World Must Move Beyond ‘Globalization of Exclusion’, UNCTAD President Says, as Economic and Social Council Opens Financing for Development Forum
Populism and xenophobia were challenging global solidarity at a moment when States should be working together to meet the Sustainable Development Goals, speakers stressed today as the Economic and Social Council opened its forum on financing for development follow-up.
The future of globalism was in question, warned Christopher Onyanga Aparr, President of the Trade and Development Board, United Nations Conference on Trade and Development (UNCTAD), in the forum’s opening session, highlighting that global output had slowed to 2.2 per cent in 2016, down from 2.6 per cent in 2014 and 2015, while large emerging economies had registered weak or negative growth.
The world must move beyond a “globalization of exclusion”, which had left behind the poorest, including those in the developed world who embraced nativism and populism, he emphasized.
Due to difficulties following the 2008 financial crisis, 2017 would likely be the sixth year of trade growth below 6 per cent, a state seen only once in the 70-year history of the global trading system, noted Yonov Frederick Agah, Deputy Director-General of the World Trade Organization (WTO). “This situation deserves our attention,” he emphasized, adding that it was difficult to imagine a robust economic recovery without growth in trade, although with the right mix of policies, trade could drive economic recovery.
Protectionist rhetoric was cause for alarm, stressed the representative of Ecuador, speaking on behalf of the “Group of 77” developing countries and China, who called for an inclusive, non-discriminatory trading system under WTO auspices in line with the Addis Ababa Action Agenda. Developed countries must also play their role and honour their official development assistance commitments, she stressed.
Despite signs of global economic recovery, a distrust of globalization had led to a tightening of policies that compounded uncertainty, said Shamshad Akhtar, Executive Secretary of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), speaking on behalf of the five United Nations regional commissions. The debate on the management and composition of tax systems needed to intensify, she stressed, pointing out that people’s willingness to pay taxes were influenced by perceptions as to how well those revenues were used.
Public resources must be used in a smarter way, including as a catalyst to mobilize more public and private funding, said the representative of the European Union. He went on to describe a new European Union external investment plan that would earmark some €4 billion from the bloc’s budget to hopefully generate at least €44 billion in additional investments in higher-risk sectors in developing countries. “We are determined to make our development cooperation more effective and to assist others in their efforts,” he declared.
Countries were thinking more systematically about how to mobilize domestic and international resources to meet the Sustainable Development Goals, and efforts were under way to align financial flows and policies with those objectives, said Tegegnework Gettu, Acting Administrator of the United Nations Development Programme (UNDP). Nevertheless, an implementation gap remained amid the slowest global growth rate since the 2008 financial crisis, he said, adding that it was critical to complement long-term investment — in resilience and sustainable infrastructure, for example — with measures to help the poor.
In a video message, Christine Lagarde, Managing Director of the International Monetary Fund (IMF), underscored the importance of securing adequate financing for development and stressed that cooperation between institutions was critical for success. In that context, she emphasized the important relationship between IMF and the United Nations, saying that the only way to achieve the Goals was through open communication and collaboration.
Domestic resource mobilization was a major area of focus for the World Bank Group, highlighted Mahmoud Mohieldin, Senior Vice-President for the 2030 Development Agenda, United Nations Relations and Partnerships, World Bank Group. Analysis suggested that many lower-income countries had the potential to increase their tax ratios by at least 2 to 4 per cent of gross domestic product (GDP), without compromising fairness or growth, he added.
The first priority of bolstered investments in sustainable development could stimulate global growth, said Wu Hongbo, Under-Secretary-General for Economic and Social Affairs, who continued that growth alone would not eradicate poverty. That would need more targeted measures, with social protection floors directly ameliorating the lives of the poor and vulnerable, he noted.
In the afternoon, two panel discussions took place on fostering policy coherence in the implementation of the Addis Ababa Action Agenda, as well as on inequalities and inclusive growth.
General statements were also delivered by representatives of Bosnia and Herzegovina, Panama, Kiribati, Nepal, Guatemala, Tonga, Belarus (on behalf of Like-Minded Countries Supporters of Middle-Income Countries) and the Netherlands.
The forum will continue at 10 a.m. on Tuesday, 22 May.
Opening Remarks
FREDERICK MUSIIWA MAKAMURE SHAVA (Zimbabwe), President of the Economic and Social Council, opened the 2017 forum on financing for development, recalling the 2015 adoption of the Addis Ababa Action Agenda, and with it, a comprehensive financing framework to support the achievement of the Sustainable Development Goals by 2030. Realizing the Goals in a timely manner made the Addis Agenda more important than ever. “The eyes of the world are upon us,” he said, stressing that there was no option but to live up to expectations.
Recalling that the forum brought together stakeholders to identify challenges to the financing for development outcomes and delivery of the means of implementation for the Goals, he said its recommendations included a range of policy measures to change the trajectory of the global economy.
