Illicit Financial Flows Reinforce Corruption, Deplete National Revenues, Warns Deputy Secretary-General during Meeting with Bretton Woods Entities
Illicit Financial Flows Reinforce Corruption, Deplete National Revenues, Warns Deputy Secretary-General during Meeting with Bretton Woods Entities
|Department of Public Information • News and Media Division • New York|
Economic and Social Council
Special High-Level Meeting
9th & 10th Meetings (AM & PM)
Illicit Financial Flows Reinforce Corruption, Deplete National Revenues, Warns
Deputy Secretary-General during Meeting with Bretton Woods Entities
Economic and Social Council President
Urges Strong, Balanced Global Recovery Focused on Creating Jobs for Youth
Despite some improvement, the world economic situation remained weak and subject to uncertainties and risks, the Economic and Social Council heard during a high-level meeting today.
The economic forecast in many parts of the world was favourable, but the crisis was still “not a story of the past”, Deputy Secretary-General Jan Eliasson, told participants, who included Government Ministers and officials from the Bretton Woods institutions, World Trade Organization and the United Nations Conference on Trade and Development (UNCTAD). He cautioned against ignoring illicit financial flows, which reinforced corruption and criminality while depriving countries of much-needed revenue. He also urged steps to protect development gains, particularly in conflict areas.
Thomas Helbling of the International Monetary Fund said global growth had strengthened in 2013, thanks to advanced economies, but emerging markets and developing economies had experienced only modest growth. However, growth was expected to strengthen in 2014, although disparities in growth rates could create tension. Geopolitical risks, including the situation between Ukraine and the Russian Federation, were also of concern, he said.
Council President Martin Sajdik ( Austria) said macroeconomic policies worldwide should focus on a strong and balanced recovery, particularly with regard to job creation for young people. He went on to say that the post-2015 development agenda would require a comprehensive financing network that ensured resource mobilization and its effective use for sustainable development. A comprehensive strategy was needed that incorporated all forms of financing, including public and private, domestic and international. Policymakers should think creatively about how to appropriately incentivize investors to contribute to sustainable development, he said, adding that an effective post-2015 development agenda, with poverty eradication and sustainable development at its core, should be based on a strengthened global partnership.
Jorge Familiar Calderón of the World Bank Group said that environmental considerations should also be integrated into policymaking because climate-smart policies were necessary for environmental sustainability and resilience, with the potential added bonus of generating jobs.
Following the morning’s examination of “Coherence, coordination and cooperation in the context of financing for sustainable development and the post-2015 development agenda”, the Council held a thematic debate on “Mobilization of financial resources and their effective use for sustainable development”. Both were followed by an interactive dialogue.
The Economic and Social Council met today to convene a special high-level meeting with the Bretton Woods institutions, the World Trade Organization (WTO) and the United Nations Conference on Trade and Development (UNCTAD).
MARTIN SAJDIK ( Austria), President of the Economic and Social Council, said the success of the development agenda depended on a strong global economy. Achieving stable and equitable economic growth would require greater cooperation and coherence in macroeconomic policies. The world economic situation had shown improvement, but remained subjected to uncertainties and risks. The global employment situation remained weak, with some European countries facing tough challenges with unemployment rates at 27 per cent and youth unemployment over 50 per cent. There was also extremely high structural unemployment in North Africa and Western Asia, particularly among youth. Macroeconomic policies worldwide should focus on supporting a strong and balanced recovery, particularly with regard to jobs for youth.
There were signs of hope, he continued, noting that Spain’s jobless figures showed a downward trend for the first time since 2007 and, in the United States, unemployment had fallen well below the 7 per cent threshold. Foreign direct investment in manufacturing, mainly from European countries, was blooming. The economic output for the original four BRIC countries ( Brazil, Russian Federation, India, China) had risen from $3 billion a year to $15 billion, although after so many successful years, growth rates in 2013 were far below what they once were. That was due to the depreciation of currencies caused, not only by economic slowdowns and the specificities of global financial markets, but also by recent changes in the political landscape in Eastern Europe, which had increased anxieties.
