the Millennium Goals as a concrete contribution in the fight against poverty. However, he stressed that the Monterrey Consensus extended beyond poverty alleviation, and was also about building a stronger international financial system that helped all countries seize the benefits of globalization.
The IMF's effectiveness as a cooperative institution depended on all members having an appropriate voice and representation, he explained. With that objective, the Fund had recently taken several steps to bolster the capacity of Executive Directors’ offices of developing and transition countries, aimed at enhancing their effective participation in policy formulation and decision-making. More than ever, he said, the quest for global solutions to global problems required cooperation for the global common good. The Monterrey Consensus was the international community’s joint policy framework in working towards achieving the Millennium Goals. In that effort, all development partners needed to do their part. The advanced economies needed to improve market access, reduce trade-distorting subsidies, and provide more -– and better-coordinated -– financial assistance. Developing countries needed to stay the course in strengthening economic policies and good governance. Steadfast implementation was the key to decisive progress in the common fight against poverty.
FRANCISCO THOMPSON-FLORES, Deputy Director-General of the World Trade Organization (WTO), said the greatest journeys began with the thought “Where are we going?” In 2000, the world’s leaders had assembled for the Millennium Summit and mapped out the parameters of a better world. Two years later they gathered at Monterrey to lay down the tools for attaining their objectives. However, that strategy would only be successful if the commitments undertaken were fully implemented. In that context, the 2001 Doha Development Agenda had provided the framework by which to empower developing countries to achieve long-term socio-economic development.
Poor countries must grow their way out of poverty, he said. And while trade could serve as an engine for that growth, developing countries faced too many obstacles in the present international trading system. In addition to redressing that situation, the international community must face up to the fact that, despite the increases in ODA after Monterrey, realizing the Millennium Goals would require an additional $50 billion dollars annually in ODA.
If governments put their mind to it, the Doha negotiations could bring huge benefits, he added, well beyond what could be accomplished in any other area of intergovernmental activity. However, the setback of the recent Cancun Round and the ultimate failure to reach agreement on the “Singapore issues”, meant that WTO members had to take collective responsibility for the outcome of that Round. Cancun had proved to be a disappointment, but it was not a collapse. The WTO was already exploring ways to move forward; the first step being to identify the areas of greatest difficulty at Cancun and to get people discussing them again.
Determined to carry forward its negotiations, yet cognizant of new pressures, he said the WTO had witnessed at Cancun the emergence of new groupings of States, united in advancing their common interests. One must ensure that the increasing activism of developing countries, which added greatly to the complexity of the negotiation rounds, was adequately recognized and reflected. Comprehensiveness of participation and substance must be the goal. The WTO must re-energize its efforts, which would require change, and as always, that process would rely on the participation of all members.
RUBENS RICUPERO, Secretary-General of the United Nations Conference on Trade and Development (UNCTAD), said that one of the most important aspects of the process that produced the Monterrey Consensus was its holistic approach to the problems of financing development. It had not, however, provided a blueprint that guaranteed economic development. It was not a point of arrival, but a point of departure for an ongoing process that must keep abreast of the rapid changes in the global economy. The challenge today to improve coherence in the implementation of the Consensus was how to combine and sequence the various aspects of the Consensus in a way that allowed progress in its implementation and to identify those areas in which the Consensus needed to be extended and amplified.
In assessing the progress made so far, it was important to bear in mind that the impetus for such conference originated in the negative net transfers of real resources sustained by many Latin American countries in the aftermath of the 1980s debt crisis -– what had come to be called the “lost decade” of development. As noted by the Secretary-General, the net financial flows in the recent past were still from the developing to the developed world. In all likelihood, this year would be the seventh year the world would experience negative net flows of financial resources from developing to developed countries, thereby suggesting the world may be in another “lost decade”. Unfortunately, some countries, such as Argentina and Bolivia, that were early in implementing the measures that were eventually included in the Consensus were now experiencing living standards far below those of the lost decade and found themselves excluded from external financing possibilities.
