Developing Countries, Hardest Hit by Global Financial Crisis, Urgently Need Pledged Assistance, Assembly’s Economic Committee Is Told
Developing Countries, Hardest Hit by Global Financial Crisis, Urgently Need Pledged Assistance, Assembly’s Economic Committee Is Told
|Department of Public Information • News and Media Division • New York|
Sixty-fourth General Assembly
12th & 13th Meetings (AM & PM)
Developing Countries, Hardest Hit by Global Financial Crisis, Urgently Need
Pledged Assistance, Assembly’s Economic Committee Is Told
Some Delegates Say Average Development Aid from Industrial Nations
Now Well Below 0.7 Per Cent of Gross Domestic Product Originally Set
Donor countries needed to fulfil existing financial commitments to prevent developing countries, already suffering from the effects of the economic crisis, from backsliding further, delegates said today as the Second Committee (Economic and Financial) met to consider the follow-up to, and implementation of, the outcome of the 2002 International Conference on Financing for Development and the 2008 Review Conference. Among the topics discussed was reform of the international financial “architecture” as well as innovative financing for development.
Nepal’s representative, speaking on behalf of the Least Developed Countries, said that those nations -– already weakened by the food and energy crises -- experienced a “perfect storm” as financial resources, foreign direct investment, remittances from overseas workers, export earnings and tourism revenue all dried up at the same time.
The representative of the Democratic Republic of the Congo, speaking for the Southern African Development Community (SADC), said he was concerned that the effect of the global stimulus package was felt most in developed countries, and that improved economic growth in the developing world required stronger commitment. Industrial countries had to deliver more efficiently on existing promises with regard to official development assistance (ODA), which had declined and now averaged about 0.24 per cent of an industrial country’s gross domestic product (GDP), significantly short of the agreed-upon goal of 0.7 per cent of GDP.
Indonesia’s representative, speaking for the Association of South-East Asian Nations (ASEAN), stressed that it was critical for all countries to expedite economic recovery. The developed world also had to learn long-term lessons, particularly regarding development of the financial sector and development strategies. Policymakers worldwide had to address how best to reduce instabilities in terms of private sector flows, and everyone had to resist protectionist impulses while also concluding a development-focused Doha Round of the World Trade Organization (WTO) negotiations as soon as possible. To strengthen efforts to achieve the Monterrey Consensus, “We need to go beyond stale political discussion aimed at scoring points,” he said.
Speaking for the Caribbean Community (CARICOM), the representative of Bahamas said the task of enhancing development financing, follow-up and implementation was “an exercise which all States need to approach with creativity and a clear sense of purpose”. Concerning the upcoming High-Level Dialogue on Financing for Development, she described it as the key intergovernmental follow-up mechanism, since it engaged all stakeholders in the implementation of the outcome of the Monterrey Consensus and Doha Declaration, and she promised that CARICOM would participate vigorously.
The French representative, speaking for the ‘pilot group’ on Innovative Financial Mechanisms, stressed the importance of innovative financing, which complemented ODA. Such financing, for example in the form of certain profit‑sharing arrangements, could be used to bring low-cost medicine to people in need, he said, noting that a tax on air tickets had been used to fight pandemics. He also pointed to the Innovative Sources of Financing for Development, which was a result of the “Action against Hunger and Poverty” initiative launched by France, Brazil, Chile and Spain in 2004.
In just a few years, he said, innovative financing had already had a noteworthy impact. More than $2 billion in additional, stable and predictable finance had helped to vaccinate more than 100 million children annually and to guarantee the paediatric HIV/AIDS treatment for 100,000 children annually. He said he supported the Group of Eight (G-8) appeal in the L’Aquila and Doha Declaration on financing for development. In May 2009, European partners decided to extend the air-ticket solidarity level, which was already applied to reduce the cost of high-quality drugs to treat HIV/AIDS, malaria and tuberculosis in developing countries. Efforts were under way to create a carbon tax, which would be important in fighting climate change.
Also today, Alexander Trepelkov, Acting Director for the Financing for Development Office, introduced several reports to the Committee. They included the United Nations Secretary-General’s report on Follow-up to and implementation of the Monterrey Consensus and Doha Declaration on Financing for Development, his report on Innovative sources of development finance, and his note on proposed organization of work of the High-Level Dialogue on Financing for Development.
