GENERAL ASSEMBLY CONCLUDES HIGH-LEVEL DIALOGUE ON FINANCING FOR DEVELOPMENT; LAYS GROUND FOR REVIEW OF PLEDGES MADE IN 2002 ‘MONTERREY CONSENSUS’

25 October 2007
GA/10647

GENERAL ASSEMBLY CONCLUDES HIGH-LEVEL DIALOGUE ON FINANCING FOR DEVELOPMENT; LAYS GROUND FOR REVIEW OF PLEDGES MADE IN 2002 ‘MONTERREY CONSENSUS’

25 October 2007
General Assembly
GA/10647
Department of Public Information • News and Media Division • New York

Sixty-second General Assembly

Plenary

35th Meeting (AM)

GENERAL ASSEMBLY CONCLUDES HIGH-LEVEL DIALOGUE ON FINANCING FOR DEVELOPMENT;

LAYS GROUND FOR REVIEW OF PLEDGES MADE IN 2002 ‘ MONTERREY CONSENSUS’

 

With negotiations set to begin in 2008 on ways to breathe new life into a sluggish development financing partnership struck five years ago between rich and poor countries in Monterrey, Mexico, General Assembly President Srgjan Kerim today urged cooperation among all United Nations members working to put into concrete terms what they expected from Governments, civil society, business and global financial institutions in the areas of trade, aid, debt relief and investment.

Wrapping up the Assembly’s three-day ministerial-level dialogue laying the ground for a review of anti-poverty promises pledged by world leaders in the 2002 Monterrey Consensus, Mr. Kerim said that he had decided that the process could be most effectively carried forward by the facilitators he appointed late last month -- Ambassador Maged Abdelaziz of Egypt and Ambassador Johan Løvald of Norway.  The two senior diplomats are charged with coordinating procedural matters in the run-up to the review of the International Conference on Financing for Development, which will be held in Doha, Qatar, in the second half of 2008.

“In the spirit of Monterrey, I encourage all Member States to give their full support and cooperation to the facilitators,” he said, telling the Assembly that he had been encouraged by the “richness of the debate” over the past three days, and that the Assembly was now set to begin consultations on a procedural draft resolution laying out the modalities of the Doha conference.  He urged delegations to work in an “open, transparent and inclusive manner” with the facilitators as they worked to conclude agreement on the text, which would be presented to the wider plenary by the end of the current session.

Mr. Kerim, who convened the Assembly’s High-level Dialogue, said early in his presidency that reviewing implementation of the Monterrey Consensus -- in which developing countries took primary responsibility for mobilizing domestic resources and developed countries agreed to promote an environment conducive to that effort -- was critical because the landmark agreement was “the principle multilateral basis establishing a global partnership to achieve the Millennium Development Goals”.  The Consensus’ six major focus areas are:  mobilizing domestic financial resources; mobilizing international resources; international trade; international cooperation for development; external debt; and the coherence of the international monetary, financial and trading systems.

Today, he briefly highlighted a few key topics that the more than 100 delegations touched on during the debate, which drew the participation of finance ministers, senior officials from the Bretton Woods institutions and other stakeholders.  Among other things, he said, many speakers had expressed their concern with the growing economic inequalities, not only between countries, but also within them, in the context of globalization, as well as in light of the current instability in global financial markets.

On the domestic front, according to several speakers, there was a crucial need to enhance tax revenues and create more distributive tax systems.  Mr. Kerim, who is from the former Yugoslav Republic of Macedonia, said that this would not only help reduce disparities, but also increase public spending on basic infrastructure services.  In the same vein, good domestic governance, effective and transparent regulatory mechanisms, and the rule of law were stressed as key to the development financing agenda by many participants.

For a large number of representatives, the current trends in foreign direct investment in developing countries had been encouraging.  Yet, the Assembly President said, a major challenge remained:  how to promote foreign investment in lower-income countries or those with less stable governance in order to boost productive economic activity.

