Economic Committee Is Told Special Needs of African Countries in Ongoing Global Financial Crisis Call for Range of Remedies
Economic Committee Is Told Special Needs of African Countries in Ongoing Global Financial Crisis Call for Range of Remedies
|Department of Public Information • News and Media Division • New York|
Sixty-fourth General Assembly
9th Meeting (PM)
Economic Committee Is Told Special Needs of African Countries in Ongoing
Global Financial Crisis Call for Range of Remedies
Delegates Speak of Critical Situation, with Debt-Servicing
Costs Diverting Critical Resources from Social, Development Needs
A regulatory overhaul to strengthen regional development banks, a scaling up of international aid tailored to Africa’s special needs, and debt relief were urgently needed to help buoy African economies weakened by the global financial and economic crisis, several speakers told the Second Committee (Economic and Financial) this afternoon, as it continued its consideration of macroeconomic policy questions.
Swaziland’s representative, speaking for the Southern African Development Community (SADC), said the region was not well integrated into global markets, but nonetheless had suffered the negative impact of financial havoc. The Johannesburg Stock Exchange ended 2008 with a 25.7 per cent loss. The drop in commodity export prices caused foreign exchange, reserves and Government revenue to drop, and current account balances to deteriorate. Africa’s economic growth rate would fall this year to less than half the pre-crisis level. Countries already suffering from low reserves and fiscal deficits would be hard hit, especially as Governments were unable to cope with their populations’ growing needs. Moreover, the slowdown would likely exacerbate poverty, and make it even harder for SADC countries to maintain hard-won gains towards the Millennium Development Goals.
To address those woes, he called for a review of regulatory infrastructure and increased recognition of the importance of strengthening regional development banks. It was crucial for those banks to provide medium- and long-term assistance to meet their clients’ development needs. To do that, they needed stronger financial and lending capacity.
Algeria’s representative, speaking for the African Group, agreed, and pointed to the Group of Twenty’s (G-20) recent commitment to increase resources for developing countries through the World Bank and regional development banks, such as the African Development Bank. He underscored the urgent need to tackle key issues of immediate concern to Africa, such as providing more liquid funds, or helping countries from falling into a foreign debt crisis. The international community should respect its commitments to scale up action and money to implement programmes addressing Africa’s special needs.
The global economic crisis had affected the “drivers” of Africa’s recent economic growth, he said, and added that it had threatened the ability of its Governments to protect critical core spending in poverty eradication, health, education, social-safety nets, and infrastructure. Growth across the continent was expected to fall to 3.2 per cent in 2009, down from 5.75 per cent in 2008 and 6 per cent in 2007.
Ethiopia’s representative said that donors at the London G-20 summit had proposed to give an additional $50 billion on top of official development assistance (ODA) to help Africa through the current crisis. While the International Monetary Fund (IMF) readily disbursed funds, monies sent from the World Bank and the African Development Bank were not yet available, and the slow pace of meeting pledges was worrisome. In addition, recent aid flows to Africa had shifted away from productive activities -- vital for job creation and poverty reduction -- to social sectors. Aid volatility and fragmentation, plus tied aid, continued to undermine effectiveness. Development partners, he said, must ensure full implementation of commitments and a debt-service moratorium should be considered for the heavily-indebted countries.
Also commenting on external debt, Nigeria’s representative said it had an intrinsic hold on the development of human and material resources. Debt sustainability must be addressed comprehensively to free up resources otherwise used for debt servicing to fund strategies to achieve the millennium targets. He called on creditors and debtors to faithfully and sincerely verify debts owed by developing countries, with a view to granting relief and to extending outright cancellation to more countries, as a complement to other resource flows.
Also speaking today were the representatives of Mexico (for the Rio Group), Colombia, Kenya, Jordan, Kuwait, Guatemala, Switzerland, Pakistan, Ecuador, Thailand, Iraq, Kazakhstan, Republic of Korea, Ukraine, Côte d’Ivoire, Qatar, Libya, Malaysia and Nicaragua.