Also speaking today were the representatives of Mexico (for the Rio Group), China, Peru, Brazil, Columbia, Guatemala, Japan, Russian Federation, Sudan (for the “Group of 77” developing countries and China), Chile, United States, Cuba, Venezuela, Republic of Korea and Dominican Republic.
The Committee will meet again at 10 a.m. on Friday, 16 October, to hold a panel discussion entitled “Legal Empowerment of the Poor”.
The Second Committee (Economic and Social) met today to consider its agenda item on follow-up to and implementation of the outcome of the 2002 International Conference on Financing for Development and the 2008 Review Conference.
The Committee had before it the United Nations Secretary-General’s report on Follow-up to and implementation of the Monterrey Consensus and Doha Declaration on Financing for Development (document A/64/322), which outlines the main recent developments under each of the six thematic chapter headings of the 2002 Consensus: mobilizing domestic financial resources for development; mobilizing international resources for development: foreign direct investment and other private flows; international trade as an engine for development; increasing international financial and technical cooperation for development; external debt; addressing systemic issues: enhancing the coherence and consistency of the international monetary, financial and trading systems in support of development. Other recent developments are presented in section VII, titled “Staying engaged.”
According to the report, the global financial and economic crisis has become a “development emergency”, threatening the survival of poor people. The world is entering a period of markedly slower economic growth that will have a strong negative impact on developing countries. To counter the downturn, developing countries need resources transferred to them from the developed world, greater diversification and competition, a balance between debt and equity financing, and regulatory protections. Attracting adequate resources for development, notably foreign direct investment and private finance, will remain a challenge, as will declining world trade volumes, the rise in trade protectionist measures, a widening trade finance gap, and fears that the strain of the recession will prompt donor countries to cut official development assistance (ODA).
The report states that several steps are needed to address systemic issues They include, among others, shaping regulatory systems to identify and take account of macroeconomic risks; expanding regulation and oversight to all systematically important institutions, instruments and markets; strengthening capital and risk management; reorienting principles on executive pay to minimize excessive risk-taking; and improving standards on valuation and provisioning. More advanced markets should bear a relatively greater burden in oversight and regulation, especially of risk-sharing features or internationally traded financial assets, so that smaller and less sophisticated nations do not have to over-regulate to protect the soundness of their financial and currency markets.
Also before the Committee is a Summary by the President of the Economic and Social Council of the special high-level meeting of the Council with the Bretton Woods institutions, the World Trade Organization and the United Nations Conference on Trade and Development (New York, 27 April 2009) (document A/64/76-E/2009/60), which includes details on the topics discussed during the meeting, such as the impact of the global financial and economic crisis on development, including issues related to the international financial and monetary architecture and global governance structures; and strengthening the intergovernmental inclusive process to carry out the financing for development follow-up.
The Committee would also consider the United Nations Secretary-General’s progress report on innovative sources of development finance (document A/64/189), which gives an account of all existing initiatives in that area and new ones under development. The report addresses such issues as solidarity as a basis for international cooperation in raising resources, predictability and long-term sustainability, market failures, and the need for broad participation among sub‑national Governments and the private sector.
The report describes the 2004 Landau Commission Report on Innovative Development Funding Solutions, which identified the feasibility of new financial sources, such as solidarity levies and internationally-coordinated market-based mechanisms that could be implemented nationally. It also describes, among other existing initiatives, the 2005 Declaration on Innovative Sources of Financing for Development; the Leading Group on Innovative Financing for Development; the High‑level Task Force on Innovative International Financing for Health Systems; the International Finance Facility for Immunization; Advance Market Commitments; Debt2Health; Payment for Environmental Services; and Clean Development Mechanisms.
Further, the report discusses initiatives under development, such as the currency-transaction tax, carbon taxes, reducing emission from deforestation in developing countries, special drawing rights (SDRs) and international tax cooperation.
Also before the Committee was the letter dated 23 September 2009 from the Permanent Representative of Portugal to the United Nations addressed to the Secretary-General (document A/64/373), which transmits a letter and its annex dated 17 September from Portuguese Prime Minister Jose Socrates, who, in his capacity as Co-Chair of the African Partnership Forum, wrote to United States President Barack Obama and United Kingdom Prime Minister Gordon Brown.