He went on to say that a substantial number of the participants in the Dialogue had reiterated the need to achieve the agreed 0.7 per cent of gross domestic product official development assistance target and to deliver on commitments to increase aid, including to Africa, to maintain the overall credibility of the Monterrey Consensus, and as an essential prerequisite to achieving the Millennium Goals.  In that regard, many speakers supported further work in developing innovative sources of financing, he added.

Among other recurring issues, he said that several participants noted that much had been done to increase debt relief.  But, at the same time, long-term sustainability continued to remain a significant policy issue for a number of developing countries, especially the least developed.  He also noted that many delegates had reiterated the need to improve the participation of developing countries in global economic and financial decision-making mechanisms, and the urgent need to link climate change adaptation and mitigation issues to the development financing process.

Finally, he said that he had been encouraged by the participation and contribution of key institutional stakeholders, including intergovernmental agencies, the private sector and civil society.  One of the highlights of the Dialogue had been six round tables yesterday on the thematic areas of the Monterrey Consensus.  An informal interactive dialogue focused on implementation of the Consensus and the link between financing for development and the achievement of internationally agreed development targets.  Mr. Kerim praised the richness of these discussions and the diversity of their participation, saying “The engagement of all partners is crucial on the road to Doha.”

Participating in today’s session were representatives from Kazakhstan, Jamaica, Sudan, Senegal, Kenya, Saint Vincent and the Grenadines, Suriname, Lebanon and Cameroon.

Also speaking were the Observers from Palestine, the European Commission and the Inter-Parliamentary Union.

The President expressed his appreciation to Albania and Tajikistan for having graciously decided not to take the floor at today’s meeting.

The General Assembly will reconvene at 10 a.m. Monday, 29 October, to take up the annual report of the International Atomic Energy Agency (IAEA).

Background

The General Assembly convened this morning to conclude its High-level Dialogue on Financing for Development.

Statements

BYRGANYM AITIMOVA ( Kazakhstan) said globalization was a phenomenon that, on one hand, had sped economic processes -- offering opportunities for economic and social development in all countries -- and, on the other, highlighted the divide between rich and poor countries.  That divide, if ignored, could become a threat to the world’s peace and stability.

It was recognized that enhanced financial flows were critical to fulfilling national development goals, she explained, and Kazakhstan fully agreed that nationally owned development strategies, adequate policy space and greater overall coherence, including between donors and recipients, were critical elements to attaining agreed development goals.  Further, strengthening international trade was an important factor in financing for development, as that would produce certain benefits for all countries.

She said Kazakhstan was committed to reaching the Millennium Development Goals and was implementing its long-term development strategy “Kazakhstan-2030”, as the country wished to join the ranks of the world’s most competitive economies.  To that end, her Government had implemented programmes to increase production of value added goods and services, and lay the foundations for a high-tech economy.  Moreover, her Government had improved fiscal management, and made considerable investments in other developing countries through bilateral and multilateral channels.

Her Government strongly believed that the interests of landlocked developing countries should be taken into account when developing transit transport capabilities, promoting trade, and gaining access to markets.  She hoped today’s meeting would help achieve development objectives laid out in the Millennium Declaration and help prepare for the conference at Doha next year.  Improvement in coordination among Governments, international organizations and the private sector was needed, and the United Nations had an important role to play in that context.

RAYMOND WOLFE ( Jamaica) said that it was important to consider the diverse needs of developing countries in their vulnerability to global economic and financial instability, rising commodity prices and natural disasters.  The rule of law, sound economic policies and participatory democratic institutions were objectives applicable both at the country level and for the effective functioning of the global economy.  Each country was responsible for its own development, but domestic measures needed a supportive global environment to succeed.  He expressed concern regarding financing for development, particularly for meeting the 0.7 per cent target and for increasing flow of foreign direct investment to developing countries, which currently was flowing more often in the opposite direction.