He said the special high-level meeting with the Bretton Woods institutions, World Trade Organization (WTO) and the United Nations Conference on Trade and Development (UNCTAD) had served as a focal point since 2002 for major institutional stakeholders to interact with Member States, offering an invaluable opportunity to promote coherence, coordination and cooperation in common efforts to implement financing for development outcomes. Noting that the schedule included ministerial round tables, he said the forum had a moral duty to “use this opportunity wisely” to advance the world toward achieving the Goals and ensure that promises made were promises kept. As mandated in the Addis Agenda, the outcome of the forum would be fed into the High-level Political Forum on Sustainable Development.
AMINA MOHAMMED, Deputy Secretary-General of the United Nations, speaking via video message, recalled that the Addis Agenda, the 2030 Agenda for Sustainable Development and the Paris Agreement on climate change had provided a road map for a better future for all. Key elements of that road map would come under scrutiny during the forum, she said, including the need for long-term, high-quality investment and urgent measures to improve the well-being of the poor and vulnerable. The forum was an opportunity to reaffirm the collective commitment to action for sustainable development, which was the best mechanism to prevent further crises.
She encouraged participants to share their experiences with others and urged all countries to seek out and forge meaningful partnerships. A true global partnership for sustainable development must be grounded in equality, solidarity and human rights. Developed countries needed to deliver and countries of the global South had to pursue further South-South and triangular cooperation.
CHRISTINE LAGARDE, Managing Director of the International Monetary Fund (IMF), delivered a video message in which she underscored the importance of securing adequate financing for development and stressed that cooperation between institutions was critical for success. She underlined the important relationship between IMF and the United Nations and said that the only way to achieve the Goals was through open communication and collaboration. The Addis Agenda was vitally importance and in that context, the Fund was advancing it in several ways.
The IMF continued to strengthen the global financial architecture and assist countries seeking outside financing, while also boosting domestic revenue mobilization, which would be critical for developing countries, she said. The Fund had also boosted capacity-building support and increased cooperation with the United Nations, while also evaluating the negative impact of illicit financial flows on development efforts, including by supporting reforms that addressed money‑laundering and terrorist financing through systemic risk assessments. The IMF was engaging with small States to help them build their macroeconomic and financial resistance to natural disasters and climate change. It continued to work with a variety of public and private shareholders to promote debt sustainability and develop innovative instruments to manage public debt. She recalled that report of the Inter-agency Task Force for Financing for Development showed that while significant progress had been made, cooperation must be strengthened going forward.
MAHMOUD MOHIELDIN, Senior Vice-President for the 2030 Development Agenda, United Nations Relations and Partnerships, World Bank Group, delivered a statement on behalf of World Bank Group President Jim Yong Kim, describing the forum as a critical platform for monitoring progress on commitments to finance efforts to achieve the Sustainable Development Goals and end extreme poverty. Undoubtedly the third International Conference on Financing for Development had helped start a joint conversation within the World Bank Group and other multilateral development banks on how international financial institutions could contribute to the enormous task of funding the Goals by mobilizing the financial resources required to achieve them. Official development assistance (ODA), which last year totalled $142 billion, remained critical, particularly for the poorest nations, but it would never be enough to reach the Sustainable Development Goals.
The World Bank Group’s fund for the poorest nations, the International Development Association, had a record replenishment of $75 billion, to be committed over the next three years to the neediest countries, he said. Domestic resource mobilization was a major area of focus for the World Bank Group, particularly as analysis suggested that many lower-income countries had the potential to increase their tax ratios by at least 2 to 4 per cent of gross domestic product (GDP), without compromising fairness or growth. The World Bank Group was continuing to invest in knowledge and programmes to build durable global public goods on issues such as climate action, crisis response and infrastructure finance. Furthermore, the Group was working to pull in the private sector whenever possible, combining those efforts with the Group’s technical and local knowledge to make that capital work for those who needed it most.
YONOV FREDERICK AGAH, Deputy Director-General of the World Trade Organization, said the multilateral trading system supported efforts to implement the 2030 Agenda, including the Addis Agenda. A driver of economic growth, world trade between 1990 and 2000 had expanded more than 7 per cent annually, double the rate of global growth, which had helped to increase incomes and raise living standards across the world. Due to difficulties following the 2008 financial crisis, 2017 would likely be the sixth year of trade growth below 6 per cent, a state seen only once in the 70-year history of the global trading system. “This situation deserves our attention,” he said. It was difficult to imagine a robust economic recovery without growth in trade. With the right mix of policies, trade could drive economic recovery.
Noting that the gap between developed and developing countries had narrowed, viewed by many as the most important economic event of our time, he said the integration of developing countries into the global trade system had been crucial to their economic take-off, with their share of global trade rising from less than one third in 1980 to almost half at present. It was difficult to imagine how developing countries could grow at that rate without further trade expansion. The global trade system brought predictability and security to international relations. When countries had disagreements, rather than resort to unilateral measures, they asked WTO step in, using rules that both sides had agreed and helped to design. The priority needs were to strengthen the system and resist the imposition of new trade barriers. Such reforms would ensure WTO would continue to deliver positive outcomes. Ahead of WTO’s next ministerial conference in December, a range of areas were being discussed, with a continued focus on issues related to the Doha Development Round. “We must ensure we do more to spread the benefits of trade,” he said, which in turn, would create jobs and support growth.