The post-2015 development agenda would require a comprehensive financing network that ensured resource mobilization and its effective use for sustainable development. A comprehensive strategy was needed, which incorporated all forms of financing, including public and private, domestic and international. Ultimately, financing for development in most countries would be generated domestically, with resource mobilization dependent on sustained economic growth and supported by an international enabling environment. At the same time, traditional development cooperation and official development assistance (ODA) would continue to play an important role, especially for countries with special needs. Given the large financing needs for sustainable development, public financing would not be sufficient, and thus, private financing should be tapped more extensively. Policymakers would need to think creatively about how to appropriately incentivize investors to contribute to sustainable development. An effective post-2015 development agenda, with poverty eradication and sustainable development at its core, should be based on a strengthened global partnership for development.
JAN ELIASSON, Deputy Secretary-General, said that the five years ago, recovery from the global financial crisis had been slow, but now, the economic forecast in many parts of the world was favourable, both in developed and developing countries. Still, the crisis was “not a story of the past”, as serious consequences persisted, including high unemployment in many countries and growing inequalities. The world’s richest people had as much wealth as the poorest half of the planet’s population. Bold leadership was needed to strengthen multilateralism, a preferred choice as demonstrated in the initial trade reforms launched in Bali last year. Relying on WTO and UNCTAD to put trade and development at the fore in the next round of Doha talks, he stressed that macroeconomic policies must focus on sustainable recovery with an emphasis on jobs.
He acknowledged the changing global landscape, but urged that emerging economies not be sidelined and that efforts be made to accelerate progress towards achieving the Millennium Development Goals. Further, a new development agenda with poverty eradication and sustainable development at its core was being shaped and, in that connection, recalled the Secretary-General’s meeting with multilateral development banks at which he called for further cooperation with Member States and the United Nations system to strengthen development of financing strategies. Increased public financing was also indispensable in tackling poverty and addressing social needs. It was vital for developed countries to deliver on both ODA and climate financing commitments.
Illicit financial flows must not be ignored, he said, as those reinforced corruption and criminality and deprived countries of much needed revenue. He recalled former South Africa’s President Thabo Mbeki’s panel on the matter, which had highlighted the “unacceptable loss” of at least $50 billion yearly in Africa alone. At the same time, development gains should be maintained, he said, noting that in Syria, decades of development could be lost owing to the ongoing conflict. The role of the Economic and Social Council and other organizations was crucial in channelling financing for critical long-term investments and contributing to greater stability in the financial system. “In today’s interdependent world, the good international solutions are in the national interest of individual States,” he emphasized in conclusion. Such focus would unite national and international pursuits to achieve “A Life of Dignity for All”, in line with the Charter.
Ministerial Segment on Theme I
Opening discussion on “Coherence, coordination and cooperation in the context of financing for sustainable development and the post-2015 development agenda”, THOMAS HELBLING, Chief, World Economic Studies Division, International Monetary Fund, said that global growth had strengthened in 2013, with advanced economies providing the primary impetus for the acceleration. However, emerging markets and developing economies strengthened only modestly. Advanced economies’ fiscal consolidation would ease in 2014, with Japan being the exception. Monetary accommodation would continue, with United States’ policy rates expected to begin rising in 2015. For emerging markets, exports would be supported by stronger demand from advanced economies, but that would be offset by tighter financial conditions. Global growth was expected to strengthen in 2014, although the global recovery was uneven.
He said the main concern was that the differing growth rates could create tensions, which could impact exchange rates and impede progress in some economies. In the United States, activity had been helped by falling household debt and supportive credit conditions. Growth had strengthened in the euro area, however, high debt and financial fragmentation continued to weigh on stressed economies. In Japan, depreciation had supported exports, but inflation expectations had increased. Geopolitical risks, including the situation between Ukraine and the Russian Federation, would continue to play a role. Regarding emerging market risks, there would be further growth disappointments, including in China, owing to policy tightening. Many emerging market currencies had depreciated because investors had become more sensitive.