He stressed the need to resolve the external debt problem, including for middle-income developing countries, and called for reform of the Bretton Woods institutions.  During the Doha trade negotiations, due regard must be given to the principles of special and differential treatment.  Regarding the United Nations system, he urged greater collaboration with the Bretton Woods institutions and the World Trade Organization, as well as the United Nations Conference on Trade and Development (UNCTAD), and also supported the Economic and Social Council’s efforts, through the Development Cooperation Forum, to strengthen implementation of the Monterrey Consensus, noting that duplication of effort, in that area, should be avoided.

AHMED MEKKI AHMED ( Sudan) said that members of the Development Assistance Committee had made various promises to increase their official development assistance, both before and at the Monterrey Conference.  Many of those promises still remained unfulfilled and Africa was now off track in meeting the internationally agreed development goals, including the Millennium Goals.  On a national level, the amount of official development assistance received had been declining since the early 1990s due to “the unilateral unfair sanctions imposed on Sudan”.  Despite those constraints, his Government continued to implement macro and microeconomic reform policy packages to bring down inflation and to improve the quality of life of the poor.  Among the projects it had implemented was the “Community Development Fund” to provide microcredit loans to the poor and projects to expand the microfinance sector.

“All these efforts are impeded by the country’s huge external debt that stands at more than $27 billion,” he said.  Half of that debt was from accumulated arrears and those arrears were now limiting the country’s access to external development financing.  Despite seven years of successful implementation of the Staff Monitored Programme, his Government had not benefited from any debt relief initiatives.  The lack of concessional funding due to protracted debt arrears was contributing to his country’s failure to achieve development goals.  Along with debt relief, an open, rule-based, non-discriminatory trading and financial system which addressed the special needs of the least developing countries was necessary.  South-South cooperation should be strengthened to further enhance economic partnerships.  In conclusion, he said that, while Monterrey highlighted the role of internal conditions for mobilizing resources, the role of international assistance remained a key factor, which needed to be better addressed in the future.

PAUL BADJI ( Senegal) focused on the four principle sources of financing for development:  foreign direct investment, trade, official development assistance and debt relief.  Citing the Secretary-General’s report, he said that for developing countries, foreign direct investment had increased from 18 to 48 per cent of the total financial input between 1970 and 2006.  However, that investment had been concentrated in certain regions, leaving a disparity among countries in the same region.

On trade, he highlighted the report’s focus on the fact that developing countries were still seriously hampered in their efforts to gain access to markets, noting that efforts to liberalize the international trade system had been limited.  On official development assistance, the situation was hardly better, as countries were still far from achieving the 0.7 per cent goal and flows had dropped in 2006.  In the same vein, on foreign debt, he said debt relief had only achieved a limited effect.  Debt relief measures, however salutary they might be, were not enough.

Due to such circumstances, the four main sources of financing for development had been constrained and poor results seen since 2002.  The promises of Monterrey would only be fulfilled if States found instruments to mobilize resources to supplement those sources.  The Leading Group on Solidarity, which included 54 member countries, was tasked with testing and disseminating innovative financing, noting that potential mechanisms included the Digital Solidarity Fund, which was a New Partnership for Africa’s Development (NEPAD) initiative to combat poverty.  Also, his Government had proposed the Wayde formula for dealing with shocks stemming from high oil prices.  That formula would identify profits made by oil companies and the surcharge imposed on oil importing countries.

Five years after Monterrey, economic and social well-being was an elusive goal, he said.  The Millennium Development Goals appeared increasingly unattainable and poverty was gaining ground.  Countries of the Leading Group on Solidarity, which included Senegal, called upon States to consider implementing innovative financing mechanisms.

ZACHARY D. MUBURI-MUITA ( Kenya) said that the Monterrey Consensus provided the framework for financing for development at all levels and he called on the developed countries to meet their commitments.  Kenya had undertaken wide-ranging reforms, but was constrained in raising resources domestically.  He noted that official development assistance and foreign direct investment to Africa had been declining since the 1990s.  Further, he noted that resources had been flowing from developing to developed countries in the form of foreign reserves and called for stiffer penalties for multinational companies that engaged in corruption, tax evasion, transfer pricing and other unethical business practices.

