|Department of Public Information • News and Media Division • New York|
Conference on World Financial
and Economic Crisis
3rd, 4th & 5th Meetings (AM, PM & Night)
DELEGATES CALL FOR SWIFT MEASURES TO RESTRUCTURE INTERNATIONAL FINANCE BODIES,
ON SECOND DAY OF UNITED NATIONS CONFERENCE ON WORLD FINANCIAL CRISIS
Ecuador ’s President Says Current Economic Order ‘Clan of the Powerful;’
Need for Global Stimulus, Shape of Reform among Issues Raised by Over 50 Speakers
Decrying a world economic order that had rewarded the powerful, marginalized the poor and promoted an unbridled capitalism that ignited unprecedented financial contagion, General Assembly delegates today urged swift and concerted measures to restructure international finance bodies and forge people-centred policies that addressed human security.
In a marathon second day of the Conference on the World Financial and Economic Crisis and its Impact on Development, more than 50 speakers took the floor over three meetings to assess the severity of the current situation, offering ideas about how to bring economic growth back into positive territory, stimulate credit and investment flows, create jobs and breathe new life into stalled trade talks.
Newly elected Ecuadorian President Rafael Correra said the current international system was like a “clan of the powerful” that talked about equality, but did not treat anyone fairly. To change the situation, he proposed the creation of a development bank for the South, whose goal would be to finance development projects and, thereby, improve systemic competitiveness. Linked to that would be a common reserve fund for his region -– Latin America -– which would give countries a choice as to where to deposit some $200 billion that had thus far been placed in banks of the global North.
“The current international financial system forces us, against all sense of justice, to provide cheap financing to the North and, at the same time, to seek expensive funding in the North”, he declared.
He also supported the creation of a regional payment system -– a preamble of a regional central bank -– that would allow for more autonomy, and the proposed establishment of a common monetary system, which would begin as an electronic currency to facilitate regional exchange. At the global level, he said the creation of a coordinating entity that could issue Special Drawing Rights would help break a monopoly in the provision of liquidity that guaranteed the dominance of the United States dollar and asymmetric decisions of the International Monetary Fund (IMF). Channelling those rights through such bodies as the Food and Agriculture Organization (FAO) would prevent the Fund from re-editing its asymmetry.
Ralph E. Gonsalves, Prime Minister of Saint Vincent and the Grenadines, also questioned why countries should be forced to borrow from those whose bad advice and reckless regulatory neglect had precipitated the crisis. The responsibility lay in the world’s unregulated financial centres, and in those who considered it their right to prescribe other peoples’ policy space. A good solution required a framework for a modern, competitive and many-sided “post-colonial” economy that was at once local, national, regional and global. To deal with the fallout, his country sought to strengthen bonds with other nations through various regional groupings.
At the same time, Heidemarie Wieczorek-Zeul, Federal Minister for Economic Cooperation and Development of Germany, pointed out that it would take an organization with the United Nations legitimacy to fully tackle the crisis. With today’s Conference, countries were strengthening the United Nations role in global economic governance and she welcomed the proposed creation of a panel of experts that included expertise from all regions.
She stressed the need for a global stimulus package that would benefit the poorest and embrace an ecological dimension. More financing was needed for development, which could be mobilized by fighting tax evasion, making greater use of instruments -- like emissions trading and “debt2health” swaps -- and having banks accept financial responsibility for the crisis. The allocation of Special Drawing Rights would provide an important foreign reserve cushion for developing countries in need.
Building on that, Reneet Kaur, Minister of State for External Affairs of India, underscored that today’s conference was the first United Nations gathering on the global financial and economic system since 1944. It was vital that the Organization’s convening power be used to hear the voice of the entire global community. At the Bretton Woods institutions, voice and quota reform needed to be accelerated. Lending by international financial institutions and multilateral development banks must also increase, and associated loan conditionalities must soften.
At the heart of the economic turmoil was a crisis of human security, some speakers noted. Nobuhide Minorikawa, Japan’s Parliamentary Vice-Minister for Foreign Affairs, said his country had started to advocate the concept of human security in the aftermath of the East Asian financial crisis of the late 1990s. In tackling threats that crept up on individuals across national borders, countries should take multisectoral, people-centred measures that focused on protecting -– and empowering -- communities “to take on the crisis themselves”.
Taking care not to lose sight of the human face behind the crisis, developed and developing countries must take all possible actions to help world recovery, he said. Efforts should begin with providing liquidity to maintain the integrity of the banking system: capital injections into financial institutions; and disposal of non-performing loans.
In such efforts, Håkon Gulbrandsen, State Secretary for International Development of Norway, underscored the importance of addressing illicit financial flows out of developing countries, estimated at “many times” the amount of global official development assistance (ODA).
Also speaking in today’s debate was the Prime Minister of Saint Lucia.
The Personal Representative of the President of Algeria spoke, as did the Deputy Prime Minister of Luxembourg and ministers of Ireland, Barbados, Finland, Estonia, Sri Lanka, Malaysia, Morocco, El Salvador, Mozambique, Nicaragua, Suriname, United Arab Emirates, Madagascar, Haiti, Angola and Kenya.
The First Deputy Minister of Ukraine also spoke, as did deputy ministers of Egypt, Nigeria and Thailand. Vice-ministers of the Republic of Korea and Guatemala also delivered remarks.
Also addressing the Assembly were Secretaries of State representing Switzerland, Spain, Hungary, Slovakia and the United Republic of Tanzania.
The Director-General for Multilateral and Global Affairs in the Ministry for Foreign Affairs of Slovenia and the Director General for Foreign Economic Relations and Under-Secretary of the Treasury of Turkey spoke, as did the Director of United Nations and International Organizations of the Ministry of Foreign Affairs of Côte d’Ivoire and the Director-General for Economic and Financial Multilateral Cooperation of Italy.
The Director-General for Development of the European Community also spoke.
The Governor of the State Bank of Pakistan addressed the Assembly, as did the Governor of the Kuwait Fund for Arab Economic Development and the Resident Representative to the World Bank of Saudi Arabia. Also delivering statements were representatives of Canada (also on behalf of Australia and New Zealand), Saint Kitts and Nevis, Cameroon, Samoa, Botswana, Kazakhstan, Indonesia, Colombia, Peru and Liechtenstein.
The day also featured two round table discussions under the theme of “Examining and overcoming the deepening world financial and economic crisis and its impact on development”.
The morning round table -- entitled “Coordinated and collaborative actions and appropriate measures to mitigate the impact of the crisis on development” –- was chaired by Tongloun Sisoulit, Deputy Prime Minister and Minister for Foreign Affairs of the Lao People’s Democratic Republic; and Jean Asselborn, Deputy Prime Minister and Minister for Foreign Affairs and Immigration of Luxembourg. (Issued separately as Press Release DEV/2752)
It included panellists Supachai Panitchpakdi, Secretary-General of the United Nations Conference on Trade and Development (UNCTAD); Noeleen Heyzer, Executive Secretary of United Nations Economic and Social Commission for Asia and the Pacific (ESCAP); Martin Khor, Executive Director of the South Centre; Robert Johnson, former Chief Economist of the United States Senate Banking Committee and former Senior Economist of the Senate Budget Committee; and Yaga Venugopal Reddy, former Governor of the Reserve Bank of India.
The afternoon round table on “Present and future impacts of the crisis on, inter alia, employment, trade, investment and development, including the achievement of the internationally agreed development goals and the Millennium Development Goals” was chaired by Diego Borja, Minister of Coordination of Economic Policy of Ecuador; and Bert Koenders, Minister for Development Cooperation of the Netherlands. (See Press Release DEV/2753)
It featured panellists Navanethem Pillay, United Nations High Commissioner for Human Rights; Abdoulie Janneh, Executive Secretary of the United Nations Economic Commission for Africa (ECA); Valentine Rugwabiza, Deputy Director-General of the World Trade Organization; Sha Zukang, Under-Secretary-General of the Department of Economic and Social Affairs; Stephen Pursey, Director, Policy Integration Department of the International Labour Organization (ILO); and François Houtart, Emeritus Professor at the Catholic University of Louvain (Belgium).
The Conference will resume at 10 a.m. Friday, 26 June.
The General Assembly today continued the plenary debate of its Conference on the World Financial and Economic Crisis and its Impact on Development, which aims to identify emergency and long-term responses to mitigate the impact of the crisis, especially on vulnerable populations, and initiate dialogue on the transformation of the international financial architecture. (For day one of the Conference plenary, see Press Release DEV/2747)
RAFAEL CORREA, President of Ecuador, said he could not understand the schemes that always ended up trampling the poorest and the disinherited, while the powerful took pleasure at the expense of the hunger and unhappiness of the great majority. The current system seemed to be a “clan of the powerful” who talked about equality, but did not treat anyone fairly. Indeed, equality had been used rhetorically or reviled by power. Those who were different were gathered today, to show that another world was possible.
By way of background, he explained that, after 11 September 2001, the United States had lowered interest rates, a decision taken in a deregulated environment, which had exacerbated sub-prime lending, particularly for mortgages. In 2004, it had raised rates to offset inflation, which did not stop banks from securitizing assets to gain more liquidity. When delinquency grew, panic spread, volatility went up and markets crashed.
While the crisis had originated in the financial markets of North America, the global South was the main victim, he said. For years, the United States had maintained huge trade and fiscal deficits, with the compliance of the International Monetary Fund (IMF). The financial debacle was a symptom of the crisis of a system that privileged the speculative financial economy over the real economy. Since October 2007, immense amounts of money had flowed to rescue the private financial sector. This year, the gross domestic product (GDP) of Latin America and the Caribbean would drop between 1.5 and 2 per cent. World Trade Organization estimates showed that global trade would contract by 9 per cent in 2009, the most since the Second World War.
Reforming the Bretton Woods institutions would be an insufficient stop-gap solution, he said. With that, he proposed enhancing the integration of spaces of supranational monetary-financial sovereignty. His region was already working to create a development bank for the South. The goal would be to finance development projects, notably multinational ones, to improve systemic competitiveness. Linked to that would be a common reserve fund for Latin America, which would prevent countries from depositing some $200 billion in the banks of the global North. By joining reserves in that way, the region would need less money to tackle regional contingencies.
“We must insist that Governments retrieve control of their banks,” he said. He also supported the creation of a regional payment system -- a preamble of a regional central bank -- that would allow for more autonomy with respect to the financial circuits of the North. Finally, he proposed consolidating a common monetary system, which would begin as an electronic currency to facilitate regional exchanges. That goal was already under way in the Bolivarian Alternative for the Peoples of our Americas, as was a single payment compensation system.
“The current international financial system forces us, against all sense of justice, to provide cheap financing to the North and, at the same time, to seek expensive funding in the North,” he said. Countries needed to negotiate a regional monetary agreement now, which would only be possible with the political will of regional Governments. At the global level, he promoted the creation of a coordinating entity of “planetary proportions” based on a monetary council that endorsed new foreign exchange commitments and regional institutional arrangements, with an issuance of Special Drawing Rights. Issuance of Special Drawing Rights would help break a monopoly in the provision of liquidity that had guaranteed the unipolarity of the United States dollar, and the asymmetric decisions of IMF. Channelling Special Drawing Rights through bodies such as the Food and Agriculture Organization (FAO) and the United Nations Environment Programme (UNEP) would prevent the Fund from re-editing its asymmetry. “The Fund has already betrayed the principles on which it was based,” he said.
For its part, Ecuador had freed itself from an illegitimate external commercial debt. An audit commission had been set up to examine that debt, and he stressed that such audits should be the norm, not the exception. The reduction of remittances was the expression of social discrimination and employment restrictions affecting migrant workers, and he demanded their elimination. On climate change, he said it was time to tackle the issue on both a technical and political level, making use of duly regulated markets. Last week Ecuador had presented its Yasuni-ITT Initiative, under which it vowed not to exploit oil reserves in order to prevent carbon dioxide emissions.
