Speakers Call for Practical Ways to Implement International Monetary Reform As Economic and Social Council Event with Bretton Woods Entities Concludes

15 April 2014
ECOSOC/6609

Speakers Call for Practical Ways to Implement International Monetary Reform As Economic and Social Council Event with Bretton Woods Entities Concludes

15 April 2014
Economic and Social Council
ECOSOC/6609
Department of Public Information • News and Media Division • New York

Economic and Social Council

Special High-Level Meeting

11th Meeting (AM)

Speakers Call for Practical Ways to Implement International Monetary Reform

As Economic and Social Council Event with Bretton Woods Entities Concludes

 

Representatives from world financial institutions, the global private sectors and civil society took up the question of practical implementation of international monetary reform today, as the Economic and Social Council concluded its two-day special high-level meeting with the Bretton Woods institutions, the World Trade Organization and the United Nations Conference on Trade and Development (UNCTAD).

The forum commenced with a panel discussion on three themes — “World economic situation and prospects”, “Mobilization of financial resources and their effective use for sustainable development” and “Global partnership for sustainable development in the context of the post-2015 agenda”.  It featured presentations by José Antonio Ocampo Gaviria, Chair of the Committee for Development Policy and Director of Economic and Political Development Concentration at Columbia University; Erika Karp, Founder and Chief Executive Officer of Cornerstone Capital Inc.; and Aldo Caliari, Director of the Rethinking Bretton Woods Project, Center of Concern.

Mr. Ocampo emphasized, among several points, that only international cooperation could reverse the eroded tax basis that had generated a regressive tax system.  The Committee of Experts on International Cooperation in Tax Matters, a subsidiary of the Economic and Social Council should be transformed, he said, into an intergovernmental organ, embracing the participation of emerging and developing countries in decision-making.  A global conference on tax avoidance and tax evasion would help to bring the conversation into development issues, he said.

Citing successful debt restructuring, as had occurred with Argentina before the United States’ courts, Mr. Ocampo said a formal debt-management system should be created as an aid to both developing and developed countries, in line with the Monterrey Consensus.  Because current mechanisms did not work as well as they should, several core principles could underpin improvement in global governance, including the principles of “common but differentiated responsibility”, subsidiarity, transparency, accountability and coherence.

He proposed active use of the International Monetary Fund’s (IMF) multilayered architecture with regional monetary systems that supported the Fund’s endeavours.  He also highlighted the Economic and Social Council’s role in recommending the “analysing links” between cooperation for development and global public groups.  Further, the International Development Corporation could serve to create synergy with North-South and South-South cooperation as well as multi-State partnerships.  Accountability, he stressed, should be a component in the follow-up to the post-2015 agenda.

“Capitalism is beautiful,” said Ms. Karp, pointing out its centrality in her private company’s efforts and success.  Businesses must restore confidence, faith and transparency to capitalism if the world was going to achieve the sustainable development goals, she said, urging the international community to leverage the power of the private sector to spur global development.  However, in doing so, there need not be an “out-trade” of corporate profitability and achieving the goals, she added.

The amount of regulatory scrutiny post-crisis was unprecedented and created a tremendous opportunity for transparency, which could be transformative, she said.  The global community was in the midst of the greatest ever intergenerational transfer of wealth.  Achieving the sustainable development goals would require trillions of dollars and that money could be found in the capital markets.  In the long run, there was no dichotomy between pursuing corporate profitability and achieving societal imperatives.  For companies that understood that reality and expanded their opportunities, profitability and sustainable development could go hand in hand.

Mr. Caliari hailed the private sector’s efficiency and innovation, but said there were nonetheless troubling concerns about the ability to mitigate risk in public-private partnerships.  The profit-maximizing agenda should not be fulfilled at the expense of Government handouts, he emphasized.  Infrastructure could offer high returns, particularly when considering new or “green field investments” in developing countries.  Still, reliance on infrastructure alone had its shortcomings.  Where it could not deliver hoped-for returns, the risks could be passed on to taxpayers and consumers, who were the “weakest link”, he said, citing instances in which public-private partnerships ended up costing the public.  When such partnerships failed in the health, education and water sectors, among others, States could ultimately have to intervene because of their obligation to provide basic services.  The possibility of corruption also loomed much larger over public-private partnerships because of their complexity and the scale of investment involved.