The Committee will meet again at 10 a.m. on Wednesday, 14 October, to conclude its discussion on macroeconomic policy questions and begin its consideration of operational activities for development.
The Second Committee (Economic and Financial) met this afternoon to continue its debate on macroeconomic policy questions. (For background see Press Release GA/EF/3244 of 12 October.)
JOEL NHLEKO (Swaziland), speaking for the Southern African Development Community (SADC), said that region was less integrated into global financial markets than many other regions, but they had not been immune to the negative impact of financial havoc. The Johannesburg Stock Exchange, the largest exchange in the region, ended 2008 with a 25.7 per cent loss. The drop in commodity export prices resulted in a loss of foreign exchange, deteriorating current account balances, declining reserves, and a reduction in Government revenue. Countries already suffering from low reserves and fiscal deficits would be hard hit, especially as Governments became unable to cope with the growing needs of their population.
Developing States were particularly vulnerable, he said, because many were highly dependent on primary commodity exports for income while importing food and other commodities. The slowdown in growth would likely deepen the deprivation of the poor and people on the brink of poverty. Some SADC countries were making significant progress toward the millennium targets before the crisis, but the shortage of export revenue, foreign finance and slower growth would hamper those gains.
Growth collapses were costly for human development outcomes. For example, in countries that suffered economic contractions of 10 per cent or more between 1980 and 1994, more than 1 million more infants had died than usual. The gross domestic product (GDP) growth rate of African countries was projected to fall in 2009 to less than half the precrisis rate. Unless reversed, that corresponded to a total of 1.4 million to 2.8 million excess infant deaths during that period.
He called for a review of the regulatory infrastructure, while recognizing the importance of strengthening regional development banks, taking into account the interest of all member countries. It was also important for them to provide medium- and long-term assistance to meet their clients’ development needs. He supported measures to enhance the financial and lending capacity of regional development banks. He recognized the importance of other regional, interregional and sub-regional economic initiatives and arrangements aimed at promoting development, cooperation and solidarity among their members.
CLAUDE HELLER (Mexico), speaking for the Rio Group, said that the global economic and financial crisis had come about because of structural imbalances and the disproportionate influence of the financial sector, and demonstrated the need for Governments to play a bigger role. In his region, in particular, the crisis had hit hard and hampered the attainment of the Millennium Development Goals.
Given the current challenges, he said, it was important to support middle-income countries to maintain progress and make it permanent. Similarly, it was necessary to keep both low-income countries and least developed countries on track for improvements. The international community also needed to strengthen regulation and supervision of financial institutions, and guarantee that any measure taken by the developed world in the area of trade, employment, capital and the environment did not negatively affect developing countries.
With respect to the developed world, he said that many Governments had increased subsidies to various sectors, especially in agriculture, and such measures distorted national markets with adverse consequences for the poorer countries. Finally, reiterating that it was important that the developed world fulfil its obligations on Official Development Assistance, he said the Group’s member States kept working to strengthen south-south cooperation.
NOR-EDDINE BENFREHA (Algeria), speaking for the African Group, said that despite tremendous efforts by African countries, progress in the fight against extreme poverty and hunger in Africa was slowing and, in some cases, reversing because of the global economic and food crises. The international community should respect its commitments to scale up action to implement programmes supporting Africa’s special needs. Those actions could mitigate the multidimensional aspects of the economic crisis, and new financial resources should be supplied to help African countries sustain their vulnerable economies. The crisis had affected the “drivers” of Africa’s recent economic growth; the volatility of commodity prices, exacerbated by the crisis, was of grave concern to Africa. He said demand for and prices of African commodities were falling, capital flows were declining and the promised increases in aid had not materialized.