The developing world had the creative, technical and political capacities to promote their own responses, he said. It demanded financial regulation with more controls on investments; regulation of international commodities markets; a new industrial policy with environmentally friendly industries; and universal social policies.
RALPH E. GONSALVES, Prime Minister and Minister of Finance of Saint Vincent and the Grenadines, aligning himself with yesterday’s statement by the Caribbean Community (CARICOM), said the small, open and vulnerable Caribbean economies had been “globalized” out of their agricultural exports, particularly bananas; were in danger of being “climatized” out of tourism because of sea-level rise and global warming; and stigmatized out of attempts to diversify through financial services. Contrary to the title of the Conference, the countries of the Caribbean viewed the world to be ensnared in more than a mere financial and economic crisis -- it was a profound crisis of capitalist globalization. Regulatory failure of banks, insurance companies and other financial institutions reflected the triumph of neo-liberal ideology, which had sought to roll back any interventionist role of the State in an effort to be minimalist. But “the chickens have come home to roost, as the poor and the working people suffer consequentially”, he said, listing the crisis’ numerous impacts, such as rising poverty and unemployment, shrinking foreign direct investment and strained social safety nets.
Remarking that the crisis had laid bare an unsustainable and unethical mode of production, consumption and distribution, he said the “limited” and “unimaginative” corrective measures suggested by some States and institutions seemed “bereft of logic and value”. He questioned why countries should be forced to borrow from those whose bad advice and reckless regulatory neglect had precipitated the crisis in the first place. The responsibility for the crisis lay in the world’s unregulated financial centres and in those who had considered it their right to prescribe and proscribe other people’s policy space. In contrast, in its search for a solution, the Government of Saint Vincent and the Grenadines would seek an enhanced space where the role of the State was vital. In its view, a good solution to the crisis required a framework for a modern, competitive, many-sided post-colonial economy that was at once local, national, regional and global. It must be people-centred.
In dealing with the crisis, he said, his country had sought to strengthen bonds with other nations through various regional groupings, and added that the spirit of multilateralism must inform the engagement of the United Nations in the crisis. Believing that United Nations involvement was essential, Saint Vincent and the Grenadines had been “deeply” and “centrally” engaged in drafting the Conference’s outcome document, and its Permanent Representative was a co-facilitator. While the document did not fully reflect all of the country’s interests, needs and ambitions, it was an important and actionable first step. Its 20-point action plan touched on the peculiar needs of small island developing States; called for a people-centred solution; stressed the need for solidarity and the need to restore confidence in open trade; and acknowledged the right of developing countries to employ trade defence mechanisms. It also called for national stimulus packages that did not affect other countries adversely, and demonstrated an understanding that developing countries needed the flexibility to implement counter-cyclical measures.
He called on the General Assembly to implement the outcome document’s call for an intergovernmental working group to be established, so as to operationalize the 20 principles. Quoting John Maynard Keynes, he said the crisis had exposed the contradictions and inequalities of capitalism as practiced by the world. “This moment […] must be the point at which we take financial ideological orthodoxy outside of the box of stagnation and failure,” he said. Applauding the vision of the Government of Venezuela, which had first conceptualized a formal United Nations conference on the crisis, he also welcomed efforts taken by allies in the North, particularly the new regulatory and institutional arrangements proposed by President Barack Obama of the United States.
STEPHENSON KING, Prime Minister and Minister for Finance, Economic Affairs of Saint Lucia, said that, in the developing world, there was a sense that making a few adjustments here and there, while the old rules stayed intact, would no longer serve the cause of international development. In carving a solution, the world should seize the opportunity to bring about fundamental reform.
He said that, in Saint Lucia, agriculture had long been a source of foreign exchange earnings, made possible through the preferential arrangement with the United Kingdom. The economic union in Europe and the formation of the World Trade Organization had placed pressure on that preferential status, and had forced Saint Lucia to compete with producers from larger countries who worked at much lower costs. Amid that backdrop, Saint Lucia had sought to diversify its economy and had begun investing heavily in tourism, building infrastructure to accommodate jets, cruise ships and yachts. Investors had received generous concessions to build hotels. In turn, the Government had invested in education and health, and introduced new technologies in agriculture, while improving the financial services and manufacturing sectors. To carry out those activities, the country had resorted to borrowing. “We could borrow because of prudent management on our part, both before and after independence,” he added, and it had been so successful that Saint Lucia had graduated from its many special assistance programmes.
But, just as the debts were coming due, when tax concessions were ending, and a trained cadre of young persons was coming out of the education system, the bubble had burst, he said. Saint Lucia’s small island economy made it vulnerable to external shocks, even though it was a middle-income State that had managed its affairs astutely. Tourism had declined by 8.8 per cent in the first four months of 2009 compared to 2008. Credit was less available and remittances had declined. The rising cost of capital had implications for debt sustainability. Falling revenue had made the situation worse by limiting the flexibility to counteract the recession. In response, his Government had enunciated a stimulus package that included measures to enhance efficiency in Government revenue collection, among other things. The country was also participating in a response being developed by the Eastern Caribbean Central Bank.
For its part, the international community could help by making available a significantly larger amount of funding, he said. Through the World Trade Organization, it should extend the preferential privileges enjoyed by small States for another five years, as part of the recovery package. The innovative financing mechanism should be made into reality, and the mitigation and adaptation funds of the United Nations Framework Convention on Climate Change should be capitalized. Special consideration should be given to middle-income countries, as they were the most likely recover in the shortest time. With the hurricane season just beginning, such assistance would help in dealing effectively with potential disasters brought on by hurricanes, for instance.
PETER POWER, Minister for Overseas Development of Ireland, said the crisis was more far-reaching and unpredictable than many had feared. Its impact was being felt in different countries and communities in different ways, and it was seriously undermining progress on the Millennium Development Goals. For the planet’s poorest people -- not least the 1 billion people without enough food to eat -- the financial and economic crisis was becoming a human calamity. In fact, macroeconomic statistics could not demonstrate the crisis’ true extent. Households across the developing world were facing stark choices and asking if they had the resources to meet basic consumption needs and the costs of keeping children in school. As a direct consequence of the economic crisis, several hundred thousand infants would die this year, many of malnutrition. That simple, unacceptable reality demanded a more urgent, concerted and effective response by the international community to restore economic growth, while also protecting the most vulnerable from the economic storm.
He said that Ireland and its European Union partners supported targeted, counter-cyclical measures aimed at protecting the most vulnerable and sustaining economic activity and employment. Aid effectiveness should also be improved based on the Accra Agenda for Action. Recently, there had been important positive action by the Group of 20 and by the World Bank-IMF Development Committee, but the crisis had, nonetheless, confirmed the urgent need to reform those international financial institutions. Moreover, the United Nations had a key role to play in efforts to help developing countries tackle the full range of social, economic, financial and environmental challenges facing them. Coordination among the United Nations, the international financial institutions and relevant regional organizations should be strengthened. An ambitious, balanced and comprehensive agreement in the World Trade Organization’s Doha Development Round was also needed.
He underlined the “cruel fact” that live-saving results needed to be delivered to the least developed countries in a situation where budgets for overseas assistance were under serious pressure everywhere. With difficulty, Ireland had decided to adjust its official development assistance (ODA) budget in 2009 in order to allow its economy to return quickly to sustainable growth. That was crucial to enable it to resume expansion of its aid programme. The difficult environment challenged everyone to recommit to global development and to examine and overcome old habits. To ensure that sustainable international development was an achievable goal, a clearer accounting to development partners and each other was needed.
DARCY BOYCE, Minister of State, Ministry of Finance, Investment, Telecommunications and Energy of Barbados, said that nothing short of far-reaching and radical reform of the international financial system and the institutions responsible for administering global economic governance would suffice. Institutional reforms must ensure that all countries had an equal voice and fair representation in decision-making, that the institutions were responsive to the interests of all members, that they had clear responsibilities and mandates and that they transparently conducted their business with accountability to the entire membership. In that, small countries could be effective partners, but must be accorded a seat at the table. Recognizing that the United Nations must play a greater role in global economic rule setting, Barbados welcomed the possible formation of a General Assembly working group to advance the Conference’s proposals.
Stressing the continuing impact of the crisis on the Caribbean region, he said the Caribbean Community had not been passive in its response. However, the region’s lack of fiscal space had prevented it from engaging in more aggressive and sustained counter-cyclical measures. Still, the Government of Barbados had supported external sectors, while safeguarding jobs to the extent feasible and to the end of ensuring the protection of the most vulnerable segments of society.
In the larger arena, he said, the crisis had exposed the need for an urgent re-evaluation of the criteria used by the international financial institutions to graduate middle-income developing countries, epically those with high degrees of economic openness to the rest of the world. If the graduation from borrowing from multilateral development banks was rolled back, the world would begin to address the most fundamental aspect of those institutions’ governance. Indeed, the original purpose of aiding development was no less important today. Middle-income developing countries also needed grants or concessionary financing to mitigate damage from climate change. Small, highly indebted, middle-income countries like Barbados also needed access to critical capital to keep their economies afloat. Thus, commitments to multilateral development banks needed to be kept, so those banks could raise more capital in the near future.
HEIDEMARIE WIECZOREK-ZEUL, Federal Minister for Economic Cooperation and Development of Germany, said the crisis was threatening development and its impacts would be lasting. The long-term implications were the worst: every child sent to work rather than to school would lose out for the rest of his or her life, while every mother unable to pay for proper medical attention during childbirth risked her life. Poor Governments, forced to cut back now on social spending -– health and education included -- would lose the invaluable human capital needed for the future.
Without immediate action, an average of between 200,000 and 400,000 more children would die annually between now and 2015. “We must do everything to prevent such a humanitarian catastrophe from taking place”, she said. The financial and economic crisis was a “rupture of historic dimensions” –- a clear failure of market radicalism. She called for shaping a global economy that served people and included social and ecological rules obeyed by all. While the G-20 had taken some far-reaching decisions, it would take an organization with the United Nations legitimacy to tackle the crisis. With the Conference, countries were strengthening the United Nations role in global economic governance, and she welcomed the proposed creation of a panel of experts, which should include expertise from all regions.
As for action to take, she stressed the need for a global stimulus package that would benefit the poorest and embrace an ecological dimension. While Germany would deliver on its ODA pledges, she said more financing was needed for development, which could be mobilized by fighting tax evasion, making greater use of instruments like emissions trading and “debt2health” swaps and having banks accept financial responsibility for the crisis. Also, the allocation of Special Drawing Rights would provide an important foreign reserve cushion for developing countries in need. At the same time, poor countries must not be pushed into a renewed spiral of debt by development partners. However, if countries really wished to boost the economy, they needed to engage women and unleash their economic and political potential. Today’s Conference provided a unique chance to enter a new era of international cooperation and she encouraged all to adapt global governance to the realities of the twenty-first century.
SYED SALIM RAZA, Governor, State Bank of Pakistan, aligning himself with the “Group of 77” developing countries and China, noted that, as a result of extensive deliberations based on mutual respect and accommodation, the Conference had produced a consensus draft outcome document. It provided the framework, direction and timelines for action needed to combat the crisis. Indeed, experts had voiced a fear that the financial and economic crisis would aggravate the risk of debt distress in vulnerable developing countries. Already, protectionist trade measures were expected to cause further contractions in trade. Children, women, the working poor, migrants and people already at a disadvantage were among those vulnerable to a human and development catastrophe, especially with Governments finding it more difficult to maintain social safety nets.