KRISTALINA Georgeiva, Commissioner for International Cooperation, Humanitarian Aid and Crisis Response, the European Union, said that macroeconomic risks and impacts were not being efficiently addressed, owing to conflicts and natural disasters. She pointed out that “none of us are immune against the forces of Mother Nature” and because of the global economy’s interdependence, all nations were affected by such events. Natural disasters, which killed thousands and led to enormous suffering, also impacted economies, with losses quadrupling in the last three decades from $50 billion on average per year in the 1980s to approximately $200 billion in the last decade. Because of climate change, that trend was bound to continue.
There were fiscal consequences, she said, including, among others, public debt and profound loss of revenue. However, the reconstruction industry following disasters boosted economic growth, as did resilient responses to those disasters. Still, the enormous macroeconomic impact from conflict was notable, as demonstrated by the impacts of refugees in neighbouring countries, which increased public expenditure for schooling, housing and policing, to name a few. Because conflict undermined economic stability, it was paramount to focus time and attention on that category of countries in looking at economic reforms and solutions.
The European Union, she said, should strengthen its efforts to withstand more intense shocks, as its member States had lost more than 100,000 people to natural disasters. New legislation now included components that assessed risks, and funding had been made available for countries most at risk for disaster; investments in research had also been made. However, humanitarian aid was like a “canary in the mine”, and it was time for the international community to integrate risks into mainstream macroeconomic thinking.
MOGENS JENSEN, Minister for Trade and Development Cooperation of Denmark, said that for many years there had been a conversation about whether growth was good for the poor, yet he believed that growth was necessary to eradicate poverty. Linkages from community sectors into the broader economy needed to be established. Shared prosperity meant creating economic opportunities and jobs for the poorest segments. Inclusive growth, based on decent jobs would not only increase incomes but would promote the rights of women and marginalized groups. Some parts of the world were moving forward at breakneck speed, while others moved more slowly and risked falling further behind.
He said it was up to each country to decide how to restructure their economy and ultimately society. That called, not only for financing, but also for strong democratic governance. Governments had a clear responsibility, just as the private sector had a role in propelling economic change and job creation in a socially responsible way. There would be no inclusive growth without structural reform and ultimately, no lasting poverty eradication. The international community should ensure respect for fundamental labour rights and decent working conditions in private sector jobs. The mobilization of domestic public resources was increasing, but ODA still played an important role in helping to fight poverty and support the reform needed to create a sustainable growth path.
Sacha Sergio Llorentty Solíz( Bolivia), speaking for the “Group of 77” developing countries and China, said that the financial crisis had highlighted the shortcomings of the international financial institutions. The role of the United Nations should be strengthened, including in global coordination, while tackling the urgent issues of inequality and unemployment on a global platform required the reform of international financial institutions in a way that made them more transparent and legitimate. An architecture was needed that challenged inequality.
He called for a decrease in speculative investments and a focus on promoting sustainable development. The Bretton Woods institutions required reforms that included representation of developing countries, in order to reflect their realities and involve them as a group in decision-making. The International Monetary Fund (IMF) must provide broader and flexible policies to developing countries without imposing conditions. A universal rules-based, equitable trade system to ensure resources for sustainable development was critical and a key component of guaranteeing financial support for developing countries, thus contributing to international sustainable development. He also called for developed countries to meet their ODA commitments.
EWALD NOWOTNY, Governor of the Central Bank of Austria, said that advanced economies were back on the recovery track, while emerging markets had come under pressure. The latter markets were not homogeneous, and in advanced economies, short-term effects were dependent on the future conduct of monetary policies. Domestic macroeconomic fundamentals played an equally decisive role in emerging market economies. Most countries experiencing pressure had tightened their monetary policies, which had relieved some of the pressure on financial indicators. However, the International Monetary Fund had revised downward the 2014 and 2015 growth forecast for several emerging economies. It was expected that growth in the euro area would be stronger this year and next year, while tapering had a substantial impact on the Russian Federation and Ukraine, among others. He warned that further escalation of the geopolitical tensions between those countries could severely impact the economic situation of the whole region.