He expressed concern over the adverse impact of the crisis on the ability of African countries to protect critical core spending in poverty eradication, health, education, social safety nets, and infrastructure. The increased flow of capital to Africa would go hand in hand with prevention of capital outflows. Africa was expected to grow 3.2 per cent in 2009, down from 5.75 per cent in 2008 and 6 per cent in 2007. The sectors most affected by the crisis were mining, tourism, textiles and manufacturing. Enterprise closings, and cancellations and postponements of projects were becoming widespread. There were substantial job losses, which lowered standards of living.
The Group of Twenty (G-20) Summit in September 2009 in Pittsburgh agreed to increase resources for developing countries through the World Bank and regional development banks, including the African Development Bank. He underscored the urgent need to tackle key issues of immediate concern to Africa, such as providing more liquid funds, or to help countries from falling into a foreign debt crisis. Such action would also help Africa make progress towards achieving the Millennium Development Goals. A successful outcome of the Doha Round should support expansion of Africa’s exports, reinforce the potential for trade as an engine for growth and development, and increase Africa’s chances for using trade to support development. He welcomed action by individual countries to provide duty-free and quota-free market access for all least developed countries, particularly in Africa, and he called on others to follow suit. Aid for Trade would help African countries take advantage of opportunities offered by the international trading system.
FREDRICK LUSAMBILI MATWANGA ( Kenya) said developing countries in particular struggled with the effects of the financial and economic crisis, which had revealed the shortcomings of the international financial system. With regard to the Millennium Development Goals, he said that many countries –- especially in Africa –- were behind their 2015 targets, and he encouraged the developed world to assist with macroeconomic reforms.
He said that, on the subject of reform in general, the international financial system should be reviewed to deal with the structural weaknesses, which the crisis had revealed. He outlined a number of areas for improvement, among them international cooperation on financial regulation; multilateral surveillance and policy cooperation; lending and resource capacities of the International Monetary Fund; the international system for payment and reserves, and finally, governance and reform of the Bretton Woods institutions. He called on countries to abandon policies that distorted trade, and urged them instead to develop efficient debt management practices or even to cancel debt entirely.
CLAUDIA BLUM ( Colombia) stressed the importance of closely following the objectives established in the outcome document adopted at the Conference on the financial crisis last June. To that end, her delegation supported the creation of the Assembly’s open-ended working group, and looked forward to the beginning of its tasks. She said restructuring the international financial system, including better regulation and a change in the mechanisms for supervision, was crucial to strengthen the path towards economic recovery. Such a reform must take into account the financing needs of developing countries. The mobilization of required resources to achieve the development goals agreed to by the United Nations would depend on the adequate direction of that process.
She said that renewed financial architecture should be based on enhanced consistency of macroeconomic policy at the global level; adoption of codes of conduct that included a better flow of information and strengthening of regulation and supervision; preservation of the autonomy of developing economies; the creation of regional and subregional networks in support of monetary and financial management; and reform of international financial institutions.
Overcoming the crisis should be compatible with attending to other difficulties faced by developing countries. In particular, Colombia supported simplification of duties and an enhanced transparency in the functioning of international commodities markets. It reaffirmed the need for a less protectionist system, with the reduction of subsidies used mainly by developed countries. On the other hand, the supply of food and production of energy alternatives, such as biofuels, should not be seen as opposite or competitive ends. Those options were compatible and concurred with sustainable development goals and the strengthening of the agricultural sector.
KHALID SHAWABKAH ( Jordan) said developing countries continued to suffer because of external debt, thwarting efforts towards sustainable development, poverty eradication and higher standards of living. External debt stood at $3.6 trillion in 2008. Most developing countries could not service their external debts. Such debts increased at an unprecedented rate in the past few years. Many developing countries had to curtail investment projects, thus limiting progress towards achieving the Millennium Development Goals. Jordan had been cooperating since 1989 with the International Monetary Fund (IMF) to achieve economic reforms.