In Pakistan, he said, foreign direct investment was in decline and the Government’s ability to tap resources from international financial markets to fund development activities had been severely affected. Steps were being taken to broaden the exports base and to diversity its trade in the region, but the results would take time to realize. The Government had also resorted to curtailing non-development expenditure and prioritizing development activities, because its ability to expand its resource base was limited. With regard to the banking system, the Government was giving banks room to consolidate their current balance sheets, so they would not have to worry about the steep rise in minimum capital requirements in the future. Monetary policy designed to reduce demand pressure was now being made more accommodative. Steps were being taken to alleviate financing constraints facing exporters. Even with such steps, the challenges to developing countries’ economies would grow larger if the economies in developed countries did not respond to their respective stimulus packages.
He said the establishment of the open-ended working group of the General Assembly was a welcome development. He was also heartened by international resolve to work in solidarity on a response. That included commitments to explore mechanisms to provide adequate resources to developing countries; recognize the right of developing countries to consider trade defence measures; and frame fast-disbursing assistance packages to quickly assist developing countries. It also included commitments to resist protectionist tendencies; expand the scope of regulation and supervision; improve early-warning systems through even-handed surveillance; enhance the coherence and coordination of policies and actions between the United Nations and international financial institutions; and establish an ad hoc panel of experts, among other things. If the international financial architecture was to be redesigned, it should be “UN inclusive”. The idea of setting up a global economic coordination council, preferably under the Economic and Social Council, should be seriously considered.
PAAVO VÄYRYNEN, Minister for Foreign Trade and Development of Finland, aligning his statement with the one made on behalf of the European Union, said it had been crucially important that Member States reach agreement on the Conference’s outcome document. While differences of opinion remained, broad consensus existed for future action. The United Nations needed to focus on the impact of the crisis on developing countries and in cooperation in the field with the international financial institutions. Further, while there had been some progress already in strengthening the financial resources of those institutions and accelerating their reform process, it was at least as important to enhance reforms in the United Nations system. System-wide coherence and the “One UN” concept were crucial, and the Economic and Social Council should be strengthened.
He said that, in addition to improvements to the international multilateral system, the development focus must be more comprehensive and rigorous. Commitments, such as those made in Monterrey, Doha, Paris and Accra, must be safeguarded and development funding increased and made more effective. Development policy coherence and effectiveness should also be strengthened. Poverty reduction must also be a goal in all international negotiations across such areas as trade, energy, climate change and the environment, particularly as the Doha Round continued and at the Copenhagen Climate Change Conference. The principles of sustainable development must be foremost, so that the basis of prosperity was not undermined. Social sustainability was too often narrowly understood as progress in education, health care and social welfare. It should also be conceived of as good governance, human rights and democracy, and recognized as a necessary precondition for all development.
URMAS PAET, Minister for Foreign Affairs of Estonia, aligning his remarks with those made on behalf of the European Union, said the crisis had serious implications for developing economies, which were increasingly dependent on trade, foreign investment and remittances to meet their economic growth and social needs. Following hard on the heels of the food and fuel price shock, it was hitting developing countries through many channels, which together dropped net inflows and created a serious financing shortfall. Some countries were limiting hard currency exchange for their people, impeding both tourism and exports. The United Nations family had an important role in creating a coherent response. Also paramount was the need to remake the international situations, particularly the development finance institutions. Those institutions should play a strong counter-cyclical role, by providing credit in areas where commercial players had retreated.
He said Estonia had felt the crisis quickly and sharply, and despite the first positive signs of a halt in the recession, continued to face risks to economic growth. Although it had collected considerable reserves, eating up those savings as if they were fast food during the crisis was not a rational solution. Thus, it was also working to cut budget expenses, keep reserves for the future and hoped to join the euro area in 2011.
Trade was also important in fighting the global recession, he said, underlining that a gradual approach to liberalization was necessary to allow countries to adjust to the world market. Trade policy reform needed to be designed to contribute to sustainable development. To that end, reforms were crucial for creating a conducive environment and “transparency” was the key word in creating support for changes. Turning to foreign direct investment, he emphasized that Estonia’s experience also showed that the liberal investment framework, together with other elements, like the rule of law, good governance, modern infrastructure and general openness of the people, created the most attractive investment environment.
GAMINI LAKSHMAN PEIRIS, Minister of Export Development and International Trade of Sri Lanka, said the causes of the global crisis were complex and involved continued instability in fuel prices, widening economic imbalances, constrained access to financing and failed regulatory and early-warning systems. There was now an unprecedented urgency to find sustainable solutions. Macroeconomic adjustments and shock therapy would not prevent future crises. The aggravation of balance of payment difficulties, slowing income from remittances and drying up of trade financing all would have drastic socio-economic impacts.
While increased globalization had led to an unprecedented expansion of the world economy, it had made developing countries vulnerable to economic downswings created in the developed world, he continued. However, it was encouraging that emerging nations had, on the one hand, paid attention to safeguarding their domestic agriculture and rural economic activity and, on the other, maintained positive growth rates. Sri Lanka was among those countries, having recorded a 6.2 per cent growth rate in 2008 and an expected 1.5 per cent growth rate for the first quarter of 2009. The depressed global climate threatened to constrain resource flows for investment in developing countries, which would directly impact job markets and could lead to higher unemployment rates. As such, he urged early enhancement of resource flows.
Existing institutional mechanisms might not be sufficient to contain financial market volatility, he said, adding that there were systemic and practical defects in existing international aid. To correct such defects required reforming the governance framework in the Bretton Woods institutions. While welcoming efforts to enhance the voice of developing countries in them, he said true participation had yet to materialize. Also, it was important to introduce an alternative reserve asset to provide liquidity support to ensure smooth functioning of the world trade and payments system. The Special Drawing Rights mechanism had failed to play the anticipated role. Regional initiatives were also crucial, and he agreed that, in the absence of adequate short-term financing, regional commercial reserves and reserve support arrangements would help sustain overall development efforts. Finally, he said developing country debt must be addressed more pragmatically, as debt accumulation often had to do with factors beyond the control of developing countries. A mechanism should be explored that would compensate borrowing countries against unfavourable developments, such as currency appreciation.
AHMAD HUSNI MOHAMAD HANADZLAH, Minister of Finance of Malaysia, said the crisis was caused by a “casino capitalism” mentality that was focused on short-term gains and an imbalanced global economic model that depended on consumption regardless of debt. The tentative shoots of recovery seemed to be withering away. Global growth was certain to be low at a time of higher oil prices. Further, countries could be tempted to take protectionist measures that would further threaten recovery and, indeed, 17 G-20 countries were known to be taking protectionist measures. A combination of those actions posed a threat to the most vulnerable countries, which depended on aid and had no oil reserves. The world should respond by focusing on the immediate and looking at the past only to the extent that it could inform future action. Actions by the international community must be guided by what worked, rather than focusing on divisive ideological battles.
He called for unity and a common focus in bringing about a fundamental rethinking on the relationship between consumption, debt, risk and economic growth. “We cannot return to a model in which global economic growth is underpinned by the demand of Americans borrowing more, sustained by the purchase by the rest of the world of American financial instruments,” he said. It required a level of regulation that could prevent bubbles, and yet promote innovation. Financial institutions should return to their role of allocating capital to the most productive investments and activities. In addition, the international financial architecture must better inform and alert Governments of systemic flaws. Trade, aid and the environment must work in favour of the others. The United Nations had an important role to play in sustaining action on those matters.
In Malaysia, he said, two stimulus packages had been launched, worth $20 billion. The country was trying to make its economy more broad-based, leveraging on innovation and entrepreneurship to spawn value-added industries. It would focus on liberalizing the services sector. However, Malaysia was not liberalizing to conform to a new economic orthodoxy, but to benefit from dynamics that were shaping in the global marketplace. Since economic progress was often associated with expectations for the future, Governments across the world must make the effort to foster hope among people that, out of this crisis, a new dawn would emerge.
PRENEET KAUR, Minister of State for External Affairs of India, said the United Nations provided a unique forum with unparalleled legitimacy and inclusivity. This gathering was the first conference on the financial and economic system and architecture since the United Nations had held a conference on the monetary and financial system in Bretton Woods in 1944, with the participation of the then 44 members of the United Nations. It was vital that the Organization’s convening power be used to hear the voice of the entire global community. Developing countries were not the cause of the crisis, which some had dubbed “the Great Recession”; yet, they were among the worst affected victims. The loss in export earnings and remittances translated into less room for investments in infrastructure, education and health. At the G-20 meeting in London, Prime Minister Manmohan Singh had said such countries must receive an increased flow of resources from international financial institutions.
He added that any reform must reflect contemporary realities. At the United Nations, the General Assembly must be revitalized along with real reform of the Security Council, which India believed required expansion in both the permanent and non-permanent categories of the Security Council and reform of its working methods. The Economic and Social Council needed to be more robust. At the Bretton Woods institutions, voice and quota reform needed to be accelerated. To revive the world economy, lending by international financial institutions and multilateral development banks must increase, enabling countries to undertake counter-cyclical measures. The world must address the ability of those banks to do that. Associated loan conditionalities needed to be softened. To address regulatory and systemic flaws, there should be a better system of surveillance and regulation. An early-warning system was also needed to spot a build-up of risk. Protectionist tendencies must not be permitted and developing countries must be given policy space to determine measures to best fit their specific requirements.
Describing India’s response, he said the country had fared better than others, having made aggressive use of fiscal and monetary policy, with a particular focus on infrastructure investment. There were huge investments in the rural and farm sector, as well. On the international level, India had actively engaged in the G-20 framework, which had put together a $1.1 trillion package. The Commission of Experts, which the President of the General Assembly had appointed, had also made several recommendations deserving serious consideration.
SALAHEDDINE MEZOUAR, Minister of Finance and Economy of Morocco, said the United Nations was the right forum to identify strategies to come out of the crisis, while also ensuring that achieving the Millennium Development Goals remained a priority for the international community. Still, efforts should not be limited to the United Nations. Work must begin to reform the financial system and to ensure the participation of all countries in combating the crisis.
He stressed that the effects of the crisis would be lasting, with developing countries among the most affected. A credit crunch at the global level had already occurred, as had a slowdown of remittances. The social impacts of those events had been serious, with millions, particularly in Africa, being plunged into poverty. Social economic survival was at stake, and threatened to undermine two decades of progress. In that situation, the international community should provide support and solidarity for the poorest countries, guided by the Monterrey Consensus and the G‑20’s programmes, among others. Diversification towards innovative financing mechanisms was also needed, along with investments in infrastructure, education, health and other social services. Moreover, the crisis should not be a pretext for protectionism. A balanced approach within the Doha framework was needed, instead. National recovery plans should similarly avoid protectionism, which would be harmful for trade and capital flows.
He said Morocco had already felt the impact of the crisis, but projections indicated the country would emerge from it in the next two years. The Government had engaged in crisis management through the public and private sectors, opting, not for a recovery policy, but one that shored up gains that had already been made. He said recovery efforts on an international scale would prove insufficient if reforms were not made to the global financial architecture, underlining the suggestions of the both the Commission of Experts appointed by the President of the General Assembly and the G-20. Further, there was a collective responsibility to mobilize massive, emergency measures to aid the African continent during the crisis.
HÉCTOR MIGUEL DADA HIREZI, Minister of Economy of El Salvador, aligned himself with the statements by with Group of 77 and China and the Rio Group. He said the Conference was enabling all nations to participate in the search for a solution to the crisis, while bringing their individual approaches to bear on immediate concerns, as well as on reforming the international structure to promote long-term economic stability and equity.
He said the new Government in El Salvador had been formed out of an internal crisis that had resulted, in part, from the workings of the international system. El Salvador’s internal troubles resulted from a long civil war, combined with the effects of outside policies that were designed to limit the capacity of the State. Those policies were also based on the philosophy that the market could regulate itself. Now, the new Government was undertaking measures to relieve the effects that those previous policies had had on the poor, by redesigning its economic strategies through dialogue with different segments of society. In view of the threat to development, the President had launched an anti-crisis programme that would generate temporary employment to improve the lot of the poor. Subsidies were also in place for health and education in both urban and rural areas, also targeted at the poor.