The one relatively bright spot in financial flows for development, he noted, was that foreign direct investment flows remained positive despite the downturn in other flows. Nevertheless, they had declined substantially, despite the fact that in the aftermath of Monterrey many developing countries had taken steps to increase their capabilities to attract and absorb increased foreign direct investment flows. Turning to trade, he stated that, as a result of the slowdown of global expansion, the growth in global trade had fallen more or less in step with the decline in capital flows. The relation was especially important for the prices of the major export commodities of the most vulnerable least developed countries, as well as for the majority of landlocked economies and small island developing States.
In addition to the necessity to restore global growth to ensure that the benefits of increased trade were shared equitably, it was necessary to resume the discussions that had commenced in Cancun to achieve the aspirations of all countries regarding the Doha Agenda. There appeared to be a very clear interrelationship between global growth and the growth of trade and finance that the Consensus considered as the basis for increased financial resources for developing countries. That was clearly an area in which greater policy coordination and consistency could produce more general benefits. As part of the partnership between developed and developing countries that produced the Consensus, everyone needed to work harder to develop policies consistent with the dual goals of domestic and global stability.
MARK MALLOCH BROWN, Administrator of the United Nations Development Programme (UNDP), said today’s world was more unequal and more insecure than ever. In a world of 6 billion people, 1 billion owned 80 per cent of global wealth, while another 1 billion struggled to survive on less than one dollar per day. Poverty on that scale was no longer inevitable. The world possessed the means to achieve the Millennium Goals of halving poverty, removing hunger, educating every boy and girl and stemming the global crisis in health and environment by 2015. What was too often missing was the political will to accomplish those goals.
At the Monterrey Conference, a new political Consensus had been forged on the way forward in financing development and eradicating the scourge of extreme poverty, he noted. A “global deal” had been struck, built around a partnership in which sustained political and economic reform, more private investment and better governance in developing countries would be matched by direct support from the developed world in the form of trade, aid and investment. However, although the decade-long decline in ODA had been reversed after Monterrey, as ODA rose to $57 billion in 2002 with the Organization for Economic Cooperation and Development (OECD) projections showing an additional commitment of $16 billion by 2006, the total of commitments made at Monterrey would still fall far short of the $100 billion in ODA needed annually to achieve the Goals.
The key to the commitments made at Monterrey had been the agreement by all parties on the importance of country ownership reflected in nationally owned development strategies, he continued. The United Nations system, under the overall coordination of the United Nations Development Group, had worked hard to implement the Consensus, including through following up the commitments to streamline donor procedures and practices based on the principle of full country ownership made at the Rome High-level Forum on Harmonization in February 2003. Among other efforts, the UNDP was working to coordinate, through the resident coordinator system at the country level, the Common Country Assessments and United Nations Development Assistance Framework (UNDAF). The UNDP was also working closely with the World Bank to integrate the Goals into nationally owned Poverty Reduction Strategy Papers.
The success or failure of Monterrey, he concluded, depended fundamentally on a larger vision of global partnership. While constituting the bottom-up approach to development, the Goals were also inescapably part of the global commitment to progress between developed and developing countries, struck at the highest political levels. No matter how successful the reform efforts of developing countries, how coordinated the support of development agencies and civil society, the first seven Goals could not be achieved if donors’ commitment to Goal 8 on development assistance, investment and trade, was not met. The failure at Cancun to agree on the policies needed to create a pro-poor, legitimate global economic strategy thus constituted a step back in implementing Monterrey. All must now commit to renewing the spirit of partnership, to forging ahead on the common goal to “eradicate poverty, achieve sustained economic growth and promote sustainable development as we advance to a fully inclusive and equitable global system”.