The letter contains key messages to the Pittsburgh Summit of the “Group of Twenty” (G-20) on financial supervision and regulation; governance of international financial institutions; crisis mitigation and crisis recovery; development resources; agriculture and food security and global governance. It also includes a joint statement from the Africa Partnership Forum Special Session on Climate Change that took place in Addis Ababa on 3 September this year.
The Committee also had before it the note by the United Nations Secretary‑General on the proposed organization of work of the High-Level Dialogue on Financing for Development (document A/64/377), which outlines dates, venue, the overall theme and participants during the 23 and 24 November meeting at Headquarters.
Introduction of Reports
ALEXANDER TREPELKOV, Acting Director, Financing for Development Office, introduced three documents. The first was the United Nations Secretary-General’s report on Follow-up to and implementation of the Monterrey Consensus and Doha Declaration on Financing for Development (document A/64/322), which provided an overview of recent development with regard to six parts of the Monterrey agenda. With regard to mobilizing domestic resources for development, he said that it was important that States provide additional financial resources to developing countries over and above the stimulus levels agreed on at the G-20 Summit in London last year.
On the subject of international resources for development, the report pointed out that private capital flows to developing countries have dropped sharply, and it was necessary for policymakers to address issues concerning the instability and pro-cyclicality of private capital flows, he said. On international trade, the report observed that diminished world trade has disproportionately affected developing countries, and Mr. Trepelkov said that it was imperative to address trade financing gaps, and to scale up “aid for trade”.
Addressing the issue of financial and technical cooperation for development, the report provided the latest data on ODA, and pointed out that the economic and financial crisis might cause a decrease in aid flows at a time of particular need. It was essential, Mr. Trepelkov said, that developed countries lived up to commitments made in the 2002 Monterrey Consensus, the 2005 World Summit Outcome and the 2008 Doha Declaration. Concerning external debt, the international community has made progress with regard to debt relief but, because of the crisis, many developing countries could fall into debt distress due to reduced capital flows, he said. Regarding systemic issues, it was important to reform the international financial architecture to reshape the regulatory system and enhance the voice of developing countries.
The second document presented by Mr. Trepelkov was the United Nations Secretary-General’s report on Innovative sources of development finance (document A/64/189), which discussed the array of financial proposals, among them solidarity contributions or levies on airline tickets; the International Finance Facility for Immunization; the Advance Market Commitments; Debt2Health; and Payment for Environmental Services.
The third document was a note by the United Nations Secretary-General on the proposed organization of work of the High-Level Dialogue on Financing for Development (document A/64/377), and Mr. Trepelkov recommended that the General Assembly consider the information contained in the note and make the appropriate preparations by the end of the month.
HASAN KLEIB (Indonesia), speaking on behalf of the Association of South-East Asian Nations (ASEAN), stressed the need to focus on implementing the six thematic chapters headings of the Monterrey Consensus. It was critical for all countries to expedite economic recovery. But the developed world must also learn long-term lessons, particularly regarding development of the financial sector and development strategies. Policymakers worldwide must address how best to reduce instabilities in many categories of private sector flows. Everyone must resist protectionist impulses and conclude a development-focused Doha Round of the World Trade Organization (WTO) negotiations as soon as possible. The developed world must build on the 10.2 per cent increase in ODA in 2008. That increase brought total aid to 0.33 per cent of gross domestic product (GDP), but it still fell short of the agreed 0.7 per cent target.
He called on developed countries to honour their commitments to giving 0.7 per cent of GDP, including aid for trade and other forms of technical assistance and cooperation to developing countries, especially least developed countries. Only a select group of countries had made notable progress in debt relief. The present crisis threatened to increase many developing countries’ debt. Stronger efforts were needed to address flaws in the financial system and give the developing world a greater voice in global economic decision-making. To strengthen efforts to achieve the Monterrey Consensus, “We need to go beyond stale political discussion aimed at scoring points,” he said. The mood for cooperation had improved. Building on that, United Nations discussions must be based on facts and evidence, not rhetoric.
Creating a sound, a strong global financial and economic system was conducive to development financing, he said. Such a move required speeding up the reform of the global financial and economic architecture; renewing global partnerships to better mobilize resources, enhancing international financial and technical cooperation, and addressing external debt and known systemic difficulties; and ensuring that every country continued to implement the necessary macroeconomic, fiscal and development policies that would inspire confidence in the business sector and engender support for continued growth of the real economy. During their meeting in March, ASEAN leaders pledged to expand regional cooperation and called for a bold, urgent reform of the international financial architecture, among other things.