He said the report by the Commission of Experts contained measures related to long-term structural changes. The Government of El Salvador had begun assuming that challenge, using medium-term national development goals to replace old policies that had not achieved results. New mechanisms were now in place to implement those policies, which were designed to allow the different segments of society to share both the costs and benefits of recovery. The President had also established an economic and social council, which was welcomed by the labour movement, small business owners and cooperatives, as well as large business owners. To adapt to a future economic system, it was necessary for all nations to participate in a dialogue. They needed to discuss international mechanisms to bring about real solidarity, and to soften the effects of potential crises in the future. The world was now trying to confront a conceptual challenge. It was the first step in creating a more united world.
MANUEL CHANG, Minister of Finance of Mozambique, said the crisis had broken at a time when sub-Saharan Africa, the region lagging behind in achieving the Millennium Development Goals, was witnessing impressive economic performances owing to prudent macroeconomic and structural reforms, including good governance, transparency and implementation of an appropriate business environment. It was already clear that Africa would be severely affected by the global economic recession, resulting in far less growth than the 5 per cent average achieved in recent years. Many African Governments were, in fact, already revising their growth targets downwards, because of a lack of funding for infrastructure, falling exports and declining prices of raw materials. Urgent action was needed from Africa’s development partners through innovative, flexible financing solutions. Those should be in line with the agreements made in Doha in December 2008. Indeed, the crisis should not be seen as an obstacle for the financial resources that had been committed, which should be made through direct budget support, infrastructure projects, aid for trade, private capital flows, public-private partnerships, concessionary funds and liquidity facilities, among other things.
Turning to Mozambique’s efforts to combat the crisis, he said that, despite an adverse physical environment, the country’s overall economic performance had been reasonably robust in the last decade, with growth rates reaching about 7 per cent of the real GDP. Poverty had decreased from 69.4 per cent in 1997 to 54.1 per cent in 2003, and was expected to decline to 45 per cent by year’s end. Yet, statistical reports revealed that, among other things, Mozambique’s national currency was depreciating in the face of the crisis. That negatively impacted the balance of payments, foreign reserves and fiscal income, and was expected to slow economic growth to 4.3 per cent in 2009. In the real economy, the agricultural, industry, tourism, transport and fish sector were also being threatened.
Against that backdrop, he said, several lessons should be learned. First, policies should be development with more vigilance and follow-up. Second, Governments should play a proactive role for good market performance. The international economic and financial architecture needed reform and should be adapted to the real needs of the twenty-first century, by being inclusive and equitable in terms of representation.
JEAN ASSELBORN, Deputy Prime Minister and Minister for Foreign Affairs and Immigration of Luxembourg, aligning himself with the European Union, said the human cost of the crisis was significant. It had begun with the crash in the sub-prime mortgage market in the United States and had spread to the international financial market, triggering a worldwide recession. Jobs disappeared and the level of private international capital declined. The crisis exacerbated the effects of the food and energy crisis, and those of climate change, especially for developing countries. New estimates released by FAO last week said that 1 billion people were suffering, and that 100 million more may be pushed into hunger. It was essential to coordinate efforts to deal with the crisis within the United Nations, which was the most legitimate body for such an endeavour.
He pointed to the Secretary-General’s report on the impact of the crisis on development, and echoed its finding that IMF would need up to $140 billion to deal with the emergency. The international community must work towards a true global partnership for development, using a multilateral approach. He welcomed the measures being taken by United Nations agencies, funds and programmes, particularly in the establishment of a system-wide mechanism for an early-warning system.
He said downscaling trade aid was irresponsible, immoral and counterproductive. Donor countries must respect the commitments made with regard to the quantity and quality of aid they would give. Luxembourg, which was also badly hit by the crisis, nonetheless, intended to take its obligations seriously. In 2008, it had devoted 0.95 per cent of its gross national income to official development assistance, and would raise it to 1 per cent of gross national income in coming years. He called on Member States to make the necessary effort to live up to their own commitments, saying: “We have to show real solidarity.” The crisis offered an opportunity to redefine priorities and redraw the world’s institutions to adapt to modern realities, which, he hoped, would have the Economic and Social Council playing a central role. The fact that the Conference had produced an outcome document showed that the international community was capable of speaking in one voice when the situation so required.
ALBERTO JOSÉ GUEVARA OBREGON, Minister for Finance of Nicaragua, said that for developing countries, the drop in exports, imports, remittances, tourism and internal demand had led to cutbacks in national expenditures, weakening their economies even more. “And for our countries, this is but the first few months of the crisis,” he noted, urging the Assembly to remember that shocks occurring in other regions most often affected the developing world long after -- and in far different ways -- than they might have first manifested. It remained to be seen whether, over the next two or three years, developing countries in the Latin American and Caribbean region and elsewhere could revive national spending and funding for health and education, which were priorities. After decades of sacrifice, structural adjustments and fiscal and monetary discipline, developing countries were finding that many of the gains they had made were rapidly eroding.
Still, he acknowledged, the crisis was affecting everyone, and most developing countries, especially those without adequate social safety nets, were expecting low GDP and would find it difficult in the near future to access external financing. Nicaragua, which had been growing at a steady economic pace, was due to show a similar slowdown this year. There was an urgent need to reform the governance and polices of international financial institutions so that they ceased to hinder the development and self-determination of the developing world. Indeed, poor countries were being forced to adopt pro-cyclical policies, while those that had sparked the financial meltdown were rewarded for their greed.
He said the $1 trillion package approved by the G-20 London Summit must be delivered in a timely fashion and without conditions. Sadly, only $50 billion would be devoted to the least developed countries. That was less that one year of ODA commitments and, at any rate, “an insignificant sum considering the present divide between current accounts and fiscal deficits of developing countries”. He also called for a moratorium on foreign debt repayment, which, if not addressed, threatened to spark a new crisis. Such an action had been taken following the devastating Indian Ocean tsunami in 2004. “The combination of global stimulus, a moratorium regarding the external debt and the opening of international commerce would […] help needy countries overcome the crisis,” he declared, adding that such measures would form the basis for increased global aggregate demand and contribute to a broad-based recovery.
HǺKON GULBRANDSEN, State Secretary for International Development of Norway, thanking the co-facilitators for preparing a “bold and strong” outcome document, said now was not the time for business as usual. Concerted action was needed to protect the poor and vulnerable, which strengthened the case for reforming international institutions and the way they worked together. Most importantly, it was urgent to address the problem of illicit financial flows out of developing countries, estimated at “many times” the amount of global ODA. Whatever the amount, it was time to act, with targeted measures devised and implemented.
An expert commission on capital flight out of developing countries had presented a report to the Norwegian Government last week, he said. Capital flows were necessary for development, but secrecy in many tax havens and financial centres, indeed the very existence of tax havens, harmed global financial stability. Among measures proposed, the commission recommended a country-by-country reporting, with multinationals required to disclose their investments, capital transfers and taxes paid. Reducing illicit flows was not “rocket science”. Transparency was the panacea and, unless transparency in financial markets was secure, the world risked another global economic meltdown.
Moreover, world economic institutions must be reformed to provide voice and representation to developing countries, he said. The United Nations should play a leading role in responding to the crisis and the Organization needed to cooperate more with global finance institutions, respecting their roles and mandates. United Nations organizations had clear mandates to protect the world’s most vulnerable, and Norway commended efforts by the United Nations System Chief Executives Board for Coordination (CEB) to develop a comprehensive crisis response. Ongoing reform processes like “Delivering as One” should be intensified to ensure sustainable results on the ground, and all efforts should be made to accelerate the attainment of the Millennium Development Goals. Norway strongly supported the Decent Work Agenda of the International Labour Organization (ILO), and believed that gender equality was at the heart of building true progress.
NOBUHIDE MINORIKAWA, Parliamentary Vice-Minister for Foreign Affairs of Japan, said the impacts of the crisis on vulnerable populations in developing countries were particularly devastating and threatened to wipe out gains made towards meeting the Millennium Development Goals. East Asia had experienced a serious crisis in the late 1990s, from which the region had learned that, in the face of a sudden economic downturn, it was always the voiceless who suffered most. That was how Japan had begun to advocate human security. Tackling threats that “creep up on individuals across national borders” was important, and each country should endeavour to take multisectoral, people-centred measures. They should focus on both protecting individuals and communities and empowering them to “take on the crisis themselves”. A human security approach provided very relevant guidance in addressing the current crisis.
While taking care not to lose sight of the human face behind the crisis, he said, developed and developing countries alike should work together and take all possible actions -– including financial and monetary measures -– to help world recovery. The Government of Japan stressed the importance of providing liquidity, injecting capital into financial institutions and disposing of non-performing loans. In addition, countries must stimulate their economies by mobilizing large-scale fiscal outlays and strengthen the free-trade system by concluding the World Trade Organization Doha Development Agenda.
For its own part, Japan had undertaken a $270 billion fiscal stimulus, he said, calling on other Governments to acknowledge the importance of stimulating domestic demand. Asian countries in particular should take “swift and concerted action” to alleviate the impact of the crisis and strengthen growth potential. International financial institutions also had a pivotal role to play, and Japan valued the swift response by IMF and the World Bank, as well as their reform processes to enhance developing-country participation. While noting that donor countries should deliver on their pledges in a timely manner, he acknowledged that financial resources were not unlimited, and called for a “participatory approach” that would draw strength from a range of stakeholders -– developing countries, emerging economies, international organizations and corporations among them. In that context, it would be important for all to engage actively at the Second Global Review of Aid for Trade in Geneva next month.
IDRISS JAZAIRY, Personal Representative of the President of Algeria, said there was general feeling of uncertainty permeating much of the international community regarding the ultimate extent of the fallout from the crisis. Indeed, financial markets in the North remained jittery and the effects of the economic downturn were being felt sharply in the South. Africa was among the hardest hit regions and, despite years of strong socio-economic growth, would be hard-pressed to generate all the resources needed to address the myriad impacts of the crisis.
While Algeria was also experiencing a slowdown, prudent fiscal management had blunted its impacts somewhat, he said, noting with concern, however, that the crisis had sparked enmity against migrant workers, including those of North-African descent. Host countries, which generally claimed to protect and promote human rights, should stand by those commitments and adhere to the tenets of the International Convention on the Protection of Migrant Workers and their Families.
He said it was also troubling that, even in the present era of technological advances and market integration, the international community and relevant institutions had been caught off-guard by the raft of crises, including those in the areas of fuel and energy pricing and food shortages. Those shocks had called into question the very foundations of the international governance system. With specific regard to the economic and financial architecture, mechanisms that had been in place for some 60 years were clearly inadequate, and the international community must finally learn that it could no longer put off building a global financial system that would include, among other things, stable, transparent reserve management that was compatible with development and the needs of the developing world.
FOWZI YOUSEF ALHUNAIF ( Kuwait) emphasized the role of the United Nations in addressing the crisis, adding that there was also a need to resolve the causes of the crisis and prevent a recurrence. For its part, Kuwait had taken various measures to limit the effects of the crisis, having established a long-term investment portfolio in the currency market under the management of the national public investment institution.
To support poor countries, the Emir had launched a $2 billion development initiative that provided financial resources to small- and medium-sized projects, among other things, he said. As for the role of the Kuwait Fund for Arab Economic Development, its activities had expanded to provide low-interest, easy-to-pay loans for projects in the health-care and education sectors, which added to those provided for basic projects in the transportation, energy and rural development spheres.
Emphasizing that the protection of developing and least developed countries “is a must”, he demanded practical solutions from the Bretton Woods institutions that would guarantee decent living conditions for the world’s poorest peoples. It was to be hoped that the Economic and Social Council, with other relevant bodies, would receive support for positive solutions. Kuwait would continue to pursue the Millennium Development Goals under its 2010-2015 development plan.