Intergovernmental Representatives of Institutional Stakeholders
CHRISTOPHER ONYANGA APARR (Uganda), President of the Trade and Development Board, United Nations Conference on Trade and Development, said the future of globalization was in question. Populism and xenophobia were challenging global solidarity at a moment when States should be working together to meet the Goals. Global output had slowed to 2.2 per cent in 2016, down from 2.6 per cent in 2014 and 2015, while large emerging economies had registered weak or negative growth. Global trade had grown only 1.3 per cent in 2016 in volume terms, marked by a general decline in the first half of the year.
Moreover, he said, the green shoots of recovery were vulnerable to structural challenges, among them, rising income inequalities, slowing productivity, fragile financial markets, growing debt burdens in developing countries, climate change and migration. ODA to least developed countries and to economic development in general, had declined, while the digital divide continued to grow. UNCTAD’s fourteenth session was the first where developing countries, rather than developed, had led the defence of globalization.
He said the world must move beyond a “globalization of exclusion”, which had left behind the poorest, including those in the developed world who embraced nativism and populism. The Goals and Addis Agenda commitments must serve as a road map to the next phase of a more inclusive, just globalization, which would only succeed if it empowered those left behind. Reviving the global partnership on development, a commitment of the Addis Agenda, was more urgent today than when that instrument was agreed. Going forward, the forum must consider how developing countries could improve domestic resource mobilization amid falling trade revenues, how the global trade and investment regimes could be reformed, and how the voice of developing countries could be heard more clearly in global economic governance.
YVONNE TSIKATA, Vice-President and Corporate Secretary of the World Bank Group, provided a brief overview of the ninety-fifth meeting of the Development Committee, part of the Spring Meetings with IMF. At that 22 April meeting, governors said the global economy was gaining momentum, but stressed that risks remained tilted to the downside and improvements would require policies fostering inclusive and sustainable growth, addressing vulnerabilities and creating jobs and economic opportunities for all. Calling on the World Bank Group and IMF to provide and support the advancement of such policies, deliver the 2030 Agenda and protect the most vulnerable, she said the discussion addressed a range of issues, including inequality and recent developments in the implementation of the World Bank’s “Forward Look” vision for 2030, which had identified areas for improvements, including to bolster agility and responsiveness in working across public-private sectors and to pay special attention to stabilizing the economy and supporting growth in situations of fragility, conflict and violence.
She said Development Committee members had supported the Bank’s scaled-up activities, including in the areas of crisis preparedness, prevention and response, and were encouraged by the Bank Group’s efforts to become more efficient through reforms of its operational and administrative policies. Welcoming progress and discussions on strengthening Group’s financial capacity, they had been encouraged by the successful International Development Association replenishment negotiations, which had delivered a record $75 billion and had recognized the innovative measures introduced to help catalyse additional resources for Association member countries. The governors had also been encouraged by progress on diversifying World Bank Group staff and management and they supported similar progress on gender diversity in the Group’s Executive Board of Directors.
PATRICIA ALONSO-GAMO, Deputy Secretary, International Monetary and Financial Committee, International Monetary Fund, noted that global growth was strengthening, but that outlook was subject to much uncertainty, as many countries were operating below their potential. While trade and integration had brought enormous benefits, some segments of society had missed out on their rewards, leading to increased doubts about progress. A disruption of trade could reverberate around the globe as geopolitical tensions continued to rise. The international community must work together to enhance the resilience of economies and increase multilateralism, and in that regard, each country must play its part. The IMF’s approach placed emphasis on structural, fiscal and monetary policies, which sought to create a more inclusive global economy by taking care of those left behind, including by prioritizing education and skills development and helping those who had lost their jobs. “Future generations should not be left to fix our mistakes,” she stressed.
Multilateral cooperation was critical, she said, stressing the importance of working together to level the playing field for all, avoiding inward-looking measures and addressing taxation issues, she said. The IMF would continue to provide policy advice, financial support, and capacity development, while also advocating for multilateral cooperation. The Fund supported policies that expanded opportunities and multilateral solutions, while also seeking to support low-income countries and small and fragile States. To foster sustainable growth and a more inclusive global economy and technical progress, it was studying how trade and capital flows affected countries. The Fund also continued to deepen its analysis of structural reforms on growth, employment and income equality and would continue to support policies that stressed good governance, fostered cooperation, updated business environments and promoted competition. The international community must collaborate to find multilateral solutions to challenges, accelerate gains and improve living standard where the needs were the greatest.