Like all developing countries, he continued, it was subject to economic shocks beyond its control. Combating the external debt crisis drained resources and undermined Government efforts to eradicate poverty and achieve the Millennium Development Goals. There was a pressing need to look for additional, alternative and innovative financing to improve the economies and security of developing countries. Such efforts should be deployed at the global level and be highly coordinated.
ABDULAZIZ AL QADFAN ( Kuwait) said that development was not only vital in terms of attaining progress and growth, but also because it helped achieve peace and stability. The global financial crisis had affected both developed and developing nations negatively. Referring to some statistics released by IMF last June, he said that by the end of this year, the world economy would have witnessed a contraction rate of 1.4 per cent and that the economies of developed countries would have dropped by 3.8 per cent.
Given the severity of the crisis, he continued, Kuwait hosted the Arab Economic and Social Development Summit and contributed $500 million to a $2 billion fund to finance small- and medium- sized projects within the Arab world. In response to the Millennium Development Goals, including combating poverty, Kuwait donated $100 million towards agricultural research and emergency as well as earmarking $300 million to combat poverty and disease in Africa. Over the past few decades, it had contributed 2 per cent of its Gross National Product (GNP), three times the limit set by the Monterrey Conference, to assist developing countries.
He expressed his country’s pride at coming first among all other Arab countries in the United Nations Development Programme’s (UNDP) 2009 Human Development Report, and thirty-third in the world, noting Kuwait’s top scores in the fields of education, health and civil liberties. In conclusion, he said that in order to resolve the crisis, it was crucial to adhere to allocating 0.7 per cent of States’ GNP for development assistance, to find ways to reach the Millennium Development Goals before 2015 and to pursue cooperation between developed and developing countries.
GERT ROSENTHAL ( Guatemala) said the economic and financial crisis had been a “veritable earthquake” and that consequences had spread to the real economy, the institutional order and even the “world of ideas”. Although the “G-20” was an exclusive group of countries that operated outside the United Nations system, he acknowledged that the Group had taken some steps in the right direction, tentative and imperfect as those steps were.
In terms of policies put in place to counter the effects of the crisis, he said he recognized that multilateral action was preferable to isolated responses and praised the counter-cyclical measures, which had prevented a worsening of the situation. However, 170 countries did not participate in the decision-making process and this was a problem, he said, adding that those inside and outside the exclusive “G-20” had to develop more interaction. On the subject of reform, he said that a more productive relationship with the Bretton Woods institutions had to be developed and the role of the United Nations had to be boosted.
MATTHIAS BACHMANN ( Switzerland) said that the global crisis had shown the need for better regulation and supervision of the financial system, and for a close partnership between international institutions dealing with global financial stability. The G-20 had claimed a pivotal role in discussing global issues, yet 85 per cent of the world’s countries and over one third of the global population were not represented by that growth. The United Nations and the G-20 must better coordinate their work, to enhance the legitimacy and effectiveness of global economic governance. It was also urgent to address the shortage of trade financing and the rise of protectionism to better integrate developing countries into the world economy. He called for a successful conclusion to the Doha Trade Round.
The current crisis had caused an increase in the level of public debt, he continued. Current levels of public spending, particularly in some large countries, were not sustainable; national debt levels should be reduced. However, when and how to withdraw fiscal stimuli would have to be weighed carefully, since it would have political and economic implications. The Debt Sustainability Framework could serve as a key instrument to guide macro-economic policies towards sustainability.
ASAD KHAN ( Pakistan) said he supported the creation of the General Assembly’s Open-ended Working Group to follow up on actions agreed to in the Conference Outcome. He was keen to see early action on several decisions. Among them he listed: the decision to frame flexible, concessional, fast disbursing and front-loaded assistance packages designed to quickly assist developing countries financially burdened by the crisis; the mobilization of additional resources for social protection, food security and human development through all sources of development finance; the scaling up of development finance from existing resources and create new sources of finance; and resistance all protectionist tendencies and rectification of any protectionist measures already taken.