HUMPHREY S. HILDENBERG, Minister for Finance of Suriname, said most developing countries were not in a position to mount an adequate response to the crisis and faced an increased risk of missing key globally agreed development targets. With foreign direct investment also drying up, those countries also faced accelerated environmental degradation, as well as obstacles to implementing initiatives in such areas as clean energy, water and land management and climate change mitigation.
He went on to say that his country had maintained its average 5 to 7 per cent annual growth rate due to its adoption of prudent macroeconomic policies that had resulted in increased investment in the mining and tourism sectors. Suriname had also adopted stringent monetary policies, so that it would be able to achieve the Millennium Development Goals by 2015. However, the country was experiencing a drop in revenues from bauxite and alumina owing to the closure of one operation and deep production cuts in another. Consequently, the Government was exploring alternatives to keep the bauxite and alumina workforces employed.
Turning to the work of the Conference, he said delegations should strive to strengthen the international financial institutions chiefly by reforming their respective governance structures and enhancing the voice and participation of developing countries in their work, among other measures. The General Assembly should also take action to create a stronger, broader and more globally consistent regulatory and oversight framework that would include an early-warning mechanism capable of identifying and responding to risks menacing global financial sectors.
OBAID HUMAID AL TAYER, Minister of State for Financial Affairs of the United Arab Emirates, described the Conference as an opportunity for the international community to reconfirm its adherence to the United Nations Charter and to the Organization’s objectives to resolve global economic, social, humanitarian and cultural problems. It was imperative that all countries worked together to help the poorest among them combat the effects of the crisis. Its causes were varied and complex, relating to the environment, food and energy security, an imbalanced concentration of wealth in the hands of a few, as well as to regulatory failure. It was important to seek solutions based on respect for human rights. The financial system needed to be reviewed in order to create the mechanisms necessary to prevent similar occurrences in the future. There was a need to strengthen the relevant bodies of the United Nations and ensure proper oversight of the financial system. It was also important to promote global trade and investment.
Each country should bear part of the responsibility of dealing with the aftermath of the crisis in ways that suited their own particular circumstances, he said. For example, the United Arab Emirates would continue to fulfil its national commitments and ongoing development programmes, in addition to helping developing countries achieve their development goals. It was important for developed countries to continue providing development aid as promised, as well as immediate assistance to poor countries. They should ensure financing for development on both short- and long-term basis and not reduce their level of assistance due to the crisis. There was a need to facilitate the entry of developing countries into the global market.
He said his country had succeeded in containing the crisis through precautionary measures, while still ensuring enough funding for essential projects. In terms of assistance to other countries, the United Arab Emirates provided concessionary loans to developing countries, funded development programmes through regional development funds and cancelled debt, among other measures. Its level of ODA exceeded the amount recommended at the Monterrey International Conference on Financing for Development. It was intent on fulfilling its commitments to implement national programmes while ensuring a ceaseless flow of ODA to developing countries in accordance with agreements. Hopefully the Conference would reach an agreement based on solidarity and compassion towards poor people in both developed and developing countries.
RICHARD DÉSIRÉ FIENENA, Minister of Economy and Industry of Madagascar, agreed that the global economic crisis was deep and severe. In the past, war had often followed such crises. Madagascar had felt declines in exports, jobs and tourism, and experienced balance-of-payment problems. Measures must be taken now, including those to establish confidence, growth and employment. Normal credit flows must be restored and international financial institutions reformed. Trade and investment must be permitted and universal, sustainable growth promoted.
With that, he recommended that intervention funds be made available to help those likely to lose their jobs. Countries should produce a list of victims eligible for assistance. The global economy had been hit by a lack of liquidity and, as such, private resources should be channelled to regions and countries. Investment in infrastructure fostered job creation and made countries attractive for growth. Indeed, growth lay in the hands of the private sector. More equitable distribution of wealth could only happen through partnership, with reform of international bodies to ensure their adherence to international law. Also, major decision-making fora must be open to emerging and developing countries.
Sharing must be based on transparency, which required a reorientation of IMF missions, he said. Regional banking supervision must be established and tax havens controlled. Also, there should be a precise timetable to reform rating agencies and hedge funds. The environmental nature of the crisis must also be addressed, with businesses encouraged to pursue a low-carbon economy. Long-term financial tools, like a carbon tax, should be developed, as they dovetailed with the United Nations desire to create new forms of financing.
ALRICH NICOLAS, Minister for Foreign Affairs of Haiti, aligning himself with the Caribbean Community (CARICOM), said the devastating consequences of the financial crisis were forcing the international community to seek “a way out”. The Conference was the type of initiative that Member States had come to expect from the United Nations. Existing data reflected the alarming nature of the crisis, which had caused drops in Haiti’s earnings from exports and remittances. The drop in remittances had led to severely reduced investment in health and education infrastructure, jeopardizing the country’s social protection network. The forced expulsion of immigrant workers in other countries was fuelling unemployment and contributing to social tension.
The crisis reminded the international community that the world was characterized by deep-seated asymmetries, he said. Rich countries had enormous resources to institute counter-cyclical measures that seemed tiny compared to the sums pledged by the G-20 Summit to help developing countries. For several decades, developing countries had tried to respect the rules of the market and to stabilize the financial system, while rich countries were known to break the rules by engaging in speculation. Haiti supported the recommendations of the Secretary-General, which called for greater oversight and a rapid response mechanism to better hedge the risks brought about by the financial sector.
Emphasizing the “urgent necessity” of overhauling existing structures, he said the international financial institutions must be democratized. One lesson from the “bitter pill” of the 1980s structural adjustment was that the new framework must ensure progress for all people. The world was duty-bound to establish a just financial economic system that guaranteed a minimum standard of living for all. The Bretton Woods institutions were anachronistic, and needed to be restored, with the United Nations playing a pre-eminent part. Now was the time for the United Nations to take up its rightful role in world governance. The Department of Economic and Social Affairs had long warned in its monthly bulletins that the world economy was falling into recession. That proved that the United Nations had the potential to prevent crisis and formulate macroeconomic policies for the world.
AUGUSTO DA SILVA TOMAS, Minister for Transportation of Angola, said the Conference provided the opportunity to examine one of the world’s most pressing concerns -- a crisis stemming from long-standing structural imbalances in the economies of developed countries. The challenge was particularly serious in less developed countries, which had few financial and material resources to tackle the crisis. Angola, which was undergoing a phase of reconstruction following the end of its armed conflict in 2002, had seen an increase in the oil and diamond trade, but that had made the economy more vulnerable to external shocks, leading to a drastic impact on growth.
Underscoring the importance of eliminating the international market volatility fuelled by speculators who dealt in amounts so large they sometimes exceeded the GDP of most countries, he said the international community needed to regulate, not just the trade in goods, but also financial flows. It was also important to strengthen the role of the United Nations in the global economy, as well as financial governance, so that all countries, rich and poor, could make decisions about the economy.
Multilateral financial institutions should have greater financial capacity and transparency, and be made more representative, he said, calling also for special attention to the social costs of the crisis. A prolonged recession could cause increased poverty and deepen the suffering of vulnerable social classes, in addition to significantly undermining efforts to achieve international hunger- and poverty-reduction goals. The crisis should be used as a time to reflect on a new financial and economic order based on social justice.
WYCLIFFE AMBETSA OPARANYA, Minister of State for Planning of Kenya, said the economic slowdown in both developed and developing countries had been seen, above all, in rising poverty levels. It was therefore important to take urgent measures to stem its negative impacts. Global fiscal stimulus and other measures must be implemented with the support of the industrialized countries, where the crisis had originated. Sub-Saharan African economies were expected to contract by 1.7 per cent in 2009 and the capacity of many of them to address the crisis was limited. They had suffered particularly from the impact of declining trade and foreign direct investment. The global community must look into new and innovative ways to help.
He said that tourism, a cornerstone of his country’s economy, had contracted by more than 36 per cent, with serious implications for the Government’s ability to meet national and international objectives, particularly attaining middle-income country status. Kenya needed assistance to sustain growth and create jobs. Trade promotion through regional and global initiatives was a priority. In addition, fiscal stimulus in developed countries must be extended to the developing world.
While appreciating efforts by the G-20, he said the outcome of its recent meeting fell short of expectations, noting that the Group had had an opportunity to take bold steps to provide lasting solutions to the crisis. All actors must reform the international financial system to give developing countries a greater say in global matters. In that context, the Conference must advance such discussions with a view to finding durable solutions. The United Nations played an important role in addressing development issues and must remain in the forefront.
MARTIN DAHINDEN, Secretary of State for Development Cooperation of Switzerland, said the global crisis had exposed shortcomings not only in national systems for regulating finance, competition and corporate governance, but also in international bodies and arrangements created to ensure stability. As such, the focus was rightly on improving the regulatory framework to prevent future failures. But the world could not rely on new or improved regulation alone. Greedy behaviour lay at the heart of the matter.
To make the system more robust, the United Nations must play three important roles, notably providing a platform for all stakeholders to exchange views, he said. It should assume an important role in analysing and monitoring the crisis, and in recommending possible solutions. The Organization could also encourage countries to be more socially and environmentally responsible. To support those actions, the linking of meetings between the Economic and Social Council and international finance and trade bodies with ordinary meetings of the Council and the General Assembly, would allow for integrated discussions. There was also a use for complementary -- and possibly more inclusive -- approaches. An ad hoc panel of experts on systemic risks would be valuable.
While there was certainly a need to improve supervision and enforcement, rules and regulations should be complemented by voluntary mechanisms and standards, he noted, encouraging the United Nations to promote the Global Compact through its dedicated office and operational activities in the field. The crisis demanded immediate responses, as well as long-term planning to support the poorest, especially in Africa. Switzerland called for the use of combined strengths to address injustice, poverty and exclusion.
MOHAMED EL ORABY, Deputy Minister for Foreign Affairs for International Economic Relations and Cooperation of Egypt, called on countries to work together to jump-start the global economy and restore confidence in its governing institutions and mechanisms. Such actions should be carried out in the framework of an enhanced role for the United Nations in global economic and financial matters, as well as enhanced participation by developing countries in economic decision-making and norm-setting.
With that in mind, he said, it was imperative to mobilize international political will to collectively confront the economic and financial crisis on the basis of three pillars: examining its causes, agreeing on solutions and guaranteeing that it did not recur; acting swiftly to mitigate its myriad effects on developing countries, particularly regarding their ability to attain internationally agreed development goals; and undertaking comprehensive reform of the international economic system in order to reach new arrangements that would make the system more efficient, transparent and democratic, while enhancing the central role of the United Nations.
As an urgent first step, the international response must focus on generating more financial resources, he said, stressing that those should target developing countries and be based on standing development commitments made at major United Nations conferences and summits, including the recent Doha Follow-Up International Conference on Financing for Development. Those funds should also represent commitments made through agreements on ODA, debt reduction and international trade. The second step should focus on generating new and additional resources to help developing countries address the crisis. To that end, Egypt supported the proposed allocation of a percentage of national developed country stimulus packages as ODA.
SHIN KA-SOO, Vice-Minister for Foreign Affairs and Trade of the Republic of Korea, said the Conference must formulate effective concerted responses that would enable developing countries to stay on track to meet their sustainable development goals. Considering that the welfare of both developed and developing countries was now so intertwined, it was in their common interest to prevent the current crisis from leading to a deepening of the development gap, accelerated environmental degradation and social instability in developing countries. It was essential to implement the financial package agreed by the G-20, along with that bloc’s agreements to work together to restore growth and jobs, bolster financial supervision and push for an early and successful conclusion of the Doha Development Round. The international community must stand by all its commitments, including those on ODA, to ensure socio-economic progress in the least developed countries and among the world’s most vulnerable populations.