Keynote Presentations
WU HONGBO, Under-Secretary-General for Economic and Social Affairs, said the 2017 report of the Inter-agency Task Force of Financing for Development was part of a broad effort to implement the Addis Agenda and represented the first comprehensive and substantive assessment of progress. Emphasizing that the report would provide implementation guidance to all actors worldwide, he highlighted several findings, including that progress had been reported in all seven action areas: domestic public resources; domestic and international private business and finance; international development cooperation; international trade as an engine for development; debt and debt sustainability; addressing systematic issues; and science, technology, innovation and capacity-building. However, a difficult global environment had impeded individual and collective efforts and many implementation gaps remained. National efforts had been affected by such economic factors as low commodity prices and trade growth and volatile capital flows alongside political and environmental factors. Despite projected improvements for 2017 and 2018, the current growth trajectory would not deliver the goal of eradicating extreme poverty by 2030 and least developed countries would fall short by large margins.
Yet, he said, the global development agenda contained elements to reignite growth and a combination of national and international actions could change the trajectory. The first priority of bolstered investments in sustainable development could stimulate global growth, but growth alone would not eradicate poverty. That would need more targeted measures, with social protection floors directly ameliorating the lives of the poor and vulnerable. The report offered options to address financing challenges related to such floors and underlined that policies and actions on investment and vulnerabilities must be gender-sensitive. The development of integrated national financing frameworks was a promising sign, he said, underlining that national efforts must be accompanied by a supportive global environment and that many countries continued to rely on support, including ODA. In that regard, international cooperation was as vital as ever, he said, encouraging actors to use the web portal, which provided data and analyses for each of the more than 100 clusters of commitments and actions across the Addis Agenda.
MUKHISA KITUYI, Secretary-General of United Nations Conference on Trade and Development, speaking by video message, called for enhanced political momentum to achieve the Addis Agenda. “We need to speak boldly about the obstacles hampering implementation,” he said, as well as about innovative financing instruments. He also advocated scaling up partnerships with the private sector, stressing that UNCTAD had a proven record of working in that regard. At the same time, he cautioned against turning away from calling out the risks of public-private partnerships, which must be studied in order to ensure they did not create debt burdens for future generations. He called on participants to “walk the talk” on commitments made in Addis Ababa, Doha and Monterrey.
TEGEGNEWORK GETTU, Acting Administrator of the United Nations Development Programme (UNDP), noting that the Programme contributed to Inter-agency Task Force reports, said that in the first year of the 2030 Agenda, countries were thinking more systematically about how mobilize domestic and international resources to meet the Goals, and efforts were under way to align financial flows and policies with those objectives. Yet, an implementation gap remained amid the slowest global growth rate since the 2008 financial crisis. Noting that the Addis framework included support for global trade as a way to increase investment in the Goals, he said it was critical to complement long-term investment — in resilience and sustainable infrastructure, for example — with measures to help the poor.
Fulfilling the 2030 Agenda also required proactive policies for education, health and credit availability, he said. There were variety of options to finance social protection floors at the local level, including through fossil fuel subsidies, and he welcomed the proposal for the Task Force to review funding mechanisms for social protection and to report back with recommendations to the 2018 financing for development forum. He also welcomed efforts to broaden criteria for financing eligibility, noting with concern that ODA allocated to least developed countries had dropped, despite commitments to increase such aid. While it was important to meet international commitments to refugees, resources spent in donor countries hosting refugees should not reduce funding for meeting the Goals in developing countries. UNDP had helped 143 countries access $3.1 billion in financing, an investment that had liberated another $14 billion in co-financing. In response to the growing demand for support in navigating the financing for development landscape, UNDP had carried out assessments to help Governments explore how to harness financial flows.
SHAMSHAD AKHTAR, Executive Secretary of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), speaking on behalf of the five United Nations regional commissions, said that despite signs of global economic recovery, a distrust of globalization had led to a tightening of policies that compounded uncertainty. Fiscal policy needed to play a greater role in addressing inequality and expanding the fiscal safety net. Sustainable and well-calibrated fiscal policy could lead to inclusive sustainable development and reduce inequality. The regional commissions had announced consultations and analytical work related to the Addis Agenda, with 50 analytical papers having been prepared over the past four years.
The commissions’ efforts were focused on four key areas, including working to promote domestic resource mobilization, she said. Research had demonstrated that tax incentives and weak compliance had eroded the tax base across all regions. The debate on the management and composition of tax systems needed to intensify, she stressed, noting that people’s willingness to pay taxes were influenced by perceptions as to how well those revenues were used. Fostering infrastructure investment was a priority, including climate-resilient infrastructure. The fiscal requirements of meeting the Sustainable Development Goals could only be achieved by building more efficient and effective tax systems through multilateral approaches. It was important to acknowledge that countries were moving at difference paces and sequencing their reforms differently, and that social expenditures needed to be enhanced. Declining ODA was a cause for concern she stressed, highlighting that it continued to fall far short of commitments. Improving the capacities of Governments to effectively structure private-public-partnership transactions was also vital.
Statements
NEVEN MIMICA, European Commissioner for International Cooperation and Development, European Union, saying the Addis Agenda was a means to an end, insisted on ensuring full coherence and coordination with the 2030 Agenda. All actors must play their part, he said, understanding the importance of relevant international conventions, including the Paris Agreement. The European Union expected to sign the European Consensus on Development in June, framing action to deliver on Addis commitments. As the largest provider of ODA, bloc member States would continue their efforts.