PAULETTE BETHEL (Bahamas), speaking on behalf of the Caribbean Community (CARICOM), said that in her region, the impact of the global economic and financial crisis continued to grow in severity and was marked by sharp decreases in tourism revenues, commodity exports, remittances and foreign investments. Measures to enhance development financing, follow-up and implementation were “an exercise which all States need to approach with creativity and a clear sense of purpose”, she said, welcoming the discussion in the Economic and Social Council on collaboration and development. A more comprehensive, coherent approach to development issues characterized by greater openness, transparency and inclusiveness was pivotal, she said.
Concerning the upcoming High-Level Dialogue on Financing for Development, she said it would be the key intergovernmental follow-up mechanism as it engaged all stakeholders in the implementation of the outcome of the Monterrey Consensus and Doha Declaration, and CARICOM intended to participate vigorously. Concluding, she noted the institutional arrangements for international cooperation in tax matters, and said that CARICOM supported the upgrading of the Committee of Experts on International Cooperation in Tax Matters to an intergovernmental body of the ECOSOC and would pursue the matter in the appropriate forum.
SOCORRO ROVIROSA (Mexico), speaking on behalf of the Rio Group, reiterated the urgency of reinforcing the follow-up mechanism on financing for development, and in that sense, the Group believed that while the 2008 Doha Declaration had been a step forward, it was insufficient to ensure implementation of a mechanism capable of efficiently recording the commitments of developed countries on financing for development and ensuring a suitable participation of the relevant stakeholders on that important component of the international dialogue on development.
Recognizing that the Economic and Social Council recommendations to the General Assembly on the ways to achieve a strengthened and more efficient multi‑stakeholder intergovernmental development financing process could be improved, the Rio Group trusted that they could be implemented as soon as possible by the United Nations system. She also reiterated the importance of adequately participating in the High-level Dialogue on Financing for Development, which was set to be held by the Assembly from 23 to 24 November, and expressed the Group’s expectation of a sufficient degree of coordination between the work of the Second Committee and the preparation for the Dialogue in order to ensure the success of that important event.
She said the Group also supported the initiative to promote the creation of increased resources for the international assistance for development, noting its voluntary character, and to that end, noted that the value of such resources should be recognized as a means to address the concrete needs and vulnerabilities of developing countries. In the same vein, she underlined the need for new and additional resources to be directed to developing countries, in order to provide them with additional support for facing the negative impacts of the current economic and financial crisis.
AMRIT BAHADUR RAI ( Nepal), speaking on behalf of the Least Developed Countries, said those countries were experiencing a “perfect storm”. Already weakened by the impact of the global food and energy crises, financial sources were drying up as they witnessed a simultaneous sharp decline in foreign direct investment, remittances from overseas workers, export earnings and tourism revenue. That had been aggravated by the global economic and financial crisis, which posed a serious challenge to poverty eradication in least developed countries and to achieving the Millennium Development Goals. Follow up to and implementation of the last year’s Doha Conference on Financing for Development provided a significant way forward to implement the 2002 Monterrey Consensus. That follow- up, especially related to the financing of development in least developed countries, should be given top priority.
The outcome of the June conference in New York on the development impacts of financial and economic crisis should be implemented in all seriousness, he said. The General Assembly Working Group to follow up the decisions taken should aim at achieving value added apart from what had already been done. The current crisis had become an excuse for curtailing commitments to the internationally-agreed development goals and financing for development. The spirit of global partnership was even more necessary in the face of global crises.
He went on to say that proposed 2010 review of progress in implementing the Millennium Development Goals should reinvigorate the development agenda. A recent report of the United Nations Conference on Trade and Development (UNCTAD) said that compacts agreed to in the last decade for least developed countries were inadequate to address current challenges. New and emerging realities called for revising development strategies and partnerships for development financing in least developed countries.
Least developed countries needed more specific international support, he said. Multilateral financial institutions should conduct prudent oversight and avoid regulatory excesses. At the same time, no particular template on financing for development should be imposed, particularly least developed countries. Innovative financing sources, such as microfinance, which could help small enterprises and lift people and communities out of poverty in many least developed countries, should be encouraged. Maintaining and increasing ODA would help ensure predictable finance to meet development goals in most of the least developed countries.