He expressed the hope that the Fourth High-Level Forum on Aid Effectiveness, to be held in Seoul in 2011, would generate important momentum towards improving development indicators ahead of the 2015 date set for worldwide attainment of the Millennium Development Goals. There was also a need to step up efforts to elaborate more concerted international policy actions that would reflect a broad range of views and ensure greater policy coherence across relevant sectors, including trade, environment and development. To that end, it was imperative to align responses to the crisis with broader sustainable development goals and to develop a comprehensive and complementary system of global governance. Such efforts would help the international community to build greater resilience against future global crises and allow all countries to maintain development momentum.
SHAMSUDDEEN USMAN, Deputy Minister and Deputy Chairman of the National Planning Commission of Nigeria, said the global economic crisis had caused a “growth crisis” in Africa, and the possibility that projected growth in the region might drop from 2.8 per cent to 2.3 per cent in 2009. That decline was fuelled largely by weak demand for commodities and, without steps to halt it, the Millennium Development Goals would elude most African countries.
He said that, with GDP projected to slow to 5.5 per cent in 2009, from 6.4 per cent in 2008, Nigeria’s capital market, which had shown phenomenal growth between 2005 and 2008, now saw the rate of capitalization declining by 35.5 per cent and the All-Share Index by 36.8 per cent. Crude oil prices had declined from $147 per barrel to $40 per barrel in March 2009. The cumulative effect of those changes was the slow-down in economic growth, which threatened Nigeria’s ability to realize the President’s seven-point agenda aimed at improving the quality of life for Nigerians.
Developed countries had resorted to massive financial stimulus packages to rescue the sectors hit hardest by the crisis, he said. Most developing countries lacked the capacity to respond in a similar way. In Nigeria, a multi-stakeholder presidential committee had been established to monitor the crisis and offer solutions. The country welcomed the recommendation by the Stiglitz Commission that industrialized countries devote 1 per cent of their stimulus packages to developing countries. It also endorsed the ILO proposed Global Jobs Pact to facilitate a reduction of the global unemployment rate.
PRADIT PHATARAPRASIT, Deputy Minister for Finance of Thailand, said the World Health Organization’s (WHO) warnings about the H1N1 influenza outbreak had prompted him to think that another virus was making its way around the world: protectionism. It was a virus that, more than any other, endangered development and it was particularly dangerous for poor countries. “Protectionism is the single biggest threat to the health of the global economy,” he stressed. There was no vaccination or cure other than for the shapers of national financial, economic and trade policies to take a firm stand for the world’s collective good. The courage to advocate tough decisions would allow history to judge that they had done what was right for humanity. There was no better way to limit adverse impacts than to accelerate a successful conclusion to the World Trade Organization’s Doha Round, he said, emphasizing that failure to act now would burden generations to come.
He said he was proud that the “ASEAN + 3” grouping (member States of the Association of Southeast Asian Nations, plus China, Japan and the Republic of Korea), at a February meeting in Thailand, had affirmed its dedication to increasing the free flow of trade and investment, and to stand firmly against protectionist measures. Regional policymakers also had a wider choice of bilateral and multilateral tools to handle risks. Prior to tapping IMF facilities, they could use the bilateral Chiang Mai Initiative or multilateralized Chiang Mai Initiative, depending on their need to better address short-term liquidity problems and supplement other international financial arrangements. An independent surveillance unit would be created to identify trends and risks that might threaten financial stability, he said, adding that the scope of regional cooperation had expanded to include investments in productive areas that could spur growth. ASEAN + 3 were working under the Asian Bond Markets initiative to develop bond markets denominated in local currencies as an alternative to bank loans. Nationally, Thailand was rolling out a $42 billion stimulus package focused on job creation and poverty alleviation.
OSCAR ERASMO VELASQUEZ, Vice-Minister for Economy of Guatemala, said that, over the years, his country had assumed responsibility for its own development and had made much progress in macroeconomic management. It had adopted appropriate measures to ensure a healthy financial system. However, there were some weaknesses and, despite improvements in the level of tax collection in the past decade, Guatemala still had one of the lowest tax-to-GDP ratios in the Latin American and Caribbean region. Moreover, while it had made significant efforts to improve social indicators, substantial challenges remained in that area.
Suddenly, however, favourable trends had “hit a wall in whose erection we played no part whatsoever”, he said. The crisis Guatemala faced had been born in New York and, as everyone knew, when the Wall Street bubble had burst, it had done so resoundingly, and its effects had quickly seeped into the real economy, first in the United States, before spreading around the globe. For Guatemala, that had meant a 4.6 per cent contraction in exports in the first four months of 2009, compared to the same period in 2008. Non-traditional exports had fallen by 12.8 per cent and income from tourism –- a mainstay of the economy -- had decreased by 4.3 per cent in the same period. Some health and education indicators, which had shown laudable improvements for years, were now starting to trend downwards.
He stressed that Guatemala was doing all it could on its own to blunt the impact of the crisis. Among other things, the Government had adopted an emergency and economic recovery programme, which focused on generating employment, mitigating the impact of the crisis on vulnerable groups and preserving macroeconomic stability and financial-sector health. External financing already in the pipeline had played an important role in maintaining the level of priority expenditures. While Guatemala was doing its part, the wider international community must close ranks to address the impact of the crisis and prevent future shocks by addressing systemic problems afflicting global regulatory entities and multilateral financial institutions. It was now clear that reforming the Bretton Woods institutions should be an urgent priority, and completing the long-stalled Doha Development Round was equally urgent.
SORAYA RODRIGUEZ RAMOS, Secretary of State for International Cooperation, Spain, said that, as a result of the present economic downturn, an additional 55 million to 90 million people would face extreme poverty in 2009. All in all, the social impact of the crisis would be very serious in many countries, particularly the least developed countries in sub-Saharan Africa. It was the responsibility of the most developed countries to assist the poorest, to support them in a special way to overcome the crisis as soon as possible and to prevent a “development crisis” from happening. The President of Spain had reiterated a few days ago that the Government stood firm in its official development assistance commitments. Hopefully, more rich countries would follow their example. In doing so, they should be mindful of the Paris Principles on aid quality and effectiveness. It was also time to make headway in the area of innovative financing. At a meeting in Paris recently, several countries discussed the importance of combating tax evasion, which diverted approximately $400 billion to tax havens rather than being put to use for development purposes. That fact was acknowledged at the G-20 Summit and would be a priority during Spain’s presidency of the European Union.
She said misery spread quickly in a globalized world that did not have an effective regulation, surveillance and governance mechanism. The Conference should contribute ideas towards a new global financial system that would respond in a coherent and efficient way to the present financial crisis. The United Nations had a unique and decisive role to play, and Spain supported the strengthening of the Economic and Social Council, instead of duplicating existing organs. However, the United Nations’ role in international economic governance should not be exclusive. On the contrary, it should complement the work that took place in other forums, such as the G-20 and international financial institutions. The importance of reinforcing the coherence, collaboration and coordination among the United Nations, World Bank, IMF and the World Trade Organization could not be overemphasized. For their part, the Bretton Woods institutions must be reformed to include a greater role for developing countries. The United Nations, in turn, needed to improve its ability to deliver aid. Spain was committed to the “Delivering as One” pilot exercise, through which it had established an “expanded funding window” to support a more coordinated and effective United Nations response at the country level.
ANATOLII MAKSIUTA, First Deputy Minister of Economy of Ukraine, aligning himself with the European Union, said the average growth rate had stood at 7 per cent in the period between 2000 and 2008. There was a huge drop in production in key export-oriented sectors that had begun in late 2008 and continued to the beginning of 2009. Steel producers were the hardest hit. GDP had dropped by 20 per cent, one of the biggest rates of decline in Eastern Europe. The current account deficit kept growing, even as trade-related revenue and foreign investment shrank. Lending had practically stopped, because of a lack of resources and increased risk. Although the situation in the domestic currency market had stabilized somewhat in the last few months, the social sector and households were still negatively affected.
He said IMF had provided Ukraine with “adjustment projects” directed at rehabilitating the financial sector, minimizing the impact from financial shocks, lowering inflation, supporting a balance of payments and promoting structural reform. Those measures had had some positive effect, but the results were not sufficient. The recession required much greater rates of growth if it was to be overcome. He also noted that standard instruments and mechanisms of the international financial institutions were aimed mostly at stabilization rather than development. A broader approach was needed. For example, focusing on agricultural development could help address the food crisis. Ukraine was known for its fertile soil and could provide a substantial contribution to the global food supply.
LÁSZLÓ VÁRKONYI, State Secretary of the Ministry for Foreign Affairs of Hungary, said his country was aware of the effect of the crisis on developing countries. The donor community was responsible for helping countries in need to maintain their progress in the last decade and to support their recovery process. The principles of aid effectiveness reinforced in the Accra Agenda for Action and the division of labour initiated by the European Union would help determine how to use resources in the most efficient way. Hungary had gained valuable experience while implementing its donor programmes in Afghanistan, Viet Nam and middle-income countries in its vicinity, and was ready to share lessons learned.
He said that all States had a responsibility to address the situation, and developed countries must live up to promises made at Doha. Partner countries, in turn, must continue implementing their national development strategies by improving governance and increasing efforts to mobilize domestic resources. The most appropriate and efficient way to respond to the crisis was through existing institutions and mechanisms. For that reason, Hungary was strongly committed to increasing the efficiency and cooperation of those institutions and their mechanisms. It was interested to be a partner in their reform, if necessary. One of the things that Hungary hoped would come out of the crisis was a significantly improved system of financial market regulation and surveillance.
He said the most powerful tool to combat the effects of the global crisis was economic growth. As a top priority, the world should support private sector development and the establishment of an investment-friendly business environment. It should strive towards better inclusion of developing countries in global trade, including by facilitating subregional development and South-South trade. Donor countries should be ready to provide training and help in capacity-building. The United Nations role as coordinator was an important one.
OLGA ALGAYEROVA, State Secretary of the Ministry for Foreign Affairs of Slovakia, said the spillover effects of the global financial and economic crisis, coupled with food, fuel and climate troubles, had damaged the lives of tens of millions of people around the world. Within that situation, United Nations efforts to achieve international development targets had been undermined and the prospects were gravest for goals related to health, education, nutrition and sanitation. As such, developed countries must ensure that foreign aid did not fall victim to difficult budgetary choices. Slovakia, as an emerging donor, was committed to keeping its aid levels, despite such constraints.
As the crisis had also created a rare opportunity to improve global governance, she said it was important to note that new principles must be agreed among the largest number of countries in a spirit of cooperation and openness. With its universal membership and legitimacy, the United Nations should be a key player in those efforts. Today’s meeting showed a collective will to determine the most responsible and effective actions for the United Nations to help economic recovery. It was also a chance to address how the Organization could best contribute to the process of building resilience against future shocks, improve monitoring and help make the financial and economic institutional framework more inclusive. In that connection, she expressed satisfaction with the outcome document to be adopted.
For its part, Slovakia had responded in a decisive manner to the deepening financial crisis, she said. The Government was working closely with the private sector to protect savings, prevent unnecessary production and job loss, and boost economic growth. Her Government supported the implementation and delivery of commitments taken at international conferences in Accra, Doha, Washington, D.C., and London. “We must continue to build on these measures and take further necessary action within multilateral frameworks,” she added. In closing, she noted that the Group of Eastern European States had endorsed Slovakia’s candidature for Economic and Social Council membership.
ANDREJ BENEDEJČIČ, Director-General for Multilateral and Global Affairs, Ministry for Foreign Affairs of Slovenia, said the current financial meltdown was affecting his country and region on many levels. While the economic effects of the crisis were being felt to varying degrees in all countries, the people of his region were also dealing with the psychological effects. Eastern European countries had only recently emerged from a long and demanding transition to a free-market economy, during which special emphasis had been placed on the benefits of “laissez-faire capitalism”. Ironically, however, many countries that had adhered to that principle were now discussing national and supranational regulation, coordination and monitoring.