In the ensuing interactive dialogue, representatives from all sectors underlined the need to bring innovative reforms to the fore.  The Governor of the Central Bank of Sudan, noting that 94 per cent of his country’s debt was related to the Heavily Indebted Poor Countries (HIPC) Initiative, pointed out that, with five landlocked neighbours in need of trade with Sudan, mitigating the debt problem and lifting unjustified sanctions was of critical importance.  That would allow Sudan to provide food to the region and enable its own development, he said, adding that, as one of four countries in possession of the greatest natural resources, it could be the “bread-basket that could feed the world”.

A representative of Benin, speaking for the Group of Least Developed Countries, said that official development assistance (ODA) was a critical element of development finance for those nations, accounting in some cases for at least 70 per cent of their external flows.  The volume of ODA disbursed should be based on the receiving country’s needs, with due attention to capacity constraints, poverty levels, domestic resource base and vulnerability.  Financial support was also needed for adaptation to and mitigation of climate change and other natural hazards, he said, pointing out that only $26 billion out of about $703 billion earmarked for the developing world had gone to least developed countries.

A representative of the International Chamber of Commerce emphasized that business, as a key contributor of Government revenues, had a critical role to play in accelerating progress towards sustainable development.  However, critical long-term policies governing resources, investment and infrastructure must support economic prosperity and growth, he said, stressing that responsible enterprise and business models incorporating countries with low-income populations should also be promoted.

Pakistan’s representative said that financing the development agenda required a serious “rethink” of current approaches.  Given the need to evaluate the role of all funding sources, the State would continue to play a fundamental part, he said, adding that it was also critical to give the private sector a voice owing to its importance.

A representative of the Loretto Community called for a partnership model for financing that would, among other things, put an end to binding free trade agreements.  There must be an open, rules-based and non-discriminatory free trade system, and trade agreements should not be implemented at the expense of people’s well-being.  Multilateral as well as bilateral trade agreements must prioritize transparency mechanisms and bring together all relevant stakeholders, particularly marginalized groups.

The Executive Director of the Global Clearinghouse for Development Financing highlighted the need to identify the precise practical means for implementing strategies to address development needs.  In noting the “huge gap” in ODA, she emphasized the need to provide financial advisory support to businesses and Governments, stating: “That is where we should bet our dollars”.

However, social sustainability and financial development often worked in isolation, a representative of the Sisters of Charity said, noting that the Sisters lived among the world’s poor.  The organization was actively coordinating efforts with other non-governmental organizations, as well as with Governments and the World Bank, to implement social protection-based models with countries seeking to incorporate social security efforts and basic human needs into their policies.  There was also a need for grass-roots participation in programme design, she said, recalling an instance when elevators had been installed in the Alta Plano, although nobody had been trained locally to repair them and a repairperson had had to be flown in.

As panellists addressed the myriad concerns raised by participants, Mr. Caliari said the question that the world should be asking was when it was fair to take risks and how much “skin” the private sector should be expected to put on the line.

Mr. Ocampo reiterated his belief in a strong private sector, but also in strong Governments.  The first responsibility of the private sector was to pay taxes, and there must be rules to prevent major corporations from side-stepping that responsibility, he emphasized.

Ms. Karp said the themes of transparency, governance and collaboration had clearly emerged during the discussion and agreed that corporate social responsibility was an essential part of any successful company or organization.  Noting the excellence of many private sector firms, she said the world could move forward collaboratively and constructively to let capitalism “do its thing”.

Also speaking were representatives of South Africa, Rwanda, Costa Rica, Colombia, Croatia, Japan and Bangladesh.

Participants also included speakers from Scarsdale Equities and VIVAT International, representing the business sector and civil society, respectively.

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