|Department of Public Information • News and Media Division • New York|
SPECIAL MEETING OF GENERAL ASSEMBLY, 23-24 OCTOBER,
TO ASSESS PROGRESS ON DEVELOPMENT FINANCING
Finance Ministers, Development Ministers and Governors of Central Banks will meet tomorrow at the General Assembly to assess the implementation of the Consensus on financing for development reached in Monterrey in 2002.
The High-Level Dialogue on Financing for Development, to be held on 23 and 24 October under the chairmanship of General Assembly President Srgjan Kerim (The former Yugoslav Republic of Macedonia), will hear statements, among others, by United Nations Secretary-General Ban Ki-moon, Economic and Social Council President Dalius Čekuolis (Lithuania) and senior officials of the World Bank, the International Monetary Fund (IMF), the World Trade Organization, the United Nations Conference on Trade and Development (UNCTAD) and the United Nations Development Programme (UNDP). At least 34 Ministers of Finance and Development from both donor and developing countries are expected to attend.
The Dialogue will involve all relevant participants in the financing for development process -- Governments, business, civil society and multilateral financial institutions. The event, held just after the annual meeting of the IMF and the World Bank in Washington, D.C., over the weekend, will contribute to the preparation of the Follow-up International Conference on Financing for Development to be held in Doha, Qatar, in the second half of 2008.
At the first International Conference on Financing for Development, held in Monterrey, Mexico from 18 to 22 March 2002, more than 50 Heads of State and Government and several Ministers of Finance, Foreign Affairs, Development and Trade adopted the breakthrough Monterrey Consensus.
In the Monterrey Consensus, developing countries took primary responsibility for their own development and for mobilizing domestic resources. Developed countries agreed to provide assistance and promote an international environment conducive to development. Since its adoption, the Consensus has become the major reference point for international cooperation in development financing.
The Consensus covers six major thematic areas -- mobilizing domestic financial resources; mobilizing international resources such as foreign direct investment (FDI) and other private flows; international trade; international financial and technical cooperation for development; external debt; and systemic issues, including the coherence of the international monetary, financial and trading systems in support of development. The High-Level Dialogue will address the six areas.
The High-Level Dialogue will open on 23 October with two plenary meetings in the morning and afternoon.
Six round tables on the morning of 24 October will address the thematic areas of the Monterrey Consensus. An informal interactive dialogue on 24 October afternoon will focus on the implementation of the Monterrey Conference outcome and the link between financing for development and the achievement of internationally agreed development targets, including the Millennium Development Goals.
Side events will address such topics as illicit financial flows and their impact on development, South-North capital flows, and financing for development tools to mobilize private investments. The list of side events is available at www.un.org/esa/ffd.
The President of the General Assembly will make a concluding statement and subsequently prepare a summary of the High-Level Dialogue as an input to the preparations for the 2008 Review Conference in Doha.
This third General Assembly High-Level Dialogue on Financing for Development, on the theme “The Monterrey Consensus: status of implementation and tasks ahead”, follows up on the High-Level Dialogues held at United Nations Headquarters in October 2003 and June 2005. The 2002 International Conference mandated the General Assembly to hold a biennial High-Level Dialogue as the intergovernmental focal point for the follow-up to the Conference and related issues.
The High-Level Dialogue will have before it the Secretary-General’s report Follow-up to and implementation of the outcome of the International Conference on Financing for Development (document A/62/217). The report paints a mixed picture, with considerable advances in some areas, and modest progress, stagnation or retrogression in others.
According to the report, the evolution of the world economy has shown general improvement, and no new significant financial crises, such as those experienced in the late 1990s, have emerged. But, there are widespread concerns that the fruits of development and growth are not fairly distributed and, even more disturbing, that there seems to be a growing trend towards a higher concentration of income and wealth.
Since Monterrey, most developing countries have markedly improved their macroeconomic and fiscal management, the report notes. External debt indicators have improved in most countries and the inflow of private resources has grown substantially. The trend of decreasing official development assistance (ODA) has been reversed and there has been an increase in grants and new resources, as well as substantial debt forgiveness. But 70 per cent of debt-creating flows and FDI still concentrate on a dozen or so developing countries.
The present conjuncture, characterized by generally favourable economic conditions, provides a unique opportunity for actions based on a long-term vision, the report says. There is ample room for launching domestic and international reforms to consolidate the foundations for widespread economic growth, sustainable development and social progress.