To achieve greater impact, he said, public resources must be used in a smarter way, including as a catalyst to mobilize more public and private funding. A new external investment plan aimed at doing that, using €4 billion from the European Union budget to hopefully generate at least €44 billion in additional investments in higher-risk sectors in developing countries. That plan also included the new European Fund for Sustainable Development, provisions for technical support and a focus on improving the investment climate through policy dialogue and cooperation. Through those and related efforts, he said, “we are determined to make our development cooperation more effective and to assist others in their efforts”.
IGOR CRNADAK, Minister for Foreign Affairs of Bosnia and Herzegovina, said bold steps must be taken to bolster national steps, including fostering industrial development, and multilateral development banks must work more closely in areas such as fostering private-public partnerships. “If we want to success in this complex undertaking, we will have success stories,” he said. “We need to be flexible and willing to learn from those who moved faster on the Sustainable Development Goals path.” That included sharing knowledge, experience and innovative approaches or use of the transfer of technology if the Sustainable Development Agenda would be achieved by 2030.
DULCIDIO DE LA GUARDIA, Minister for Economy and Finance of Panama, endorsing the statements to be made by the “Group of 77” developing countries and China and the Community of Latin American and Caribbean States (CELAC), said his country had been the focus of a documents leak in 2016 on tax fraud that implicated many countries, including some in the Group of 20. All countries must show a united front in tackling tax issues, including senior officials in international organizations. Among a range of actions, he said fiscal policies should take into account the characteristics of each country of concern. Discussions should focus on issues such as knowledge, productivity and competitiveness of all States, particularly least developed countries.
TEUEA TOATU, Minister for Finance and Economic Development of Kiribati, said his country’s development, along with that of other small island developing States, had been hampered by isolation from world markets, vulnerability to external shocks and climate change. Existing efforts and assistance must be scaled up to implement the Sustainable Development Goals, addressing questions such as how to climate-proof related initiatives. Financial constraints and limited financial resources were inhibiting ongoing national efforts. “We cannot do it alone,” he said, emphasizing that outstanding commitments must be honoured. In that regard, he asked private and donor communities to be more forthcoming in their support.
NABINDRA RAJ JOSHI, Minister for Industry of Nepal, said his country’s new Constitution incorporated universally accepted democratic and inclusive norms, which would help create an environment conducive for implementing all internationally agreed development agendas. Nepal’s goal to graduate from least developed country status by 2022 required “huge” additional investments, and Nepal also aimed to emerge as a middle-income country by 2030. Challenges included tackling institutional, financing and capacity constraints, he said, noting that the private sector had played a key role in development. To mobilize domestic resources, Nepal had widened its tax base by formalizing the informal sectors, and had created special economic zones. Beyond traditional development finance, development partners should also fulfil ODA commitments, facilitate trade and encourage investment and technology flows.
MIGUEL ANGEL ESTUARDO MOIR SANDOVAL, Secretary for Planning, Planning and Programming Secretariat of the Presidency of Guatemala, advocated working towards a multidimensional definition of ODA. Urging a focus on prevention and pre-investment in addressing climate variability, he said foreign direct investment was needed, as were strategies with innovative models for pre-investment and legal institutional tools to foster investment in ways that promoted national priorities. Guatemala’s national development plan aimed to reduce poverty and extreme poverty; ODA was essential to that end. He advocated dialogue to set out development priorities and respond to commitments made under the Addis Agenda. Guatemala was committed to foster human sustainable development, notably through international cooperation and various modes of assistance.
TEVITA LAVEMAAU, Minister for Finance and National Planning of Tonga, said his country stood with other Pacific small island developing States to implement the Goals. Noting the need for adequate resources to support the regional coordination and national implementation of the Goals, he expressed support for Fiji’s Presidency of the twenty-third Conference of Parties to the United Nations Framework Convention on Climate Change to advocate for innovation in climate change adaptation for island nations. While acknowledging the work of IMF, the World Bank and others, he urged refining the definition of fragility to include the drivers of vulnerability in the Pacific, which included dependence on imported fossil fuels. Potential options for ocean finance were also critical.
VALENTIN RYBAKOV, Deputy Minister for Foreign Affairs of Belarus, on behalf of Like-Minded Countries Supporters of Middle-Income Countries, emphasized the significant challenges faced by those countries in achieving sustainable development. Middle-income countries should comprise all groups of developing nations, especially because as countries moved from low- to middle-income status, the assistance provided was reduced. He underscored the need to exchange experiences, improve coordination and focus the support of the United Nations development system, international financial institutions and others. He expressed concern that access to concessional finance was reduced as national incomes grew, and recalled the importance of technology transfer in the spirit of closing the economic and social gap. Multilateral development banks must devise graduation policies that were sequenced and phased. There was also a need for more nuanced, transparent country classifications, beyond the per capita income criteria, while international engagement should be tailored to middle-income country needs.