Suggesting that many current economic problems were rooted in the period of easy financing from 2008, he said that several emerging market economies entered the period of economic recovery with domestic demand that was too strong, current account deficits that were too large and interest rates that were too low. He added that the delay in tapering should be used to address internal and external macroeconomic imbalances and better prepare for eventual monetary tightening in the United States.
MORAJA BUHLAIGA, Vice-Minister of Finance, Libya, stressed that the promotion of sustainable development in accordance with Rio+20 and the right to development must remain the basis for global development. International cooperation must be a fundamental factor in achieving the Millennium Development Goals. The global and financial crisis in 2008 represented a malfunction of the international financial systems and highlighted the need to strengthen the United Nations role with all stakeholders. It was “high time to learn from the lessons of the crisis”, he said, stressing the need to reform the international financial systems and create a new architecture for them as well as genuine partnerships.
There was a need, he continued, to ensure coherence and coordination of all parties in order to support multinational efforts. Working in tandem among the International Monetary Fund, G-20, the World Bank and the United Nations was among the most important steps in the reform of international financial systems. In addition to addressing global imbalances, it would be useful to highlight ODA pledges and restructure sovereign debt. The Monterey Consensus and Doha Declaration represented an approach to the growing global challenges, including external debt and migration. Access to international markets was also important and the imposition of trade impediments needed be addressed. The flight of capital from developing to developed countries slowed development. Certain local legislation had rendered safe havens to shell companies and money laundering. It was time to find solutions to rectify that situation.
MUHAMMETGULY MUHAMMEDOV, Deputy Finance Minister of Turkmenistan, said that his country had adopted both short- and long-term plans to foster sustainable economic and social development. Those were being implemented very successfully and sought to promote sustainable growth based on increasing investment and achieving citizens’ well-being. Turkmenistan considered sustainable development to be linked to collaboration with domestic institutions, international organizations and society, and should protect the environment. The aim was to turn the country into a dynamic, developed nation, which took into account the traditions, customs and the mindsets of the Turkmen people. His country paid significant attention to international cooperation and worked closely with the United Nations, the World Bank, the International Monetary Fund and other organizations. It had moved to a sustainable development model with a pragmatic level of State regulation and had achieved significant success in reaching its goals.
ABDELRAHMAN HASSAN BADELRAHMAN HASHIM, Governor of the Central Bank of Sudan, associating himself with the Group of 77 and China, noted the good news that most countries had successfully achieved the Millennium Development Goals, although it was clear that others were still lagging behind and were unlikely to secure clean water, education and basic health care for children and mothers. The majority of those countries were in Africa, whose obstacles included high debt burdens. He urged the international community to provide debt relief to his country and others in Africa, as that would go a long way in allowing Governments to be better-equipped to provide basic necessities to their citizens.
Murat Karimsakov, President of the Eurasian Economic Club of Scientists of Kazakhstan, said his organization’s goal was to find effective approaches to address economic risks. It had organized a conference at which representatives from countries worldwide had discussed pressing economic issues and begun developing its World Anti-Crisis Plan. Since then, international experts had published more than 13,000 research works and 45 expert reviews as part of the plan’s further elaboration. The organization’s second conference would take place in May and would be preceded by a series of outreach events around the world in collaboration with the World Bank and the International Monetary Fund. More than 1,000 delegates were expected to participate, including high-level Government officials, leaders of international organizations, private sector experts and academicians. Looking ahead, the organization hoped that the Economic and Social Council would be instrumental in the implementation of the final World Anti-Crisis Plan.