WANG QUN ( China), said availability of financial resources was the prerequisite for achieving development, stressing that neither economic and social development nor environmental protection could be achieved without financial resources. Thus, securing adequate financial support for the economic and social development of developing countries was crucial to bridging the gap between the North and the South and achieving balanced development of all countries. Over the years, implementation of the Monterrey Consensus had been “very uneven” and the long-standing development deficit remained unaddressed. In the meantime, the fallout from the financial crisis had buffeted the economies of the South, especially in the least developed countries, and meagre development gains that had been attained since Monterrey were now threatened by, among others, rising unemployment, falling exports and lagging ODA.
While the primary responsibility of financing for development still remained with Governments, the support of the international community was vital for success. Against the backdrop of the current global financial crisis, developing countries more than ever before needed the international community’s assistance, and in that regard, he called on international financial institutions to put in place effective rapid response financial rescue mechanisms oriented towards the needs of developing countries. Further, he called for resolute pursuit of the reform of the international financial architecture, observing that the current financial crisis had wreaked havoc in the existing financial system.
ANA CECILIA GERVASI ( Peru) said the economic and financial crisis was undoubtedly impacting the socio-economic perspectives of developing countries, including those like Peru that had made considerable progress in macroeconomic management over the past few years. She emphasized the importance of international trade as an engine for economic growth. Peru was among countries that were committed to enlarge and diversify external markets. She reiterated the need to avoid the trend towards protectionism, and to rapidly conclude the Doha Round of trade negotiations. She stressed the importance of international financial and technical cooperation to develop resources for micro-, small- and medium-sized enterprises.
She said Peru had incorporated such resources into many of its productive sectors to efficiently fight poverty. It was also important to strengthen financial cooperation for research and technological innovation, as well as for human resource training. The crisis had also made it difficult to mobilize resources to fight climate change. Peru was particularly vulnerable to climate change, but had contributed little to it. Because it had to use resources to mitigate and adapt to climate change, it had less capacity to deal with other needs of the population, including to eradicate poverty and to achieve the Millennium Development Goals. She said climate change mitigation and adaptation must be part of the development financing debate, and the Copenhagen Conference in December must work to develop relevant initiatives. Peru had submitted specific proposals in that area which she hoped would be considered.
ANTONIO DE AGUIAR PATRIOTA ( Brazil) said that some progress had been made on financing for development, despite the current economic and financial crisis, which had greatly aggravated the global outlook. However, it was an opportunity to examine the international financial architecture with fresh eyes and correct the failed policies of the past, he said. In terms of financial assistance to the developing world, it was important to develop a system that was transparent and which could provide recipient countries with predictable flows of aid.
International trade had been hit hard by the crisis and the situation had been further exacerbated by the lack of trade finance, especially for developing countries. He noted with particular concern the lack of progress on the Doha Round of WTO talks, and encouraged the parties to conclude the process next year with meaningful results. He also urged Member States to urgently tackle the question of debt and said that the United Nations should promote a discussion of such measures as debt relief to avoid a debt crisis.
To conclude, he said that Brazil looked forward to the High-Level Dialogue on Financing for Development to be held at Headquarters next month as sufficient and adequate financing for development was a key goal for the Organization. His country was an enthusiastic supporter of innovative finance methods and had from the start pursued the mobilization of additional development funds through alternative means, he said.
CLAUDIA BLUM ( Colombia) said the impact of economic crisis had highlighted the need to redouble efforts to implement the Monterrey Consensus. The 2008 Follow-up International Conference on Financing for Development was a starting point, but the real impact of the current financial turmoil was yet to be seen. The new challenges created by the crises had confirmed the validity of agreed commitments on development financing and had given greater substance to the Doha initiatives.
For several years, Colombia had been applying some of the policies and commitments of the Monterrey Consensus, she continued. Colombia had promoted innovative mechanisms that contributed to the goals of the United Nations of social development and advancement of small- and medium-sized businesses. The third Regional Summit on Microcredit for Latin America and the Caribbean, held in June in Cartagena had encouraged a broad examination of microfinance’s contribution to the region and to the economies of developing countries.