CHRISTIAAN REBERGEN, Vice-Minister for International Cooperation, Ministry of Foreign Affairs of the Netherlands, endorsing the European Union, said the promise of leaving no one behind was a serious commitment, serving as a litmus test at the United Nations. The Addis Agenda focused on how to serve those most in need, he said, emphasizing that tax issues in that regard had been examined. Resources were being used to catalyse more investments, he said, noting that the Netherlands had made efforts in that area. The United Nations must play its role in setting norms and convening power, he said, emphasizing that there should be a moratorium on lofty outcome documents until results had been delivered on promises already made.
MARÍA CAROLA IÑIGUEZ ZAMBRANO (Ecuador), speaking on behalf of the “Group of 77” developing countries and China, welcomed the forum’s draft conclusions and recommendations, adding that agreement had been reached on minimums, but not on forward-looking actions, including on climate change, trade and international development cooperation. Financing for development was key to implementing the 2030 Agenda and predictable financial flows were indispensable on that quest. Calling for a range of actions, she said greater international cooperation was needed to combat illicit financial flows and global economic governance must be improved to create a development-friendly environment. Alarmed by protectionist rhetoric, she called for an inclusive, non-discriminatory trading system under WTO auspices in line with the Addis Agenda.
The Group remained committed to addressing climate change, she said, calling for further action and predictable and sustainable support, taking into account the needs of developing countries. The international community must consider the severe difficulties faced by countries and peoples living under colonial and foreign occupation, she said, reaffirming a rejection of the imposition of laws and regulations with extraterritorial impact and all other forms of coercive economic measures, including unilateral sanctions. Developed countries must play their role and must honour their ODA commitments.
Opening Remarks
Mr. SHAVA noted that the Addis Agenda and the Paris Agreement had scaled up support for people in countries whose needs were the greatest. Representatives of Governments had a responsibility to ensure that their institutions, despite their different mandates, governance and expertise, worked coherently towards the common vision enshrined in the 2030 Agenda. Over the last two decades, the world had made progress in reducing global poverty and narrowing economic gaps between countries, although inequality around the world remained high. Experience had shown that addressing inequality did not necessarily sacrifice efficiency. Investment in inclusive and resilient infrastructure was an important way to address inequality in access to markets, finances and technology and other opportunities. Policy frameworks should be geared towards long-term investment so as to mitigate the risk of increased investments in infrastructure focusing on a limited number of countries, and only on sectors with potential cash flows.
HERVÉ DE VILLEROCHÉ, Co-Dean, Board of Executive Directors, World Bank Group, noted that the forum represented a critical platform to help follow-up on commitments towards the achievement of the Sustainable Development Goals and ending extreme poverty. ODA would need to be strategically utilized to catalyse public and private investments and mobilize additional capital. The International Finance Corporation had introduced a new long-term strategy to scale up the impact of its financing to the private sector, at large. The World Bank Group was committed to using its balance sheets to deliver on the Goals, but was also convinced that achieving the development objectives would only be possible with continued efforts to address policies. The Bank put particular emphasis on the importance of a growth-friendly environment, the mobilization of additional domestic resources and the need for continued momentum towards the development of global public goods.
HAZEM BEBLAWI, Executive Director, International Monetary Fund, said the focus should be on whether IMF, WTO, UNCTAD and others had been able to align their activities with the Addis Agenda to support members achieve the Sustainable Development Goals and promote global imperative for inclusive growth. The Fund’s executive Board would consider proposals to improve debt sustainability framework. There was a close parallel between global economic recovery and sequence of actions by major institutions and stakeholders to support the Addis Agenda. There were gaps to be tackled and risks of setbacks and unintended consequences. Two years after the third International Conference on Financing for Development in Addis Ababa, “we have already made good progress across a wide range of objectives”, he said, stressing the need for continued cooperation with other institutions and stakeholders, in line with the Addis mandate.
Mr. APARR said UNCTAD’s work to move global economic governance onto a more inclusive footing offered examples of how policy coherence could address the wide inequalities characterizing the global economy today. All countries must work to grow exports and reform trade by moving beyond a narrow focus on multilateral trade rules and taking national steps to use trade as part of domestic and regional policies, with an eye to structural transformation. Foreign direct investment (FDI) and investment promotion actions also could be taken. Key to that was holding donors accountable for increasing ODA to at least 0.2 per cent of gross national income. “FDI cannot be a substitute for ODA,” he said. Private finance and development bank efforts to catalyse domestic finance were needed, as was a more nuanced analysis of blended finance and public-private partnerships. Addressing illicit financial flows must also be prioritized by bringing discussion of tax evasion and fiscal paradises to the fore at the United Nations and advancing international discussions on debt. Noting that UNCTAD was working to operationalize principles on responsible sovereign borrowing and lending, he said closing the inequality gap required addressing a key area of unfinished business to address systematic issues stressing the financial system, which held back international policy coordination.
Interactive Discussion I
Moderated by Sara Eisen, CNBC, the first interactive panel, titled ”fostering policy coherence in the implementation of the Addis Ababa Action Agenda”, featured Frank Heemskerk, Executive Director, Cyprus, Israel and Netherlands, World Bank Group; Daouda Sembene, Chair, Executive Board Committee for Liaison with the World Bank, the United Nations and other International Organizations, International Monetary Fund; and Nabeel Munir (Pakistan), Vice-President, Economic and Social Council, as lead discussants.