The representative of Pakistan emphasized the need for sustainable development to be an overarching goal. He outlined several points, among them, that although national platforms were responsible for development strategies and implementation, international “friendly regimes” were critical and a more robust commitment was necessary to eradicate poverty and promote sustainability. ODA support also was essential and should be aligned with the receiving country’s priorities. Although the private sector had abundant financial resources, the public and private sectors were two distinct entities and could not be substituted for one another. He concluded by asking if climate change financing should be pursed separately from development funding or if a single comprehensive track was the way forward.
The representative of China, associating himself with the Group of 77, called for all Governments to adopt sustainable development strategies and coordinate with each other. The international community should bring into full play a multilateral trade system. It was thus imperative to reform the international financial institutions and improve investment rules. Debt relief also should be provided, along with capacity-building.
Costa Rica’s representative, speaking for the Community of Latin American and Caribbean States (CELAC), called for more forceful and concerted policy actions on both national and international platforms for stronger economic recovery, with fiscal policies becoming more countercyclical and supportive of job creation. Among several points made, he underscored ODA’s central role in achieving internationally agreed development goals. However, only five developed countries had fulfilled their ODA commitments and that assistance had declined for two consecutive years. Current and future global development goals should be linked to a strengthened global partnership and include a mix of financial resources, technology development and transfer, as well as capacity-building.
The delegate of South Africa, associating himself with the Group of 77, said that in order to emerge from the economic crisis an emphasis must be placed on growth. However, that had to be coupled with addressing widening inequalities, he said, noting that growth that did not address inequalities was not sustainable. Although sub-Saharan Africa had the second-fastest growth in the world, the slower growth globally had negatively impacted that region. African economics remained overly dependent on commodities, and the pace of industrialization had been hampered by poor infrastructure. In closing, he said the debate over the Council’s role as a forum for policy debate and consensus-building was more relevant than ever, and that body had a role in global economic governance.
TRIYONO WIBOWO ( Indonesia), President of the Trade and Development Board of UNCTAD, said the global economy was still struggling to find a robust and sustainable path. Growth rates across the board were well below pre-crisis levels and remained insufficient to solve the employment and fiscal problems in most developed countries or to tackle development challenges in many countries in the global South. Subdued growth in developed countries was linked to faltering demand, which affected international trade and forced those countries to reassess the importance of domestic and regional markets and South-South integration. The need for investment with regard to the post-2015 development agenda was paramount; narrowing that gap would require private financing. He urged a concerted push to address the main challenges facing developing countries in raising finance and channelling it to sustainable development goals.
JORGE FAMILIAR CALDERÓN, Vice-President and Corporate Secretary, World Bank Group, and Acting Executive Secretary of the IMF/World Bank Development Committee, said that the Committee recognized that fostering strong, inclusive and sustainable growth in today’s interconnected global economy would require policy adjustments and appropriate coordination and communication. The Committee encouraged the World Bank Group and the International Monetary Fund to work jointly and with all member countries to pursue sound and responsive economic policies, address underlying macroeconomic vulnerabilities, rebuild macroeconomic buffers and improve prudential management of the financial system.
He said that strengthening the foundations for robust, inclusive and sustainable growth called for macroeconomic stability, good governance, the promotion of public investment, and an enabling environment for private investments, quality investment in resilient infrastructure and improved access to finance. Environmental considerations also should be integrated into policymaking, as climate-smart policies were necessary for environmental sustainability and resilience and could generate additional benefits in terms of growth and jobs.
CALVIN MCDONALD, Deputy Secretary of the International Monetary Fund and Acting Secretary of the International Monetary and Financial Committee, acknowledged the global economic activity, but said the recovery was clearly uneven, with recent geopolitical issues of concern. Growth was strongest in the United States, while in the euro area a modest recovery had taken a hold. Stronger external demand would provide some support for growth in emerging markets, but higher market volatility continued to play a role. The Fund would continue to work with member States through the use of macro, prudential policies, including its precautionary instruments.