During the Summit, Colombian President Álvaro Uribe reiterated that microcredit was the best low-cost method to address the global economic crisis, he said. Since 2002, Colombia’s Government had provided 3.9 million people with microcredit, 1.9 million of them for the first time. In a globalized and interconnected world, economies of developing countries needed international support and a system that gave them access to markets. She expressed concern over the recent protectionist trends that included the selective closure of several markets. Strengthening of the multilateral trade system was a prerequisite for addressing the crisis. She stressed the importance of paragraph five of the Doha Declaration, in which the international community was called to work together to fight terrorism.
BRIZ GUTIÉRREZ ( Guatemala) said his country believed that the 2002 Monterrey Conference was one of the United Nations greatest successes regarding development matters, even though there had been strong resistance during the preparatory process. Little by little, however, that resistance was overcome as it became clear that the Organization had a legitimate role to play in the process of development. So, bridges had been built at Monterrey –- at the national and global levels, and between the United Nations, the Bretton Woods institutions, regional financial institutions and the WTO. He said Guatemala left Monterrey with the conviction that an important step forward had been taken.
However, judging by the level of participation of national and global actors in various forums, the accomplishments at Monterrey had slowly eroded. Interaction between the United Nations and the Bretton Woods institutions had not been consolidated and there had been other disappointments as well, he said. The Economic and Social Council had adopted resolution 2009/30, which proposed various ways to enhance the interaction between intergovernmental forums, the United Nations Secretariat and the multilateral financial institutions, and while Guatemala subscribed to the resolution, he was nevertheless concerned that it might not be enough and instead could conceal bigger systemic problems.
TAKESHI OSUGA ( Japan) stressed the fact that the international community needed to stay focused on the human aspects of the financial and economic crisis, and the fact that the current turmoil had put at risk the very survival of poor people. Donor countries had to stand firm with regard to existing commitments and Japan for one intended to continue and strengthen the Tokyo International Conference on African Development process and redouble its efforts towards the achievement of the Millennium Development Goals.
Each country should assume primary responsibility in terms of its own development, he said, and added that his country recognized that a wide range of financial resources to include ODA, as well as domestic resources and foreign direct investment had to be mobilized. The “spirit of Monterrey” was particularly important at this moment in history if the current crisis was to be solved. Japan would continue to actively participate in financing for development follow-up activities. With regard to new types of financing, he said that his country joined the Leading Group on Innovative Financing for development last year and looked forward to exchanging information with other States and organizations.
DMITRI MAKSIMYTCHEV ( Russian Federation) said it was necessary to bolster activities for development financing. The Doha and Monterrey Conferences laid the foundation for reaching agreements that should take place during the course of the General Assembly plenary in 2010. He stressed the importance of making good on commitments to promote trade and build the United Nations capacity to promote global development. The recommendations of the Economic and Social Council in that regard did not need to be discussed further, and should be adopted by the Assembly as they were general in nature and aimed at more effective use of existing mechanisms. The main task now was to ensure stepped up cohesiveness on the Assembly’s work regarding macroeconomic issues. That might require adjustments to the Committee’s agenda and programme of work.
He expressed hope that the Committee would adopt substantive resolutions on financing for development. Work must be conducted within the framework of macroeconomic questions. On issues of external debt and trade, negotiations on a draft must take into account the outcome of the Assembly’s high-level dialogue on financing for development in November. That meeting should be the leading platform for general discussion and preparing for the Assembly’s high-level session on the Millennium Development Goals in 2010. He called for constructive cooperation among partners to expeditiously agree on the format of events, including on the roundtable, in a way that reflected a balance of priorities.
NADIA OSMAN (Sudan), speaking for the “Group of 77” developing countries and China, said that the Committee’s deliberations should be approached in the context of the current predicament, the deepest and widest economic crisis since the “great depression”. She outlined several development challenges relevant to the Monterrey Consensus, among them the fact that developing countries had to mobilize funds to service their debts rather than use the money for development. With respect to governance, she spoke of the need for reform and for the “Group of 8” (G-8) to make recommendations on that.