He spoke also of the decision to provide grants and loans to ensure debt sustainability to avoid a further debt crisis and to explore enhanced approaches to restructure sovereign debt, and to improve early warning systems through even‑handed and effective surveillance by the IMF of major financial centres, international capital flows and financial markets.
The redesign of the global economic and financial governance architecture should be underpinned by several principles, he said. It should be United Nations‑inclusive. Close United Nations engagement in the reform process would signify global participation and legitimacy. The right to have a voice and representation should be built around, and driven by, need and equity. The new compact for development growth and prosperity should be based on a people-centred approach and a mix of policies designed to ensure peoples’ welfare and well-being. The international community should put commodities back at the centre of the international development agenda.
DIEGO MOREJÓN PAZMIÑO ( Ecuador) said the global economic and financial crisis had been severe, and he called for the transformation of the international financial system, highlighting a recent report by the United Nations Secretary‑General on the issue. In terms of reform, more representative structures of Government were necessary and work was needed to create a new monetary system, which was more stable and equitable. With respect to the United Nations, he said that this was a historic challenge and that the Organization was poised to fulfil its intended role.
Ethics, transparency and democracy should be encouraged and developed within the international financial system; counter-cyclical policies on both the national and international level should be promoted. Overcoming the crisis was a challenge for everybody, and he highlighted recent multilateral action in his region, such as work on a common reserve fund for Latin America and a unified payment system. He said that it was important that developed countries listen to the needs of developing countries. Furthermore, he called for the countries of the south to get debt relief, saying that countries currently serviced the debt at the expense of development and investment.
KRIRKBHUMI CHITRANUKROH ( Thailand) said that since many Asian economies showed signs of stabilization, Thailand was encouraged that regional cooperation had been making significant contributions to the strengthening of the regional financial architecture. For instance, “ASEAN plus Three” (Association of South‑East Asian Nations plus China, Japan and Republic of Korea) had agreed to widen the swap arrangement known as the Chiang Mai Initiative from the initially agreed level of $80 billion to $120 billion. Thailand also looked forward to the establishment of a Guarantee and Investment Mechanism under the Asian Bond Market Initiative to support local currency-denominated corporate bonds in the region. Furthermore, efforts were being made to strengthen the region’s early warning mechanisms.
Continuing, he emphasized the need for a mechanism whereby the views of all countries, particularly the emerging market economies, could be heard on regulatory standards and issues, since the implementation of post-crisis reform would have implications for most economies in the global financial system. It was also important to make sure that international trade continued to be an engine of growth and development for the world. The global economic crisis, by virtue of its startling severity, should bring a sense of urgency to the multilateral trade negotiations. All concerned must resist the urge to put narrow self-interests before the development needs of the global community.
Countries must not give in to the temptation of trade-distorting protectionism, but must commit themselves to maintaining an open international system of trade and investment. The international community must do more to accelerate the pace of trade negotiations and push for their completion as soon as possible. He said he looked forward to working closely with the Assembly’s ad hoc Open-ended Working Group on the follow-up to the World Economic and Financial Crisis Conference, and he urged the Second Committee to be part of the solution by reaching an ambitious and balanced outcome.
ANTHONY ADEYEMI SEKUDO ( Nigeria) commended the Conference on the World Financial and Economic Crisis and its Impact on Development and the recommendations of the Stiglitz Commission, which provided far-reaching insights into the existing weaknesses and proposed concrete options that led to the collective focus on the way forward. He urged all stakeholders to seize the momentum already generated by the Conference outcome to ensure that effective and even-handed surveillance was mounted and that appropriate regulatory reforms were implemented nationally, regionally and internationally. In that context, Nigeria was strengthening macroeconomic reforms to ensure that excesses and leaks in the financial sector, especially in the banking industry, were curtailed; programmes with deflationary consequences were discouraged; safety guarantees for domestic and foreign capital were provided, and provisions were made for new ideas.