On the fiscal front, he said the Fund would promote policy options that enhanced economies, reduced public debt, supported growth and mitigated uncertainty. It would also advise member States on risks and policy responses and assist them in their efforts to address data gaps. For countries in transition, medium-term growth prospects would be crucial, while for low-income countries, efforts would focus on broadening economic growth and putting in place policy frameworks through structural transformation and diversity.
YI XIAOZHUN, Deputy Director-General of the World Trade Organization, said the organization remained committed to working with the United Nations and the Bretton Woods institutions in the formulation of the post-2015 development agenda. Sustainable, inclusive and equitable economic growth was the goal — the challenge was how to activate all the engines of economic growth while combating inequality, promoting human rights and ensuring the planet’s sustainability. Trade was a key enabler of inclusive and sustainable development and, therefore, it must play a central role in the post-2015 agenda.
However, he said, a specific focus on trade and development was still missing, he said, stressing that trade must play a greater role in the future development agenda. Trade improved people’s lives and had helped lift millions of people out of poverty in recent years. The challenge now was to ensure that trade continued to play that vital role in the most effective way possible. Trade had a major impact on job creation, but to be effective, trade reforms must be embedded in reform policies.
The panel discussion on “Mobilization of financial resources and their effective use for sustainable development” featured presentations by Pertti Majanen ( Finland) and Mansur Muhtar ( Nigeria), Co-Chairs of the Intergovernmental Committee of Experts on Sustainable Development Financing, as well as Mahmoud Mohieldin, Special Envoy on the Millennium Development Goals and Financial Development of World Bank Group.
Mr. MAJANEN said the Intergovernmental Committee of Experts on Sustainable Development Financing was building its work on four pillars. First, the body was revisiting the Millennium Declaration, which remained valid because it stressed universal common values, objectives and responsibilities. The Committee had Rio+20 and its follow-up as a second pillar, which dealt with interrelationships among sustainable development’s three dimensions. The third pillar was the Monterrey Consensus, which examined financing options beyond ODA. The fourth pillar was a multi-stakeholder approach, which also involved non-governmental organizations.
He said the Committee, which consisted of 38 experts, would draw up recommendations based on those pillars and submit a final report in September. It had already held three of five plenary sessions, and the experts had already agreed on some points, including that ODA remained a main option for least developed countries and countries in special situations, and another was that money was being used wrongly as harmful subsidies and illicit capital flows. A finding from a recent outreach activity in Helsinki had noted a built-in contradiction between private and public sector objectives, but those could be easily combined.
Mr. MUHTAR said that to fund the post-2015 development agenda, there must be a focus on the full range of resources — public, private, domestic and those stemming from partnerships — and their sustainability, complementarity, aims and contexts in which they were applied. No one questioned ODA’s central role, but it must be looked at as a catalyst to galvanize sources. Concessional funds must be applied properly and linked to country-specific approaches. Domestic resource mobilization was gaining crucial significance in the post-2015 financing debate, as developing countries themselves sought to take charge of their own potential.
In that regard, he went on, it was vital to make greater, better use of tax and other domestic revenue. Sound institutions and policies were essential for mobilizing resources. Curbing tax evasion and illicit flows, particularly in Africa where illicit flows totalled $50 billion annually, was essential. Ending wasteful subsidies could render great savings and free up much needed funds for development. Even a marginal increase in private sector funding, the largest potential funding stream, could make a significant difference. There was also great potential in risk mitigation and other techniques. At the end of the day, all processes must be linked into a single, unified financing framework. That required a transformative, creative global partnership and ways to incentivize and catalyse the private sector.