To promote development, she said, it was important that the international community deliver on promises to monitor and evaluate implementation; the world needed global solutions for global problems. Furthermore, States needed to deliver on their long-standing commitments with respect to financial aid, especially the promise of contributing 0.7 of their GDP to development. Moreover, the Group of 77 attached importance to the discussion of innovative sources of financing for development, and looked forward to concrete inputs as well as the High-Level Dialogue on Financing for Development to be held this November in New York.
ATOKI ILEKA ( Democratic Republic of the Congo), speaking for the Southern African Development Community (SADC), said he was concerned that the spending of the global stimulus package was now concentrated in developed countries, which prevented developing economies from playing their role in boosting global demand. As stated in the United Nations Secretary-General’s report, the concentration of spending in the more industrialized regions could further skew the distribution of global income.
He said that the Regional Indicative Strategic Development Plan of SADC, launched in August 2004, was meant to improve the efficiency and effectiveness of SADC policies so the Member countries could reach their long-term goals. This would include solid political, economic and corporate governance, which was a necessity for the promotion of sustainable socio-economic development and poverty eradication. While the region’s economic situation had improved since the early 1990s, the financial crisis and climate change had had a negative impact on the region’s goals.
The improvement of the long-term strategy for economic growth would require stronger commitment of sustainable financial and human resources. The region had seen sharp declines among countries of the community trade volumes, a serious issue since trade was considered one of the region’s engines for development. Industrial countries had to deliver more efficiently on their commitment for ODA, which had declined and averaged about 0.24 per cent of an industrial country’s GDP. Yet this assistance was one of the important sources of finance for the implementation of the regional development plan.
PHILIPPE THIEBAUD (France), speaking for the ‘pilot group’ on Innovative Financial Mechanisms, stressed the importance of innovative financing, which complemented ODA by working to correct the negative externalities of globalization and certain aspects of economic regulation. That financing could be used to bring low-cost medicine to people in need. It could be in the form of certain profit‑sharing arrangements. For example, the tax on air tickets was used to fight pandemics. He pointed to the Innovative Sources of Financing for Development, which was a result of the “Action against Hunger and Poverty” initiative launched by France, Brazil, Chile and Spain in 2004.
In just a few years, he said, innovative financing had already had a noteworthy impact. More than $2 billion in additional, stable and predictable finance had helped to vaccinate more than 100 million children annually and to guarantee the paediatric HIV/AIDS treatment for 100,000 children annually. He said he supported the G-8 appeal in L’Aquila and Doha Declaration on financing for development. In May 2009, European partners decided to extend the air-ticket solidarity level, which was already applied to reduce the cost of high-quality drugs to treat HIV/AIDS, malaria and tuberculosis in developing countries. Efforts were under way to create a carbon tax, which would be important in fighting climate change.
EDUARDO GALVEZ ( Chile) said it was important to focus attention on the best follow-up mechanism in the vital area of development, and the recommendations of the Economic and Social Council, a step in the right direction, would be duly considered. It was essential to agree on a participatory, inclusive, multi-sector approach to development and development assistance.
Chile placed particular value on the question of innovative sources of development finance, and praised the United Nations Secretary-General’s report on the topic before the Committee. He said this constituted an excellent overview and analysis as well as an interesting picture of projects on their way, and projects that could be implemented in the future. He highlighted that Chile was among the first countries to engage with the subject because the country was especially interested in promoting a foreign policy characterized by solidarity, one that was more inclusive and humane, and advanced international peace and security.
DAVID CARBAJAL ( United States) said the economic downturn had impacted every country and the international community had to remain diligent, even with the signs of an economic recovery. Some nations would take longer to recover than others and needed more financial support. The World Bank estimated a global contraction of as much as 2.9 per cent in 2009, and world trade was expected to drop by 10 percent. Developing countries were expected to grow by about 1.2 per cent this year and the poorest nations, the least able to take appropriate fiscal action to counteract the effects of the downturn, were seriously affected. Export demand for products from the poorest countries had dropped between 5 to 10 per cent in 2009, and private capital flows to the poorest countries had dropped to $13 billion in 2009, down from $21 billion in 2008 and $30 billion in 2007. At the same time, remittances to these same countries were expected to fall between 5 and 7 per cent in 2009.
He said there was a clear need to strengthen the international dialogue on sources of financing for development and the United Nations, with its universal membership and development mandate, was an important forum for this discussion. The United States had been a consistently, strong backer of the financing‑for‑development process since the Monterrey Conference in 2002. He believed the High-level Dialogue on Financing for Development next month could be an important event, to deepen the international community’s understanding of the issues and opportunities that would safeguard the development progress. The United States would be fully engaged in the process.
