CURRENT NET FLOW OF RESOURCES FROM DEVELOPING WORLD TO OTHER COUNTRIES MUST BE REVERSED, SECRETARY-GENERAL TELLS HIGH-LEVEL DIALOGUE

30 October 2003
SG/SM/8974-ECO/42-GA/10198

CURRENT NET FLOW OF RESOURCES FROM DEVELOPING WORLD TO OTHER COUNTRIES MUST BE REVERSED, SECRETARY-GENERAL TELLS HIGH-LEVEL DIALOGUE

30/10/2003
Press ReleaseSG/SM/8974 ECO/42 GA/10198

CURRENT NET FLOW OF RESOURCES FROM DEVELOPING WORLD TO OTHER COUNTRIES

MUST BE REVERSED, SECRETARY-GENERAL TELLS HIGH-LEVEL DIALOGUE

Following are the remarks by Secretary-General Kofi Annan to the High-Level Dialogue of the General Assembly on Financing for Development, 30 October:

One stark fact should be on our minds throughout this timely dialogue:  in 2002, for the sixth consecutive year, developing countries made a net transfer of financial resources to other countries.  Moreover, last year’s was the largest such negative resource transfer ever:  almost $200 billion.

Of course, this is a complex question.  Aggregate numbers can mask varied performances, and there is some good news here and there.  But, even taking all subtlety and nuance into account, the overall result defies common sense.  Funds should be moving from developed countries to developing countries, but these numbers tell us the opposite is happening.  Funds that should be promoting investment and growth in developing countries, or building schools and hospitals, or sponsoring other steps towards the Millennium Development Goals, are instead being transferred abroad.  Despite promising investment opportunities in the developing world, and improved economic policies, fear and uncertainty are keeping resources from being deployed where they are most needed.

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 is the goal that brought us all together in Monterrey last year.  Given the dramatic events we have lived through since then -– from the war in Iraq and its aftermath, to the setback in trade negotiations at Cancun -– that conference might seem a world away.  Therefore it strikes me as useful, amid the current global divisions, to recall some of the spirit that prevailed just 18 months ago.

Certainly Monterrey was not free of tension and disagreement.  But we did achieve real breakthroughs there.

The one most people remember concerned official development assistance:  new commitments made in Monterrey reversed a troubling and devastating decade of decline or stagnation.

But let’s not forget Monterrey’s other messages:

-- First, the way the process broke new ground in bringing together, under the umbrella of the United Nations, all relevant stakeholders –- not least, different ministries within the same government -– to improve policy coherence.

-- Second, the way Monterrey cemented a view of poor people and poor countries as partners in the development process -– as untapped reservoirs of initiative, not objects of pity.

-- And third, perhaps most important of all, the way both developed and developing countries acknowledged their mutual responsibilities and mutual accountability, a welcome departure from the polarizing practice of pointing at what others were not doing.

The result was a new approach to dealing with issues of development finance -– an approach we must sustain.

My report on implementation of the commitments and agreements made at Monterrey was issued several weeks ago.  I hope you are ready to improve on what is very much a mixed report card.

While ODA has increased, it is still far short of what is required to meet the Millennium Development Goals.

We have all seen what trade can do to create jobs and wealth, but we also know how subsidies and tariffs are stifling the ability of poor countries to compete fairly in the international trading system and trade their way out of poverty.

Foreign direct investment in the developing world, already concentrated in fewer than a dozen countries, is down.

Too many developing countries continue to carry too much debt, making it clear that the assumptions behind the HIPC initiative were in many ways over-optimistic, and suggesting the need for an international framework for debt restructuring.

Too many remain vulnerable to swings in commodity and financial markets, underscoring the need for strengthening the international financial architecture.

And too many remain excluded from meaningful participation in the decision-making of key international bodies on economic, financial and trade issues -- a democratic deficit that undermines confidence and impedes progress.

There is no shortage of urgent work ahead in each of these areas, and I have made recommendations to help point the way forward.

I have also called for steps to help us get more out of the annual spring meeting between ECOSOC, the Bretton Woods institutions and the World Trade Organization.  That meeting needs better, more focused, preparation if it is to fulfil the special role given to it by the Monterrey Consensus as a guardian of coherence, coordination and cooperation.

Ultimately, progress depends on leadership:  leadership that can overcome domestic constraints, that recognizes the deeply fused fates of the world’s peoples, and that is committed to multilateralism as the pragmatic path to shared prosperity.

We are here again in one room –- ministers and senior officials of governments and multilateral institutions responsible for finance, trade, foreign affairs and development cooperation -– along with representatives of civil society and the private sector and other key stakeholders.  We face an uncertain economy, wide-ranging social distress and faltering trade negotiations that need a real jump-start at December’s WTO talks in Geneva.  We must stay together, stay engaged, and make this process work.

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For information media. Not an official record.