Speaking of the burden of external debt, he said that Kenya had not benefited from the Heavily Indebted Poor Countries (HIPC) Initiative as the country’s debt was perceived as sustainable, which was not the case.  He called for unconditional debt relief for developing countries.  He also said that the Bretton Woods institutions should be reformed to be more responsive to the needs of developing countries.  He hoped that the Development Cooperation Forum would work towards reform of international financial institutions to ensure a greater voice, participation and representation of developing countries and to improve corporate governance.

CAMILLO GONSALVES (Saint Vincent and the Grenadines), recalling that the goal of the Monterrey Consensus was to eradicate poverty and promote sustainable development, noted that today the question was whether States had lived up to those pledges.  States must concede that, despite some bright spots, the post-Monterrey process had been “inauspicious”.  Indeed, the Consensus could not be viewed through the prism of “balance sheet slight of hand”, and he urged States to truly focus on improving the lives of millions living in poverty.

There was no one-size-fits-all approach to development, he continued, adding that States must abandon the “monolithic” processes to financing that had doomed many initiatives.  For example, farmers in his country who had sought financing for agricultural diversification today found themselves mired in externally imposed red tape.  They were on the front lines of inequitable agricultural subsidies and no closer to much-needed development assistance.

Moreover, most middle-income and small island developing States had not been given a fresh start at Monterrey, he explained.  They had been left with two exacting masters:  foreign creditors -- for whom debt servicing was paramount -- and domestic populations, for whom social investments were urgently required.  There was a vexing conundrum in that indebted countries were told to clean up their domestic acts as a precondition for debt relief, while middle-income countries were told that their marginal competence precluded them from receiving it.  He likened those middle-income States to Sisyphus, condemned to pushing the “debt boulder” uphill.

His country also bemoaned trade-distorting subsidies, as they were investments in instability.  Dealing with the consequences of them required more than just meeting the 0.7 per cent target.  Moreover, the concept of official development assistance at 0.7 per cent had been developed prior to the challenges of climate change and the digital divide.  The question, today, was whether that amount was enough; not whether it was achievable.  Saint Vincent and the Grenadines was heavily dependent on official development assistance and technical cooperation, and was grateful for the support it had received.  He recognized the benefits of South-South cooperation and, in that context, paid tribute to Cuba, Venezuela and the Republic of Taiwan, despite its exclusion from the United Nations, as exemplary global citizens.  “Talk is cheap and the road to hellish underdevelopment is paved with good intentions,” he said, calling on States to deliver on their 2002 promises.

RAYMOND LANDVELD (Suriname), aligning himself with Pakistan’s statement on behalf of the “Group of 77” developing countries and China, underscored the importance of the Monterrey Consensus as a comprehensive accord outlining internationally agreed development goals.  He strongly believed that the United Nations was the principal forum for discussing the matter.  Although the Secretary-General’s report had mentioned improvements, it also had highlighted unresolved issues, including:  the unequal distribution of wealth; increasing poverty worldwide; emerging protectionism; a lack of progress in trade talks; and declining levels of development assistance.

His Government remained committed to realizing targets laid out in the Millennium Declaration, he explained.  Indeed, Suriname had achieved 5 per cent annual economic growth for the last five years, resulting from new investments in the mining sector and implementation of stringent macroeconomic policies, among other things.  However, that success was fragile, as it depended on a limited number of sectors.  The situation was compounded by the fact that most of the population lived along the coastal zone.  It was indisputable that sea-level rise would be catastrophic for his country, and it was, therefore, crucial to include such issues in the Doha conference’s agenda next year.  Further, he called on States to find innovative ways to finance climate change adaptation and mitigation strategies.  He also acknowledged the private sector’s contribution to development financing.