With that in mind, he stressed that many still remembered what it was like to live in a “regulated” economic system, and would prefer to put that experience behind them. “We know that it simply does not work,” he said. When the question was asked about why some countries did not want to jump on the bandwagon and rework the existing financial and economic architecture from top to bottom, the answer probably lay in their reluctance to go from one extreme back to another. At the same time, he acknowledged that the current crisis had exposed some deficiencies in existing institutions, which needed to be addressed. Slovenia, therefore, supported structural reforms aimed at ensuring more stability in the global economic system, including effective oversight, enhanced transparency and increased integrity of financial markets.
He went on to say the second phase of governance reform of the World Bank needed to be stepped up, while the work of IMF must reflect the changes in the global economy and ensuring greater voice, representation and responsibility for emerging economies and developing countries. In addressing the broader impacts of the crisis, the international community must maintain a strong focus on the Millennium Development Goals. The quality, quantity and effectiveness of ODA was more important than ever, he said, stressing that Slovenia was determined to meet its commitments in the spirit of the Doha Declaration on Financing for Development and the Paris Declaration on Aid Effectiveness.
STEFANO MANSERVISI, Director-General for Development of the European Commission, speaking for the European Community, said the current crisis had exposed the deep links among the prosperity and future of the world’s advanced economies, emerging economies and developing countries. The crisis had also exposed the impact of globalization “in all its unregulated reality”. So, the international community must face up to the need to create and promote globalization that was more equitable and regulated, while reaffirming the commitment to fighting poverty and exclusion. He went on to say that the “third wave” of the economic crisis was now reaching the shores of the developing world, and with gloomy economic forecasts predicted through 2010, there was a serious risk that years of sustained efforts by developing countries would unravel.
“Therefore, our response must be resolute,” he said, recalling that, while the G-20 London meeting had taken a number of steps in the right direction, in order to make a difference, more concrete action must be taken right now. No country could ensure a successful recovery on its own. “We need each other more than ever […] we must work together -- of fall apart,” he said, stressing the shared responsibility in addressing critical issues. The United Nations was an appropriate forum to discuss such cooperation. The leadership and commitment of the European Union were crucial in crafting a global response to the crisis, and that was why the European Commission had proposed a number of concrete and coordinated actions that included, among others, keeping the European Union’s promises to increase ODA, enhancing partnerships and making its aid more effective.
CHARLES MUTALEMWA, Permanent Secretary of Planning of the United Republic of Tanzania, recalled that his country had recently hosted an Africa-IMF ministerial meeting, which contributed to efforts to address the global crisis. The importance of today’s Conference could not be overemphasized. The crisis was related to high food prices, food insecurity, volatile energy prices and the uncertainty of global trade negotiations. It had endangered developing countries’ achievement of the Millennium Development Goals, among other agreed development goals. In the United Republic of Tanzania, the average growth rate for the last five years had been 7.2 per cent, but was expected to fall to 5 per cent in 2010. There was a rapid increase in unemployment and constrained access to credit. Tourism revenue had fallen by 20 per cent, while prices for major export crops had dropped due to slack global demand. The impact of such events on poverty reduction efforts was dire.
The Conference’s outcome document underlined the fact that developing countries, though not responsible for causing the crisis, were the most impacted by it, he said. As such, Member States must respond according to their respective abilities. Stabilizing financial markets must be a priority, while trade and investment must be revitalized. Resolute measures were needed to alleviate the impacts on the most vulnerable populations. Many African countries would need external assistance, with one estimate putting that figure at $50 billion. Other estimates said an additional $1 trillion was needed. He hoped the G-20 would “hold well” on its promises. Indeed, recent years had seen the imposition of onerous conditionalities on developing countries and he hoped all nations would deliver on their existing bilateral and multilateral commitments, notably those made at Gleneagles and Doha.
At the same time, he said his Government was aware of its duties and had taken measures to cope with the crisis. It had set up an early-warning system to detect weaknesses in the financial sector. Also, the President had unveiled a stimulus package equivalent to 5.4 per cent of gross national product. For its part, the United Nations had taken its rightful place in addressing the financial emergency and he looked forward to the Conference’s outcome document.
GEORGES ABOUA, Director of United Nations and International Organizations, Ministry of Foreign Affairs of C ôte d’Ivoire, said the severe economic recession was not sparing any countries, particularly those of the developing world, which were facing a drop in exports, a fall-off in remittances and weakening of ODA. Worse was the fact that the ultimate outcome of the “financial tsunami” would not be known for some time, particularly for countries in Africa, which were already dealing with extreme poverty, debt and weak economies. It was critical that action be taken to address the crisis right now, he said, stressing that the current Conference should provide an opportunity for the international community to reaffirm its solidarity by taking actions that went beyond mere promises.
Indeed, stakeholders gathered in New York should make every effort to come up with concrete, practical solutions, he said. He appealed to the G-8 countries to stand by the commitments to Africa made at the 2005 Summit in Gleneagles, Scotland. The crisis should not be an excuse to renege on those commitments. Rather, it should be an opportunity to act on behalf of global solidarity. He went on to say that Côte d’Ivoire would shortly be available to take part in the Heavily Indebted Poor Countries (HIPC) Debt Initiative, and that would allow the country to undertake further efforts to reduce its levels of poverty.
He thanked his Government and the people of the international community for working with Côte d’Ivoire to help address the impact of the crisis. It was a major challenge that all nations must face together, in a spirit of solidarity and in line with the spirit of the United Nations Charter. At the same time, he reiterated his call on the international community to turn its pledges and commitments into concrete action.
ABDULRAHMAN ALMOFADHI, Resident Representative to the World Bank, Saudi Arabia, summed up current thinking on the origins of the crisis -- excessive leverage and risk-taking in financial markets, lax and inadequate regulatory environment and undisciplined globalization. He summarized the effects of the crisis as contained in the Secretary-General’s report and other sources, including new estimates that 1 billion people would begin to suffer from chronic hunger in 2009, and that 100 million people would now fall into poverty. Against that backdrop, it was important to help normalize growth while simultaneously reforming the global financial system to prevent a recurrence.
Saudi Arabia had contributed meaningfully to G-20 efforts to resolve the crisis, approving a $400 billion investment programme for the next five years, he said. The country was currently implementing the largest budget in its history ($126 billion) to spur domestic demand and sustain GDP growth over the medium term. Saudi banks had improved their resilience and, at the Arab Summit in January, had called for policies to liberalize trade at the local, regional and international levels to promote exports. At the Gulf Cooperation Council, it had called for the finance ministries and central bank governors to coordinate positions in a crisis resolution.
He said it was important for multilateral and regional development institutions to provide assistance to enable developing countries to enact measures to stimulate demand. The proactive approach of the World Bank in vulnerability financing, infrastructure provision and so on, was welcome. But, the crisis was highlighting the importance of trade as a critical element of global growth. In that context, it was important to strive for a successful outcome of the Doha Round, but countries must refrain from resorting to protectionism, including financial protection, such as restrictions on overseas lending from institutions based in advanced economies. In the context of long-term recovery, it was worthwhile remembering the private sector’s role in supporting growth through job creation. The fall-off in private sector flows due to the financial crisis was both a cause of concern and an opportunity to explore new avenues of private financial flows, for example through North-South investments in the food and energy sectors. On the reform of international financial and economic governance, he expressed hope that consensus would be reached soon on giving more representation to developing countries. While the idea of a global economic council could be discussed, it was doubtful that it would add value to existing arrangements. Saudi Arabia, aware of its pivotal role in ensuring the stability of oil supplies, would continue to uphold a balanced oil policy that accounted for both producer and consumer interests.
GIANDOMENICO MAGLIANO, Director-General for Economic and Financial Multilateral Cooperation of Italy, said the crisis called for a prompt, concerted and strong response, at all levels, based on coherence, coordination and efficiency. The outcome document before the Conference was the most useful instrument for pursuing that objective, and the United Nations, by virtue of its universal character and presence on the ground, was in a unique position to contribute to achieving a recovery on a new, more stable and sustainable basis.
Over the past 18 months, he said, great efforts had been made to address a daunting number of global and systemic challenges, from sharp spikes in fuel and commodity prices to the meltdown of major financial sectors. Indeed, substantial stimulus packages had been approved and huge amounts of cash had been injected into ailing systems. Further, important “green growth” initiatives were under discussion, and Italy was convinced that the decisions agreed by the G-20 London meeting would help address urgent short- and medium-term needs. Nonetheless, more efforts and initiatives had to be identified, elaborated and implemented, chiefly to ensure that the needs of the most vulnerable communities and countries were addressed.
He noted that Italy was planning to host the upcoming G-8 Summit in l’Aquilla and, in light of the ongoing crisis, had added food security as one of its priority topics, which, along with ensuring reliable access to water and sanitation, and promoting global health and education for all would help advance the Millennium Development Goals. Turning to other issues that would be addressed at the summit, he said financial markets needed to be based on the principles of propriety, integrity and transparency.
To that end, complementing the actions of the G-20, the Italian G-8 presidency had promoted the “Lecce Framework”, a comprehensive set of principles and standards regarding the conduct of international business and finance that would be brought to the attention of leaders at the summit, he said. It built on existing international initiatives and aimed to create a comprehensive framework that addressed governance, market integrity, financial regulation and supervision, tax cooperation and transparency of macroeconomic policy and relevant data.
JOHN McNEE (Canada), speaking also on behalf of Australia and New Zealand, said hidden behind the falling GDP statistics were the men, women and children who were struggling to feed their families, pay for medical treatment, keep their jobs and remain enrolled in school. Of critical importance during this time of financial and economic uncertainty was the reaffirmation of shared development financing commitments. It was more critical than ever for donors to fulfil existing commitments, despite the financial and economic crisis. Canada, Australia and New Zealand had a good track record in that regard, each agreeing to double their contributions in the next few years. In addition, they had all made multi-year pledges to support development in the Americas, Africa, Asia, the Pacific, the Middle East and Eastern Europe. The focus of their aid was on programmes that generated employment, protected children, contributed to food security and delivered health and education services. They were also committed to making aid effective.
He said that, in addition to the $1.1 trillion that had already been committed to international financial institutions by the G-20, Canada had committed an additional $10 billion in temporary bilateral credit arrangements to ensure that emerging markets and developing countries had access to the capital they needed to mitigate the impacts of the crisis. That amount would later be rolled into its permanent commitment, under a “New Arrangements to Borrow” facility, to which Australia had also committed $7 billion. In areas closer to home, the three countries had invested in regional banks, such as the Asian Development Bank and the American Development Bank. Australia and New Zealand would use the upcoming Pacific Island Forum Leaders Meeting to focus on supporting the Pacific islands.
He said the three countries would work with its partners on governance reforms of the international financial institutions. They would work towards reaching a successful Doha Round, with each country making separate aid-for-trade commitments. While calling on the United Nations to continue playing a leadership role, he also called on all development actors -- including international financial institutions, regional development banks, the private sector and civil society -- to work together to complement the multilateral response.
DELANO FRANK BART, ( Saint Kitts and Nevis) associating himself with the Caribbean Community (CARICOM), pointed out that the global financial and economic crisis had not happened overnight. Rather, an amalgamation of deficiencies in the global system delivered the results. The monetary system had been fragile for a while and various interconnected economic sectors were barely on life support. It was particularly sad that, despite technological advances and commitments made in the First Development Decade of the 1960s, many lived without life’s most basic necessities. Addressing such ills required working together in a manner devoid of greed and exploitation. Absent those factors, a genuine self-regulating framework could emerge.
The United Nations had structures in place to deal with such problems and Member States must throw their full support behind the Organization, he said. United Nations bodies and agencies responsible for bringing the Millennium Development Goals to fruition must be strengthened. While all countries had national interests, the only way forward was through international cooperation. Aid, trade, migration and development were interconnected variables -– where there was disconnect, the whole system self-destructed.