The greatest challenge posed by external debt in developing countries, he said, was its intrinsic hold on development of human and material resources. The debt burden called for a significant re-evaluation. Debt sustainability must be addressed comprehensively to free resources for development. Having lifted its credit burden in 2006, Nigeria understood how resources that would otherwise be tied to debt servicing could now benefit implementation of key aspects of the Millennium Development Goals. He called on creditors and debtors to faithfully and sincerely verify debts owed by developing countries, with a view to granting relief and extending outright cancellation to more countries. Debt relief should complement other resource flows. The weakened demand for commodities due to the financial crisis had greatly impeded the export revenue and import capacity of most African countries. Nigeria’s gross domestic product (GDP) would fall 0.9 per cent in 2009. The uncertainty over commodity finance and investment sustainability was frustrating efforts to diversify national income sources.
KUTAIBA ALKERO ( Iraq) said that external debts constituted one of the thorniest problems of the economy, one that hindered the achievement of the Millennium Development Goals by affecting countries’ access to financing. It was of primary importance that the international community agree on decisive and urgent measures to contain the crisis and promote systematic growth. With respect to official development assistance (ODA), he urged donors to honour their commitments.
Regarding institutions such as IMF and the World Bank, he said that they should assist developing countries and countries in transition to protect them from the negative impact of the crisis. He called on the United Nations and the international community to honour the obligations they had undertaken at recent summits and conferences, especially with regard to debt relief, and he specifically encouraged countries to “write up” Iraq’s debt or at least substantially reduce it.
MURAKAT TASHIBAYEV ( Kazakhstan) observed that the economic crisis exposed the weaknesses of the international financial system and financial policies. It also illuminated where international cooperation and coordination needed to be strengthened. In implementing reforms built upon transparency, legitimacy, and accountability, among others, the realities of modern economics needed to be acknowledged. Further, an increased representation of developing countries and their rights needed to be present in decision making in the Bretton Woods institutions.
She also noted that the revived discussion on the reserve currency would lead to a more stable and equitable international monetary and financial system. In order to ensure long-term international commitments, cooperation between governments, international organizations, the private sector and non-governmental organizations was crucial. The financially integrated international community needed to articulate and affirm essential principles and standards of market regulation, as well as to develop a mechanism for continuous oversight on progress made on coordination and cooperation.
SIN BOONAM ( Republic of Korea) welcomed the United Nations Secretary‑General’s initiative to develop the Global Impact and Vulnerability Alert System (GIVAS). The system would be an important tool to understand in real time the actual impact of the crisis. It would allow the international community to hold itself accountable to those who needed assistance. He encouraged countries and regional groups to continuously voice and share their concerns on the impact of the crisis on their economies. Since the onset of the global financial crisis, countries appeared to agree on the need for greater global cooperation to revitalize the international financial system, including governance reforms of the Bretton Woods institutions. It was important to continuously discuss and explore means to achieve that end.
The high-level conference on the financial crisis last June offered an important opportunity to show the international community’s commitment to a more stable global economy, he said. The G-20, which held three summits in one year, showed what the international community was capable of doing when it had political will. It had come up with swift, coordinated measures to respond to the crisis and provided direction for international financial architecture reform.
He expressed the hope for actively engaging with Member States and the United Nations to explore ways to better cooperate with the G-20 so that the voices of all countries would be duly reflected in G-20 meetings. On commodities, he expressed concern over the United Nations Secretary-General’s observations that speculation may be causing commodity price instability. Given the importance of commodities to many economies, he called for more in-depth studies on the extent that speculation had caused price instability and potentially triggered a global food crisis.
ESAYAS GOTTA ( Ethiopia) noted successful measures implemented by African countries to strengthen revenue collection institutions, broaden tax bases and improve the efficiency of tax administration systems. Those measures had translated into improved savings, but given the low level of income the domestic savings were inadequate to finance a “meaningful” growth rate for achieving the Millennium Goals. Therefore, while intensifying efforts to mobilize domestic savings, Africa also needed an increase in external resource flows.