Mr. MOHIELDIN said that a framework for financing for development beyond 2015 must have four pillars — resource mobilization by Governments, development of domestic and financial sectors, better and smarter aid, and drawing on external, private and financial sectors. In the past, he had met with panellists or delegates who insisted the four pillars were important but that they could tackle one at a time. Nine out of ten jobs were in the private sector, he said, stressing that job creation had been the major driving force to reducing poverty. The dynamic private sector could lead to increased productivity, income growth and improved opportunities for all. Private philanthropy and foundations were playing a larger role in recent years, with South-South philanthropy on the rise. A challenge was to mobilize the long-term private financing for infrastructure. Key areas of work must include putting in place an adequate legal and regulatory framework; mainstreaming risk-sharing mechanisms; and developing domestic capital markets instead of just relying on foreign investment. Private-public partnerships were a way to leverage capital, he said, describing how those partnerships in India, Kenya, Brazil and Rwanda could raise the necessary capital for their infrastructure projects. Multilateral development banks could facilitate global dialogue involving the private sector, policymakers and other stakeholders.
During the ensuing interactive discussion, a civil society representative of Bread for the World highlighted the need for the right framework and appropriate public policies to make the best use of financing for both social and economic development. The world was underperforming because of austerity policies, which must be managed fairly in order to protect the poor and vulnerable. She backed the International Monetary Fund’s claims that there was too much austerity now in Europe. There must be a consistent, modern framework for development. The upcoming conference provided an appropriate platform to update the 2002 Monterrey Consensus, and she meanwhile urged the General Assembly to establish special financing for development expert committees to discuss developing a framework for private sector financing.
The representative of El Salvador stressed the need for more representative global governance that went beyond the G-8 and G-20 frameworks. Latin America only received 9 per cent of ODA, even though it was home to 184 million poor people, including 66 million living in extreme poverty. The region had fostered South-South cooperation as a complement, not a substitute, for North-South cooperation. He called for innovative financing and resource mobilization mechanisms.
The representative of Serbia said that while each country had the primary responsibility to finance its own development, private sector funding and foreign direct investment were also needed. Also vital was to address youth unemployment, including through joint public-private investments. He stressed the need to establish the rule of law and stamp out organized crime, a top priority of Serbia, and for establishing both as stand-alone goals during the post-2015 period.
A representative of Standard Chartered Bank said the institution had worked closely with the World Bank and other multilateral development banks to create a global trade liquidity programme focused on providing short-term trade financing. In developing local currency capital development markets, the Bank worked closely with the African Development Bank and International Finance Corporation to create a Pan-African programme that provided development financing over the long- and medium-term in the midst of asset management volatility.
The representative of Brazil stressed the need for good governance of global regimes. The lessons of the 2008-2009 financial crisis were all too clear and should not be forgotten in formulating the post-2015 development agenda. An international enabling environment was vital to provide the means of financing the agenda and concluding the long-overdue reforms of the Bretton Woods institutions was urgent. The Fund had consistently missed successive deadlines, which sent the wrong signal.
The representative of Turkey called for expedited efforts to set up a better sustainable integrated financing structure. Regulatory and institutional reforms at the domestic level were not enough. Support from international financing sources was vital and, thus, the long-term capability of international financial institutions must be enhanced. He called for effective insurance programmes to leverage private financing capabilities for development projects.
The representative of Development Alternatives with Women for a New Era said mobilizing private resources for sustainable development could not replace the role of the State towards that end. Only after addressing systemic issues and installing strong accountability mechanisms and criteria for monitoring the private sectors’ contribution to human rights, could the debate move forward. It was necessary to review protection investment treaties and free trade agreements that eroded national laws on environmental sustainability, gender equality and human rights.
In response, Mr. MOHIELDIN said issues related to global public goods like health would require global resources. Scaling up of financing could also be of great value. Mr. MAJANEN said indeed the security crisis and environmental emergencies must be tackled. Foreign direct investment must be improved in terms of quality, he added.
The panel discussion on “Global partnership for sustainable development in the context of the post-2015 development agenda” featured presentations by George Wilfred Talbot (Guyana), Co-Facilitator of the preparations for the third international conference on financing for development, and Serge Tomasi, Deputy Director of Development Co-operation Directorate of the Organisation for Economic Co-operation and Development.