On trade, he urged States to place development at the centre of the international agenda.  To bring about development, he called for introducing a monitoring mechanism; continuing efforts to increase aid effectiveness; strengthening international financial institutions; supporting the poorest countries in their integration efforts; supporting innovative finance initiatives; and supporting South-South cooperation.

HASSAN SALEH ( Lebanon) said that, on the national level, countries should pursue legal and regulatory reforms that would create a good environment for private economic activity in constructive synergy with the public sector, to stimulate growth and development.  Internationally, he noted that 70 per cent of foreign direct investment flowed to a limited number of countries, primarily to the oil sector.  He said that South-South cooperation was increasing as a source of foreign direct investments, but was not a substitute for North-South flows and should be enhanced by triangular cooperation.  He called for the Doha Round to redress imbalances in the multilateral trading system by providing real market access and entry for developing countries, and expressed concern for the appearance of new forms of protectionism.

He expressed concern for the decline, in 2006, of official development assistance, and said that that was among the most important tools for financing development.  He did not consider that debt relief represented additional resources for development, and called for developed countries to increase official development assistance apart from debt relief, technical and emergency assistance, and to meet their commitment to contribute 0.7 per cent of their gross national products.  Developed countries also needed to effect major debt relief, restructuring and cancellation.  He also supported reform of the international financial institutions to give greater participation and voting power to developing countries.  Innovative sources must also be found to finance development.

MARTIN BELINGA-EBOUTOU ( Cameroon) shared the concerns of others for the need to redouble efforts to move from words to action.  His delegation placed today’s debate in the context of Africa and the raison d’être of the United Nations.  Noting that the General Assembly last week had reviewed conditions for peace and development in Africa, he said it was a happy coincidence that financing was being discussed today.  He thanked partners that had called for cancelling bilateral and multilateral debt for Africa.  Work needed to be done to comply with the 2015 deadline for achieving the Millennium Development Goals.

The lack of progress in the Doha Round of trade negotiations was a major problem and his Government expected a high level of assistance.  The Group of Eight (G-8) should urgently increase its aid to Africa.  In that same context, he invited them to create a series of innovative financing mechanisms to accommodate shortfalls in core budget credits.  Those should prioritize Africa’s needs and include provisions that were adapted to them.

Recalling the dream of those who had founded the United Nations to build a world of peace, he said today’s debate was about a peace that remained threatened by poverty.  Moreover, the Monterrey commitments dealt with financing peace, which meant that countries “stay the course”.  To do that, political will and solidarity was needed.  That solidarity should not be limited to individual commitments that were continually postponed; it must be shown “in acts and facts”, that responded to the needs of southern countries.  There was no choice:  today’s economic asymmetry could no longer be tolerated, as the survival of humankind was at stake.  What future for prosperity was there in a world where most lacked basic necessities? he asked.

RIYAD H. MANSOUR, Permanent Observer for Palestine, supporting Pakistan’s statement on behalf of the Group of 77 and China, said the Middle East continued to confront problems on its path to development.  Noting that the Millennium Development Goals were linked to the Monterrey process, he said the role of financing for development was crucial to freeing people from absolute poverty.  Observers had agreed that instability in the Middle East had been the main cause of the region’s weak integration into the international economy.   Palestine had an important place in the region and had been an aid recipient over the years.  Thanks to that aid, and the motivation of the Palestinian people, Palestine had made achievements in economic reform.  The goal was to create a financial system marked by transparency and openness.

Despite those achievements, the situation of Palestinians remained grim, he continued.  Development efforts had been thwarted by Israel through arbitrary measures, making economic recovery almost impossible.  Through those illegal practices, Israel had destroyed infrastructure that had been built under agreements made in 1993.  The current situation was a humanitarian disaster that had made Palestinians dependent on international aid.