Countries had to understand that they could not pursue options alone, he explained, which, in turn, meant that the interests of all Member States had to be taken into consideration. He hoped to see the least developed countries, landlocked developing countries and small island developing States, among others, sitting at the same table as developed countries. The Bretton Woods institutions and other financial bodies had to be restructured to ensure that States operated on a true-level playing field. Saint Kitts and Nevis supported the idea of a vulnerability fund and establishment of a General Assembly ad hoc open-ended working group to follow up on today’s Conference. It also supported cooperation between the United Nations and Bretton Woods institutions. Finally, the global community had to be careful in its approach to addressing offshore financial services. He agreed that transparency and good governance were necessary, but did not agree that the services provided by those small developing independent States were the overriding problem. Targeting them was not the best strategy.
TOMMO MONTHE ( Cameroon), underlining the grave and devastating effects of the economic crisis on developing countries, said his country faced a net loss of $155 million in tax revenues in the first quarter of 2009. Among other financial challenges, the Government faced a weakening in its balance of payments, rising unemployment and declines in the purchasing power of its households. In response, counter-cyclical measures had been adopted, including, among other things, the opening and development of productive sectors, wider access to markets and continued construction of energy infrastructure. It was also seeking a reduction in prices of some basic goods, such as food products, and was lowering its prime rate.
He said that, at the regional level, a support fund had been established, but such measures had to go hand in hand with adequate financing. In that respect, the recent granting of resources by the G-20 should be made without conditionalities. But, as those funds were insufficient to meet the needs of developing countries, additional financing was also needed, such as the allocation of 1 per cent of the total stimulus packages of rich countries. Yet, because development problems in the South were not limited to aid, fairer trade frameworks, as well as a reform of the international monetary, system were needed. The United Nations had to play a vital role in that endeavour. If the world community was not ready to apply responses that were steeped in humanity to the current crisis, its conferences would continue to be rehearsals of written speeches that were out of step with humankind.
ALI’IOAIGA FETURI ELISAIA ( Samoa) said all economies were affected whether or not they had contributed to the root causes of the crisis. Some economies had the capacity to weather the recession unaided, but least developed countries like Samoa were vulnerable and the least able to cope. For most countries, the achievement of national and international agreed development goals would have to be delayed, or derailed. The crisis could not be wished away or postponed, which was why he welcomed the opportunity to contribute to the collective search for solutions. The Conference’s outcome document represented a consensual synopsis of the financial crisis, its causes, impact, remedial actions and a proposed way forward. They had been agreed intergovernmentally and needed to be implemented in earnest.
Addressing the interconnectedness of financial markets, he said reduced production and export of automotive wire harnesses to Australia had resulted in the loss of 70 per cent of Samoan jobs in that industry. A large number of the workforce in the tuna-canning business had also been laid off, 87 per cent of them Samoan. Tourism and remittances were the Government’s main revenue earners, but those industries were susceptible to exogenous factors. Any negative impact of the crisis on tourism was somewhat cushioned by the implementation of projects already in the pipeline, but it had, nevertheless, fallen by 7.6 per cent. Last week, the island had experienced its first case of H1N1 Influenza, which could affect the number of tourist arrivals. In addition, Samoa was midway through the transitional period, before graduating next year from the group of least developed countries. But, the catastrophic impact of the global recession affected efforts to meet the proposed graduation deadline. While reluctant to do so, Samoa nevertheless had an intention to request the extension of the transition period beyond December 2010.
CHARLES THEMBANI NTWAAGAE ( Botswana) said less than four and a half decades ago, his country had been one of the world’s poorest, with only 10 kilometres of paved roads, one public secondary school and an adult literacy rate of just 34 per cent. Its minerals sector had transformed the country from an agrarian economy to a middle-income country with an annual growth rate of over 8 per cent since independence in 1966. In 2005, the country had achieved the second Millennium Development Goal of universal primary education, with a total enrolment of 100 per cent and a guarantee of virtually free education for every child for the first 10 years. Throughout the journey, the resources entrusted to the Government had been managed with care and proper oversight mechanisms.
But, with the onset of the crisis, he said, Botswana had had to contend with the closure of mines and layoffs. The initial response had been to introduce a broad stimulus budget for 2009-2010, which represented a 5 per cent increase over the last period. But, a decline in revenue and a further forecasted contraction, had led the Government to reduce development spending and to borrow. There were indications that the world economy was likely to contract even more, signalling the need for another downwards adjustment, with a possible derailment of various goals. The United Nations offered a unique platform for proposing remedial measures to those problems, and it should pay special attention to middle-income countries, such as Botswana, whose heavy reliance on one major export commodity had left it vulnerable.
BYRGANYM AITIMOVA ( Kazakhstan) said the fact that the Conference was taking place was proof of the United Nations exclusive coordination role as a platform for inclusive discussion. While reforming the international financial and monetary system and renewing the governance system were among possible solutions to the problem, they had to focus on the realities of the modern economy: bringing the financial architecture into line with the principles of democracy, justice, transparency, legitimacy, equity and accountability. Kazakhstan attached the utmost importance to reform of the international financial institutions in a way that increased representation and realized developing country rights.
IMF was the only body able to facilitate a transition to a single world currency, while, in the medium-term, ensuring the establishment of fair regional currency systems. Implementation of any anti-crisis measures should be agreed upon among Member States and enable conditions for open trade, joint financing in infrastructure and regional economic zones. Her Government supported the creation of special funds at regional and subregional levels, along the lines of the Chiang Mei Initiative. In Kazakhstan, a lack of liquidity had adversely impacted industrial growth indicators, lowering them by 4.6 per cent in 2008.
By acting swiftly to develop an anti-crisis programme, she said, the Government had been able to blunt the impact from the crisis without appealing for outside aid. It intended to strengthen social safety nets via an annual 9 per cent increase in such benefits. Total pension allocations were expected to double from 2008 to 2011. Kazakhstan further believed protectionist tendencies would harm open trade, dampen prices and establish trade barriers that would only deepen the crisis. It also shared the view of many States that all earlier announced financing commitments should be fulfilled.
MARTY NATALEGAWA ( Indonesia) said that, if the crisis had a silver lining, it was that it reinforced the importance of multilateralism. A strong commitment to collective action was reflected in the outcome document set to be adopted by the Assembly tomorrow, and it could serve as a platform for an inclusive and transparent multilateral process to mitigate the impact of the crisis on development, as well as towards discussion of reform of the international financial and economic system. Immediately, the world’s nations must move to help limit the impact of the crisis on human development. Indeed, the mitigation efforts of developing countries must be assisted, including through the provision of access to resources for a stimulus package.
He said support for the United Nations development system needed to be scaled up, so that it could effectively implement its respective mandates to assist developing countries minimize the human development impacts of the crisis. He said that Indonesia’s participation in the G-20 had been guided by the need to ensure a focus on developing country concerns. At the same time, the crisis must not detract from other equally detrimental challenges, and he called on the Assembly to address the financial meltdown in concert with efforts to tackle food, energy and climate change concerns. The response to all those challenges provided an opportunity to pursue “green growth”, and the international community must act together to implement the Bali Road Map and Plan of Action, as well as ensure the upcoming Copenhagen Climate Change Conference was a success.
CLAUDIA BLUM ( Colombia) said the document to be adopted by the Conference represented a step in the right direction, and contained areas where the contribution of the United Nations system could be effective and complementary to the action of other institutions. She paid tribute to the co-facilitators of the intergovernmental negotiations in bringing about a balanced outcome. With respect to mitigation, Colombia highlighted the importance of the fiscal stimulus packages to effectively address the long-term needs of the developing world. The crisis also presented the opportunity to provide a new impetus to multilateral cooperation, including to the work of United Nations funds and programmes.
She said Colombia joined the call to resist protectionism in trade, finance and migration. Whether the world would recover its confidence in the economy depended on whether it could recommit itself to the trade of goods and services, and the free movement of labour. Colombia considered it essential to achieve greater consistency in macroeconomic policies at the global level; adopt codes of conduct and strengthen regulation; maintain autonomy of developing economies; design a network of regional and subregional organizations that supported international and monetary financial management; and strengthen and reform international financial institutions. In that context, countries must make the effort to strengthen such institutions as regional development banks. The Inter-American Development Bank, for example, provided more than 50 per cent of multilateral financing in Latin America and the Caribbean.
MEMDUH AKÇAY, Director General for Foreign Economic Relations and Under-Secretary of the Treasury of Turkey, said the interlinked food, fuel and economic crises had created a “bleak” development environment that had led to a slowdown of efforts to eradicate poverty and create jobs, and had even erased some other development gains. Turkey believed that the concrete agreements made and common ground reached among the G-20 provided important momentum to the overall effort to address the impact of the crisis. As a member of that negotiating bloc, Turkey would follow up on those commitments.
Turkey was also suffering from the impact of the economic downturn, chiefly as a result of the global slowdown in production, consumption and investment trade volume. However, the soundness of Turkey’s banking sector, with its well managed risk structure, had somewhat limited the impact. On the fiscal front, Turkey had benefited from prudent policies and crucial structural reforms that it had implemented over the past seven years. Turkey had been able to significantly reduce the public sector borrowing requirement, and the ratio of public debt stock to gross domestic product. On the international front, he called for the development of a shared vision and common action plan devised in a pluralistic and participatory process that did not protect specific countries. The crisis had also led to increased calls for broad institutional reform. Turkey welcomed the efforts aimed at empowering the developing countries with greater voice and participation in those institutions.
GONZALO GUTIÉRREZ ( Peru) said the financial crisis had expanded to become an economic crisis affecting real economies worldwide. Through diverse programmes from the United States, the European Union, Japan and, ultimately, the G-20, an enormous financial response had been mobilized. Nevertheless, in the ongoing effort to address several vital elements of the crisis, the safeguarding and promotion of international trade would be essential. Protectionism would be especially harmful. A successful conclusion of the Doha Round that reaffirmed a multilateral trade system was also necessary. Greater inclusiveness in the global financial institutions should ensure that global decision-making did not favour the larger economies. The United Nations should play a fundamental role in the financial system’s reform, which should aim to simplify, harmonize and diminish the number of financial instruments, while also increasing their transparency. Greater protection should be afforded to the rights of migrant workers.
Turning to the Conference’s outcome document, he said Peru supported the final negotiated text, which reflected a diversity of perspectives and considered it to be a beginning, not an end. As a fundamental part of the international economic system, trade must be further integrated into its architecture. He called for the creation of an intergovernmental panel of experts, as recommended by the Commission of Experts, which would work towards the eventual goal of creating a global economic coordination council.
CHRISTIAN WENAWESER ( Liechtenstein) said the international community must make good use of the toolboxes at its disposal to deal with the financial and economic crisis –- the Monterrey Consensus and the Doha Declaration. The Government of Lichtenstein was making sure not to let the crisis affect its commitment to achieve the agreed official development assistance target of 0.7 per cent. It had consistently increased its contributions since 2002, and the goal for 2009 was to exceed a target of 0.6 per cent of its gross national income. That figure did not include debt cancellation, export promotion measures or loans. In addition, the Government of Lichtenstein had recently committed itself to implementing internationally recognized standards of transparency and exchange of information. It was presently engaged in bilateral negotiations on tax information exchange agreements for addressing tax fraud and tax evasion. Finally, Lichtenstein had become increasingly active in the field of microfinance, through the “Microfinance Initiative Liechtenstein” and the United Nations Capital Development Fund.
He said Liechtenstein was expecting its economy to stagnate or shrink in 2009. Given that its economy was strongly export-oriented, he underlined the importance of open trade relations as an important engine of growth. Any measure that attempted to limit trade was problematic and counterproductive. The Liechtenstein Government had not enacted a stimulus package and was not planning to do so. The Government understood that its role was solely to provide a regulatory framework to enable business to function in a liberal market economy. Over-regulation must be avoided, since it could stifle innovation. The crisis could only be dealt with effectively through a global approach.
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