Ms. EISEN said that the discussion would focus on the promotion of inclusive economic growth in the pursuit of sustainable development.
Mr. HEEMSKERK said that the United Nations should continue to foster coherence by benchmarking performances of member States and by exerting pressure on the private sector, including both larger and smaller companies, which may be interested in supporting the Sustainable Development Goals. It was important not to forget that the best form of leverage would only come from a well-functioning State; including those that followed the rule of law and made appropriate investments. The international community must make sure that investments were well-spent and not diluted. There was a lot of talk about public-private partnerships and blended finance, although there were many different definitions for both of those terms in use.
Mr. SEMBENE noted that IMF supported domestic policies, including by deepening policy diagnoses and advice, scaling up capacity-building and enhancing the financial safety net. He highlighted that there were weaker growth prospects relative to the projections made in 2015. The IMF had committed to scale up its policy diagnostics for the 2030 Agenda in key areas, including through infrastructure policy support and supporting fragile States and small, developing countries by addressing their challenges and vulnerabilities. The Fund was also scaling up its support for capacity development in five key areas by boosting support for domestic resource mobilization and building State capacity for scaling up public investment. Liquidity needs were growing among developing countries, which had prompted IMF to put in place a 50‑per‑cent increase in access for all concessional facilities and debt relief for countries experiencing public health disasters.
Mr. MUNIR highlighted that, at the national level, countries continued to face major challenges with formulating multisectoral, integrated and coherent policies and actions towards the achievement of the Sustainable Development Goals. Many countries were still at the very early stages in establishing mechanisms for mainstreaming the Goals and the Addis Agenda in their national development strategies, he said, highlighting that changing institutions and mindsets were not easy processes. For countries that were least capable of implementing such changes more international assistance to support their transition was warranted. At the regional level, different coordination mechanisms, platforms and dialogues had helped bring together Governments around region-specific objectives. More also had to be done at the global level to increase the coherence between national policies and global development policies.
In the ensuing discussion, the representative of Kenya, speaking on behalf of the Peacebuilding Commission, said the synergies between the 2030 Agenda and the peacebuilding architecture in creating sustainable peace were evident. The Peacebuilding Commission stressed the need for adequate, predictable and sustained financing to assist countries in building and sustaining peace. The Addis Agenda recognized the existence of a “peacebuilding financing gap”, which should be narrowed by strengthening partnerships with financial stakeholders, including the multilateral financial institutions. The representative of the International Chamber of Commerce stressed that if countries wanted to achieve the Sustainable Development Goals, they must ensure trade policies allowed businesses to create new jobs, while the representative of the World Trade Organization underscored that although reforms were important, greater emphasis must be placed on building trade capacity.
Also speaking were the representatives of Indonesia and the United Kingdom.
Interactive Discussion II
The forum then held an interactive discussion titled “inequalities and inclusive growth”, which featured presentations by Patience Bongiwe Kunene, Executive Director, Angola, Nigeria, and South Africa, World Bank Group; Nancy Gail Horsman, Executive Director, Antigua and Barbuda, the Bahamas, Barbados, Belize, Canada, Dominica, Grenada, Ireland, Jamaica, Saint Kitts and Nevis, Saint Lucia, and Saint Vincent and the Grenadines, International Monetary Fund; Masaaki Kaizuka, Executive Director, Japan, International Monetary Fund; and Jürgen Schulz (Germany), Vice-President, Economic and Social Council.
Ms. KUNENE noted that the World Bank’s expertise included agriculture, energy, education, climate change, conflict and violence, gender issues and resilience among many other areas. A key question to be addressed was what sort of access was being provided to the services being produced by international organizations, Governments and the private sector. Success was not only about having opportunities, but about having access to quality opportunities. In that context, it was important to take into consideration things such as the strength of education systems and whether through those educational opportunities it was possible to address equality gaps. Connectedness was very low in many African countries, including access to cell-phone and broadband services. When looking at the access to trade and air travel, one could see why there was much more that needed to be done with regard to connectedness. It was important to create credible evidence-based solutions that utilized data. Some of the available data still had gaps. The Bank had organized a meeting to brainstorm what a “strong World Bank” would look like in 2030, during which participants stressed the need to appeal to all of the financial institution’s clients in an interconnected fashion.
Ms. HORSMAN said growth had narrowed income gaps across countries. Within most advanced and some emerging economies, inequality had increased over two decades, while slow growth since 2008 had exposed the difficulties of some groups to adjust to technical progress. Wages of low- and middle-skill workers had stagnated, leading some to question the value of global trade and the multilateral framework underpinning it. Technological change, more so than integration, appeared to be behind labour’s falling share, which led many to question how multilateral institutions could align their work with the goals of inclusive growth. “Protectionism and inward-looking polices are not the answer,” she said. The Fund was working to ensure its policies were supportive of inclusive growth by encouraging States to implement measures that boosted economic opportunities and reduced trade-offs. She cited measures to promote financial inclusion to support long-term growth and smooth income fluctuations. Coordinated actions by countries could boost growth, and avoid negative spillovers of policies among countries.