Mr. TALBOT said the concept of a global partnership was included in the 2000 Millennium Declaration and Development Goals, particularly Goal 8, which addressed key elements for a more effective system of international development cooperation in five areas: ODA; market access and trade; external debt sustainability; access to affordable essential medicines; and new technologies, especially in information and communication. In addition, it emphasized the special needs of least developed countries, landlocked developing countries and small island developing States. Goal 8 was critical to achieving the other seven goals. The commitment was further fleshed out in the Monterrey Consensus and the Doha Declaration. In Monterrey, a historic compact was made between developing and developed countries, but global partnership remained unfinished business. The 0.7 per cent ODA target had stalled despite a slight pickup in 2013. Rather than emphasizing the inadequacy of ODA, its positive sides should be acknowledged. Millennium Goal 8 was a work in progress and should address issues related to climate change and its associated costs. The Monterrey and Doha processes provided templates.
Mr. TOMASI discussed the Development Aid Committee’s work to improve ODA, noting that other sources of external finance were becoming more prominent. ODA today represented only 18 per cent of all external finance, down from 23 per cent in 2000. By 2012, private funding had increased, reaching 45 per cent; other sources, including remittances from migrants, totalled 24 per cent. The 149 developing countries eligible for ODA were in very different situations, with per capita income ranging from $200 in the Democratic Republic of the Congo to $14,000 in Chile. Least developed countries were more dependent on ODA than middle-income countries, as the latter had access to a broader range of financing. While ODA in sub-Saharan Africa had fallen 4 per cent in 2012, overall, it had increased 6.1 per cent in real terms to a historic $135 billion. Given the pressure on donor countries to reach the 0.7 per cent ODA goal, today it was becoming more important to fund grants, notably concessionary grants, than loans, which had a low budgetary cost. Grants also were more feasible as many low-income countries were not eligible for loans due to their net sustainability problems.
To improve ODA, he continued, the Development Aid Committee had established three criteria. The first was not to make any major changes in ODA volume and philosophy, but rather to base ODA on grants. The second was to review loan discount rates, including by harmonizing the practices of the Bretton Woods institutions, which used a 5 per cent discount rate and differentiated rates. The third solution was to allocate a better rate to those most in need, namely, least developed countries.
In the ensuing dialogue, a representative of the Centre for Social and Economic Rights, a civil society organization, stressed the importance of the human rights centred approach in financing for development and fiscal policy.
The representative of Antigua and Barbuda, speaking on behalf of Caribbean Community (CARICOM), called for the implementation of Goal 8, urging developed countries to fulfil their ODA and technology transfer commitments within an agreed timeline.
The representative of Statera Capital, representing the business sector, said he was optimistic about the potential of organizations to leap-frog technologies and processes. Innovative financing was important, but adapting existing financial mechanisms was crucial.
The representative of United Nations Office on Drugs and Crime, noting that the World Bank had recognized the link between development and justice, called for the inclusion of targets on anti-corruption, access to justice and personal security in the post-2015 development agenda.
The representative of Pakistan underscored the importance of promoting self-reliance in development finance and the need for homegrown economic plans.
The representative of Mexico said the first ministerial meeting of the Global Partnership would be held in Mexico City tomorrow to discuss a holistic approach and address resource mobilization, including fulfilment of ODA.
The representative of Slovakia said innovative public-private partnerships were needed now more than ever.
The executive director of Global Clearinghouse for Development Finance said that in order to open the floodgate for private capital, a better job must be done to identify viable projects on the ground.
The representative of the Society of Catholic Medical Missionaries stressed the need for global partnerships in such areas as climate change.
In closing, Mr. TALBOT emphasized the relevance of the theme of today’s debate and the importance of working together and sharing objectives.
Mr. TOMASI said the G-20 was creating a new action plan for low-income countries, and he thanked Mexico for hosting the conference on the effectiveness of partnership, emphasizing the need to better manage global financial flows.
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