NADIESKA NAVARRO BARRO ( Cuba) said financing for development was a top priority for developing countries in the south. The deeply unjust, unsustainable international economic order was the biggest obstacle to development and it had led 75 per cent of the population in that category of country to underdevelopment and limited the access of those countries to necessary financial resources. Despite countless promises, she went on, it was evident that rich countries lacked the political will to ensure that developing countries had the resources they needed. At the 2002 Monterrey Conference, there were very few concrete commitments, and the Doha Conference outcome did not meet the expectations of developing nations. Serious follow-up had not been established despite recent attempts in that regard.
She said most developed countries had not even lived up to the insufficient commitment of allocating 0.7 per cent of their GDP for ODA. The so-called Global Partnership for Development was inactive and had not brought the expected results.
The south had fought to introduce concrete proposals in the negotiation texts on questions of financing for development, but they typically encountered stubborn resistance from developed countries. It was essential, she said, that ODA commitments be fulfilled with the creation of a credible, permanent monitoring mechanism to chart progress. Rich countries must give new and more resources to developing countries, particularly during the current economic crisis. The rich world must cancel the external debt of countries in the south and grant new soft loans to finance development.
VICTOR OVALLES-SANTOS ( Venezuela) said that his country wanted to reaffirm international solidarity, seek out constructive ways to safeguard ODA and help transform the system for financing development. The liberalization and deregulation that had worked in favour of large multinational corporations had created an unprecedented crisis in the capitalist system, eroding equality and social justice while increasing the schism between developed and developing countries. He said Member States should reflect on financing development with regard to the Monterrey and Doha commitments.
“The people of the world cry out for the creation of new international financial institutions,” he said, adding that there had been an attempt to hide what could not be hidden: “The failure of a savage globalization that served large foreign capital and voracious multinationals.” He said a globalization based on solidarity was the only viable option, and his country believed that several great initiatives had already been established on the regional level, including the Bolivarian Alternative for Latin America and the Bank of the South. These, he said, countered the negative influence and “incompetence” of the Bretton Woods financial institutions.
CHOI JONG-KU ( Republic of Korea) said the global economic and financial crises risked reversing the international community’s development gains, making achievement of the Millennium Development Goals unlikely by 2015. Strong efforts were needed to address the difficulties of developing countries caused by the crises. The global community must act faithfully to implement the 2002 Monterrey Consensus and the 2008 Doha Declaration. The United Nations should play a central role in formulating effective and concerted responses to the global crises. In that context, he lauded the convening of the United Nations Conference on the World Financial and Economic Crisis and its Impact on Development, creation of the Assembly’s Open-Ended Working Group to follow up on the Conference’s outcome document, the United Nations Secretary-General’s proposal for a Global Impact and Vulnerability Alert System, and the upcoming High-level Dialogue on Financing for Development.
He said it was crucial for the international community to fully implement its commitments to increase ODA; that was a prerequisite for achieving comprehensive and accountable development financing. The Republic of Korea had done its best to increase its contribution to international development cooperation, and had scaled up ODA three times since 2000. It would expand it another three-fold by 2015. He expressed hope that the fourth High-level Forum on Aid Effectiveness to be held in Seoul in 2011 would create important momentum to improve development results.
FEDERICO CAMILO, Dominican Republic, said the commitments of the Monterrey Consensus and the Doha Declaration became “dead words” if the wealthy nations did not live up to their promises; any discussion of financing for development was related to the achievement of the Millennium Development Goals, which were the cornerstone of development efforts. To reach those targets before 2015, he added, $250 billion would be needed -– an amount that paled in comparison with the $1 trillions which developed countries spent to rescue their own financial institutions in the wake of the economic crisis. He urged donor countries to meet existing commitments.
Against this dispiriting backdrop, he said, he wished to advance an idea originally introduced by his country’s President, Leonel Fernandez, during his address to the General Assembly last month: to tax capital deposited in fiscal havens. According to the Economic and Social Council, he said, tax havens currently held almost $7 trillion, untaxed. “We hope that this idea is valued as a feasible alternative to the always tedious topic of financing for development,” he said.
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