In terms of ODA, he continued, donors at the London G-20 summit had reaffirmed their earlier commitments and had proposed an additional contribution of $50 billion to help Africa through the current economic crisis. Some of that funding was readily disbursed through the IMF but the rest, to be disbursed through the World Bank and the African Development Bank, was not yet available. The slow pace of meeting pledges was worrisome.
In addition, he said, recent aid flows to Africa had shifted away from productive activities in favour of social sectors. Aid to productive sectors was important in the creation of jobs and efforts to reduce poverty. “Aid quality is as important as its quantity”, he said, but aid volatility and fragmentation, plus tied aid, continued to undermine effectiveness.
He noted that the global financial and economic crisis had dampened foreign direct investment and said those flows were expected to continue declining. Further, they were concentrated in a few countries and economic sectors with limited spill-over effects. Africa would redouble efforts and encourage development partners to invest in infrastructure and other priority sectors.
The economic crisis that followed on the heels of the financial had also impacted Africa negatively. Shifts in commodity prices and global trade had tested Africa’s growth. It had proved the fragility of Africa’s economy and the need for Africa to rid itself of commodity dependence and embark on a structural transformation of its economy.
HANNAH PROROK ( Ukraine), while expressing gratitude to the institutions that gave financial support during the global economic crisis, said the United Nations should prevent “financial perturbations from spinning out into social upheavals”.
Ukraine, she said, recommended revisiting the idea of a United Nations Economic Security Council; the international community should consider all possibilities and all measures for achieving global stability and the durable sustainable development of all countries. This would include governance reform of the Bretton Woods institutions, including the World Bank and IMF, to give developing countries a stronger voice in decision-making. It would strengthen the position of low-income countries in the IMF and ensure effective participation of developing countries and countries in transition in the international financial institutions, as well as in the global economy and financial system as a whole.
She said the international community must find a durable solution to external relief; debt had one of the principle obstacles to sustainable human development and it impeded the security and economic stability of developing countries. Debt relief would free up national resources for development-related purposes.
Lending rates remained too high in most developing and transition economies, and thus, it was key to avoiding the accumulation of new unsustainable debt. The current financial crisis had impacted the Ukrainian economy but the Government was taking all measures to minimize the influence of the global economic recession.
TETIALI ROLAND TOH ( C ôte d’Ivoire ) said that many countries were “crushed” by the debt burden, which forced Governments to a choice of reducing poverty or servicing their debt. While debtors needed to pay creditors, the terms of the debts could be renegotiated, he said, and added that by “gobbling up money”, debt payments endangered the achievement of the Millennium Development Goals for many countries.
With respect to Côte d’Ivoire, he said, the Government had decided to free the country of the debt burden and had defined priorities for development and debt management. This programme to reduce poverty and encourage growth was ambitious and included goals of significantly bringing down the poverty rate, and he thanked his country’s development partners for their help. He called on the developed countries to live up to commitments made previously, particularly with respect to raising the ODA to 0.7 per cent of the GDP.
NASSIR ABDULAZIZ AL-NASSER ( Qatar) said the current economic and financial crisis was one of the worst economic setbacks since the “Great Depression” of the 1930s. Its social consequences would worsen unless measures were taken in line with the outcome document of the high-level conference in June. Achievement of the Millennium Development Goals would be threatened. The economic systems in developed countries failed to protect consumers. The root causes of the international credit problem must be addressed. Without urgent measures, the crisis begun in the United States would spread to financial sectors everywhere and hamper investment flows. Middle-income countries and energy producers would feel the impact, as protectionist measures were taken.