Recalling that States had agreed at Monterrey that development was a shared responsibility, he said the Palestinian people, still under the yoke of occupation, believed that should remain a priority.  However, the economic and financial systems had worsened after elections in January 2006.  A contradiction existed between efforts to alleviate poverty and the imposition of a regime by which Israel kept taxes and duties it had illegally collected.  Moreover, the trade embargo had been stepped up and banking restrictions on transferring funds remained, measures which had deepened the crisis.

Trade, as an engine for development, remained stalled due to a blocking of channels to markets, he said.  A report adopted by UNCTAD had shown that opportunities for his people to engage in trade were weak, due to pressures imposed by Israel.  In the last five years, Palestine had lost $8.4 billion in income, more than double the size of today’s economy.  Further, Palestine remained dependent on imports from Israel, while its exports remained at zero.  “Those are realities that we live every day,” he said.  The development challenge was a global one.  As such, the Palestinian people were entitled to enjoy development and play their role in that process.

FERNANDO M. VALENZUELA, observer for the European Commission, said that 2008 was a crucial year for development and would test the credibility of the international community and the global partnership.  Aid effectiveness would be promoted in Accra, the Doha conference would study implementation of the Monterrey Consensus and progress in trade negotiations at the Doha Round was expected.  Achieving the Millennium Development Goals remained at the centre of the European Union’s agenda.  The Union was on track to achieve the 0.7 per cent official development assistance target by 2015, and was particularly committed to sub-Saharan Africa.

Aid must be made more effective, he said.  The European Union Code of Conduct on the Division of Labour in Development Policy aimed to avoid fragmentation of aid at the global, country and sector levels and would avoid the proliferation of donors in the same areas.  It also addressed the problem of neglected countries and sectors.  He said that budget support was the aid modality that most favoured country ownership of development.  Partner countries needed stable and predictable aid, with longer-term perspectives to plan for public spending on the Millennium Development Goals.  An “MDG Contract” was under development that would target countries that had successfully implemented budget support and showed a commitment to achieving the Millennium Development Goals.

For trade to meet its potential as an engine for growth, countries must have access to markets, he said.  Trade policy should encourage competitiveness.  Developed and developing countries had an interest in successful completion of the Doha Round and those negotiations had made more progress than was realized.  Members needed to show a spirit of compromise and “take this last chance to agree on modalities for a Doha deal”.  The Union would try to ensure that issues like “aid for trade”, duty-free access or measures against preference erosion were taken into account.  The Doha development agenda remained the central priority of Union trade policy, he said, and called on its partners to make it theirs as well.

FRANCOIS-XAVIER DE DONNEA, on behalf of the Inter-Parliamentary Union, said the Union fully endorsed the Monterrey Consensus and had taken a number of steps over the years to facilitate its implementation within Parliaments.  At an institutional level, it had recently established a Parliamentary Committee on United Nations Affairs, which would help better coordinate cooperation between the two organizations.  Good governance and democracy were necessary for effective implementation of Monterrey and Parliaments should be strengthened to improve decision-making in all domains, including those relating to the Monterrey agenda.

Official development assistance was a principal concern, he said.  However, he added that it was not a panacea and should be used to complement policies in support of entrepreneurship, investment and trade.  Parliaments could provide direct input on the management of aid through the budgetary process.  Currently, a misalignment between aid allocations and countries’ priorities was producing poor results on the ground.  More oversight and scrutiny by parliaments would create national ownership of official development assistance and would politically buttress the case for future increases.  To be most effective, members of the various parliaments would need more support to increase their understanding of official development assistance and to increase their overall capacity.

He said the Union was also very active in working towards further trade liberalization through the Doha Round.  Despite improvements over the past few years, tensions between parliamentarians and the World Trade Organization continued to exist, mainly due to conflicts between World Trade Organization rules and national legislation on issues such as health, education, employment and food safety.  Parliamentarians were very concerned about the current impasse in the Doha Round of talks and were ready to assume their share of responsibility in relaunching those talks specifically and, overall, in moving forward on financing for development.

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For information media • not an official record
For information media. Not an official record.