Mr. KAIZUKA said the Fund had several tools available to address inequality and inclusive growth, describing policy surveillance as a regular exercise for devising policy recommendations. Such consultations with his country focused on how to solve labour market realities, including how to enhance women’s labour participation. Country specificity should be highly appreciated in such work, he said, noting there were many policy options for inclusive growth. The real application of policies for infrastructure, education and labour market reform, for example, should be prioritized. Equally important was to ensure country ownership. The Fund provided capacity-development programmes tailored to country situations, which were important to monitor. In many IMF board meetings, members stressed that the Fund should not deviate much from its mandate to promote macroeconomic financial stability. Yet, it was sometimes difficult to draw a line between the core and non-core mandates. Fiscal policy must play pivotal role in reducing inequalities, as should social policies.
Mr. SCHULZ said the gap between the wealthy and the poor had widened, with Goal 10 calling on the international community to reduce inequality both within and among countries. Rising inequality compromised social justice and human dignity. As such, it had been at the core of the Economic and Social Council agenda and he called for the creation of inclusive institutions, combined with the right policies and regulations to ensure that everyone benefitted from economic gains. More must be done to ensure inclusive and sustainable economic growth, as well as to address systemic issues by ensuring that developing countries were fully heard in economic and other institutions. Data disaggregation was essential for reaching those most in need, with the dynamics between and within vulnerable groups — based on gender, race and ethnicity for example — understood. He advocated redoubled efforts to implement Addis Agenda commitments on inequality.
In the ensuing discussion, delegates asked how to tackle the digital divide and reverse the trend of deepening inequality, with Costa Rica’s speaker asking about actions to ensure women’s economic empowerment. Others described domestic and international drivers of inequality, with Ghana’s delegate pointing to a one‑size-fits-all approach to national development. She asked how much of budget was going into social protection floors. “Where you put your money is where your heart is,” she stressed.
Mr. KAIZUKA responded to Ghana’s delegate that social protection floors would be discussed later this week in Washington, D.C. The Fund, working with low-income countries, set indicative targets for where the floor in the budget formulation should be set. It was an evolutionary process.
Mr. SEMBENE added that IMF was working to ensure women’s participation by making the point that their participation was essential for countries to reach their growth potential. The IMF also promoted gender budgeting. It had released a tool kit last July and a book titled Women, Work and Economic Growth: Levelling the Playing Field, in March.
The representative of the United Nations Children’s Fund (UNICEF) spoke about the importance of policy solutions for poverty alleviation, stressing that investing in children was not only morally right but made economic sense. Recent evidence had shown that children’s exposure to toxic environments was “costing nations a lot”, with some forfeiting two times their GDP due to additional spending on health, resulting from a lack of investment in the early years. “We don’t need to spend much more to get the results on the ground,” she said. Resources required to scale up child-focused interventions for achieving the Goals were moderate. Children under age 18 comprised more than half of the global poor.
The representative of Citi Group, noting that Governments alone could not finance the Goals, said the current size and pace of private sector support would not be enough to support success. Large, deep and liquid markets were one solution, with a transactional level focus. The Goals’ objectives presented risks far beyond those traditionally taken by the private sector. “We’ve not solved Rubik’s cube of using blended finance structures,” he said, noting that the public sector did not need to take significantly more aggregate risk to facilitate those transactions. Rather, it must be better at targeting risk that often coalesced in the private sector. He described the “integrity challenge” as crippling, with corruption as the Achilles heel of reaching the Goals.
The representative of the Financial Transparency Coalition focused on tax reforms to reduce inequality and the need for progressive taxes, which had important implications for addressing gender bias in tax structures. Efforts to increase tax bases should shift the burden away from women. A transformative change in international tax was needed to combat tax evasion and avoidance.
The speaker from the World Trade Organization spoke about trade finance, which played a key role in helping developed, developing and least developed countries participate in global trade. The sixth global review of Aid-for-Trade would be held from 11 to 13 July with a cross-cutting theme of how that programme supported achievement of the Goals, notably for poverty eradication and women’s empowerment.
Ms. KUNENE added that the World Bank had a gender-diverse board, with staff incentives for women to become senior managers. For countries, she cited educational projects for adolescent girls and cross-cutting solutions focused on gender.
A speaker from Yes Bank said the tool that could bring the $218 trillion global capital markets and the $256 trillion in global individual wealth into the Goals was impact investment. Alternative investment funds in India and the Social Impact Bond Act in the United States were other mechanisms that allowed people to pool funds and become part of the development story. Social entrepreneurs were also looking to address access to health and education, she said, citing the “Start Up India, Stand Up India” programme in that context.
Other speakers from the International Monetary Fund also spoke, as did the representative of Liberia, the United States representative at the World Bank and a speaker from the Women’s working group on finance for development.