He said the outcomes of the conferences on the issue should form the basis for international financial rules, with developing countries more involved in decision-making. Cooperation and coordination between developed and developing countries should be extended. The International Monetary Fund (IMF) had been bereft of solutions, despite its role in coordinating global economic policies. The Fund should undergo radical change. He said Qatar would present during next year’s Davos Conference a proposal for the financial governance of the IMF. New practices were needed that met the requirements of developing countries. If not curbed, the current crisis would affect the international distribution of resources, commerce and trade. That was why conclusion of the Doha Round was more important than ever.
MOHAMED ALAHRAF ( Libya) said the forces of globalization had exacerbated the economic and financial crisis, and that today there were more poor people, more unemployed people and more illegal migrants in the world as a result. He called for developing countries to get a stronger voice in the governance of international financial institutions and said that meaningful and comprehensive reform of the financial system would help avoid a similar crisis in the future.
On the debt crisis, he said he was concerned about the flow of money between the developing and developed countries. He noted that his country’s leader, Muammar Al-Qadhafi, had spoken about colonialism and the exploitation by the developed world of the natural resources of developing countries during his address to the General Assembly last month, and called for the adoption of a resolution on that issue. Furthermore, it was necessary to strengthen and consolidate programmes in developing countries to help them with exports and access to international markets. He emphasized the importance of United Nations Conference on Trade and Development (UNCTAD) and spoke of the burden of debt as an obstacle to the achievement of Millennium Development Goals. There was an urgent need to reduce or entirely cancel these debts, he said.
RAJA NUSHIRWAN ZAINAL ABIDIN ( Malaysia) said there had been a large number of banking crises in the past three decades, and they had all involved three factors -- disruptions in the financial intermediation process; a downward spiral of asset prices and a general loss of confidence. Measures to address the crises were aimed at restoring stability in the financial markets, the start-up of credit flow and the restoration of confidence.
He said his country’s experience in managing the Asian financial crisis had shown that a decisive, comprehensive response at an early stage was critical to both early recovery and reducing impact. Also, efforts did not stop when the crisis was over; a comprehensive restructuring and reform of the financial sector was called for. That involved aggressive development of domestic financial markets and strengthening of oversight, both regulatory and supervisory.
“The key lesson was that foundations for resilience are built during the good times,” he said. Over the past year, massive fiscal stimulus packages had been adopted, sweeping regulatory reforms had been proposed and unorthodox policy measures had been introduced to stabilise the market and restore confidence in the financial system. With immediate urgency receding, it was critical to achieve consensus on regulatory and institutional reforms at both national and international levels.
The obvious causes of the crisis included indiscriminate lending, excessive risk-taking and over-zealous financial innovation, he said. To ensure it did not recur, it was necessary to see that the crisis at the more fundamental level was due to a mismatch between the financial sector and the real, productive, centre. Islamic finance placed a strong emphasis on its linkage to productive economic activity. It had built-in checks and balances and high degrees of disclosure and transparency. Indeed, explicit elements inherent in Islamic finance addressed a number of issues that had surfaced in the conventional system. The resilience of the Islamic system underpinned by Sharia principles.
He said the current crisis had shown the need for cooperation between regulators to contain potential systemic risks beyond national boundaries. An Islamic finance task force had been established and the next step was for Islamic finance to integrate with the international system through mutual recognition of standards and products across jurisdictions.
JAIME HERMIDA ( Nicaragua) said the original intention of having international financial institutions connected to the United Nations system had been lost; today institutions responded to the agenda of one government, and so reform was needed. Free trade and this international financial system had transformed the world economy to “a big casino” where winning countries did not take risks and were the rest became large losers without even participating in the game.
On the subject of external debt and development, he said that the developing countries paid the developed world, both in natural resources and in terms of money, and he supported the various initiatives to cancel or put a moratorium on debt payments, at this moment when many countries suffered the effects of the global economic and financial crisis. Promises of a world without poverty were more than 50 years old, he said, but one billion people still suffered from hunger today. He described the use of land and grains for bio-fuels while people starved as “a crime against humanity”.
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