A number of recommendations are contained in report. Developing countries should diversify their financial sectors by creating markets for long-term debt in domestic currencies, including through domestic currency bonds. They should increase revenue by diversifying the tax base, strengthening tax administration and making their tax and revenue systems more progressive, diverse and stable. Venture capital funds should be used to expand financing for small and medium-sized enterprises.
To prevent financial crises, developing countries should be able to use “market-based” capital regulations to curb excessive short-term capital inflows, with long-term investors exempt from such restrictions, the report recommends. Regulations and mechanisms should encourage more stable private capital flows and reduce the risk of abrupt changes. Local currency borrowing by developing countries and countercyclical financial instruments, such as bonds linked to gross domestic product and commodity prices, would help to mitigate risks associated with cyclical international private capital flows. In particular, international and national authorities should increase the transparency and regulation of hedge funds and derivative instruments.
Trade policies should stimulate competitive supply capacity, including through investment by the private sector, according to another recommendation. Developing countries should also increase their exports of services, due to their enormous potential for employment generation and export earnings.
In the area of external debt, the report recommends a shift in debt restructuring aiming at self-regenerating growth in debt-distressed countries, including the use of grants and the possibility of total debt cancellation. Without growth and resources for poverty alleviation, the debt overhang of many countries will continue to prevent development. Debt relief for heavily indebted poor countries needs to be supported in full by bilateral and commercial creditors.
A report of the Secretary-General on the International financial system and development (document A/62/119) reviews recent trends in international official and private capital flows to developing countries, and recent efforts to strengthen international institutions concerned with expanding the flow and stability of development financing. The paradox of the increasing net outward financial flows from developing to developed countries persisted in 2006, growing from $533 billion in 2005 to $662 billion in 2006. The size of net transfers from countries with economies in transition also increased in 2006, from $112 billion to $133 billion.
The report offers policy conclusions to address this situation. Governance reforms and improved multilateral surveillance should be a first step towards developing a broader-based consultation process. A stronger multilateral mechanism of surveillance and policy coordination is needed. Governance reforms should seek to solve the problem of underrepresentation of developing countries in global financial institutions.
Multilateral surveillance remains at the centre of crisis prevention efforts, the report states. If the proposed reform of the IMF surveillance process is to be effective, all new surveillance mechanisms should enhance focus, symmetry, objectivity, equity and even-handedness. Countries should use regional funds and mechanisms for surveillance and policy consultations to complement the role of the IMF. Standards and codes should be consistent and flexible enough to be applied in countries at different stages of financial development. All parties, including private entities, should be more involved in the work of international regulatory and standard-setting bodies.
A report of the Secretary-General’s on Recent developments in external debt (document A/62/151) reviews the external debt of developing countries and the related phenomenon of capital flows from developing to developed countries. It analyzes the role of new borrowing strategies and new debt instruments, and reviews progress in the Highly Indebted Poor Countries Initiative and developments in Paris Club rescheduling. The report points to several issues related to the debt sustainability framework for low and middle-income countries, and discusses potential vulnerabilities arising from the increasingly important role of structured finance.
Another report of the Secretary-General, on Follow-up to and implementation of the Monterrey Consensus of the International Conference on Financing for Development: the regional dimension (document A/62/190), reviews the follow-up to the International Conference by region. Prepared by the five United Nations Regional Commissions, it reflects progress in such areas as mobilization of domestic and international resources, ODA, technical cooperation, FDI and private financial flows for development. It also analyzes the regional dimension of improving the coherence of the international monetary, financial and trading systems.
Staying engaged with all major interested parties at the regional level through continued discussions is critical, the report says. The Regional Commissions have been leading in organizing follow-up activities to the Monterrey Conference, and these activities have raised awareness of the aims of the Monterrey Consensus, and of the need to adopt policies and regulations that promote development finance and strengthen cooperation.
A report of the Secretary-General on International trade and development (document A/62/266)covers recent developments in international trade and the trading system, particularly the World Trade Organization Doha work programme and their implications for developing countries.
The Doha Round and the multilateral trading system stand at a critical juncture, according to the report. An agreement on modalities on agriculture and non-agricultural market access is urgently needed to conclude the Round by the end of 2007. The Round must deliver on its development promise, including through substantial market access and market entry in agriculture, industrial products and services for developing countries. A balanced, equitable and development-oriented outcome can improve the prospects for economic growth and development, and contribute to achieving the Millennium Development Goals.
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