JOHN LINTJER, Vice-President of the Asian Development Bank, on behalf of the African and Asian Development Banks, said that the two Banks had a close partnership with and strong representation from developing member countries, which enabled continued leadership in areas such as governance, anti-corruption and gender in development. Regional banks were mandated to support integration and cooperation. For example, subregional trade facilitation was an important element of the Asian Development Bank, and countries in that region had pulled themselves out of poverty on the basis of it. Moreover, regional banks supported the development of regional public goods by providing cross-country approaches for tackling disease, combating the trafficking of women and children in Asia, and regional facilities for exchange of business and trade information in Latin America.
The African and Asian Development Banks were undertaking steps with regard to their commitments at Monterrey, including aligning their programmes with country-driven poverty reduction strategies, aimed at achieving the Millennium Goals and improving systems for monitoring and evaluation at all levels. In addition, they were harmonizing operational procedures with the Bretton Woods institutions, bilateral donors and the United Nations system. In terms of debt and development sustainability, external financing was necessary to achieve the Millennium Goals in low-income nations, particularly in Africa. Donor commitment to financing a grant facility in the most recent replenishment of the African Development Fund was an important step in that direction.
Regional and country-specific agendas in the areas of domestic finance and trade had been expanded, he continued. In Asia and Latin America, foreign direct investment, the mobilization of domestic resources and growth through trade would be important elements of financing for development. Regional development banks were working with countries to improve their business environments, strengthen the rule of law and improve tax and customs facilities. In addition, they were working to strengthen governments in the planning, use and accountability of those resources. The Monterrey Consensus had helped give a place and voice for regional banks, and there were plans to utilize that space to strengthen regional perspectives in ongoing discussions.
MERVAT TALLAWAY, Executive Secretary of the Economic and Social Commission for Western Asia (ESCWA), said that the regional commissions remained active in support of their member States to promote successful negotiations in the Doha Round and to facilitate membership in the WTO for those developing countries that remained outside its orbit. Perhaps of greater significance was the fact that because of in-house multidisciplinary capacities, the regional commissions were uniquely well-placed to integrate implementation of the Monterrey Consensus with that of other global conferences, such as the Johannesburg World Summit on Sustainable Development, and to truly treat it as a development agenda.
She said the global analyses and aggregates, while important, often provided an incomplete picture and hid some of the stark realities, thereby necessitating regional and subregional approaches. Proximity to the field enabled regional commissions to also undertake more in-depth analyses and facilitate exchange of experiences, both regionally and interregionally. She noted that, with the recent downturn in the global economy, the situation in many developing countries had grown worse. With the exception of East, South-East and South Asia, in every other region, the poverty situation had deteriorated. Trade was underlined as the engine of growth in the Monterrey Consensus. Therefore, it was of utmost importance to improve market-access for the developing countries. That required the elimination of trade-distorting subsidies and the reduction of support measures for agriculture in developed countries. In terms of financial cooperation, she stressed that ODA should be increased markedly from current levels to stand a chance of achieving the Millennium Goals by 2015.
Development needed financing, investment and, most importantly, opportunities for trade, none of which, unfortunately, were much forthcoming to most of the developing regions. National savings, foreign investment, as well as the growth rate in general had decreased due to conflict, war and political instability in her region. Moreover, all the developing regions had been experiencing even higher levels of public debt, which signalled significantly less manoeuvrability in terms of public policy. But there was some good news. There were some new positive initiatives at the regional and subregional levels. In June 2003, 11 Asia Pacific central banks agreed to pool $1 billion of their foreign exchange reserves to establish the Asian Bond Fund. Also, under Africa’s NEPAD, the efforts of several countries to create an enabling atmosphere for sustainable development had received further impetus.
She pointed out that in all the regions and subregions, economic integration movements were gaining new momentum, and there was wider acknowledgement that a system that relied on networks of global and regional institutions was both more efficient and equitable, for which the United Nations provided the ideal platform. She called for the generation of new momentum to accelerate the pace of development at the country, regional and global levels, and stressed that the interests and needs of the developing countries must be kept at the forefront.
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