Statement by Mr. Anwarul K. Chowdhury

Madame President,
Honourable Ministers,
My dear colleague Under-Secretary-General Ocampo,
Distinguished delegates,

I am happy to take the floor following the introduction of the Report of the Secretary-General. Yesterday in my remarks at the Investment Promotion Forum, I had outlined the preparatory process for this High-Level Segment of ECOSOC.

Let me take this opportunity to recall that the theme for this segment was proposed last year by the Secretary-General, based on his consultations with Member States. In particular, the theme was put forward by Benin, as leader of the Group of the LDCs. The theme also had the support of the European Union, Congo and Japan. Two regional commissions, the one for Asia and the Pacific and the one for Western Asia, together with the Food and Agriculture Organization, the World Food Programme and the International Fund for Agricultural Development -- all expressed their support for the theme to be dedicated to the LDCs. Such strong convergence of focus is very extraordinary in the ECOSOC considerations of the theme for its High-Level Segment.

This ECOSOC High-Level Segment marks a very important occasion. It coincides with the third anniversary of the adoption of the Brussels Programme of Action for LDCs, which laid down a partnership for development emphasizing that effective poverty reduction in the LDCs needed a more supportive international environment. We believe strongly that the debates during this High-Level Segment will renew, promote and galvanize support for the enormous development challenges faced by the LDCs, through a more effective and determined implementation of the seven commitments under the Brussels Programme.

As you are all well aware, the living conditions in the LDCs are characterized by severe, mass poverty with four out of five people living on $1 a day, with the lowest per capita GDP, weak human assets and high degree of economic vulnerability. Many of them are in conflict situation or coming out of it - some others experience recurrent natural disasters - all at a tremendous human and material cost. We should also not lose sight that a big number of LDCs are also landlocked or small islands. Starting from this point, the key element for the implementation of the Brussels Programme, aimed at reduction of poverty in these countries, is a combination of availability of financial resources for investment and the creation of an indispensable policy and regulatory environment, as fully described in the Secretary-General's Report (E/2004/54).

Though during the first three years of the millennium (2000-2002) the real GDP of the LDCs as a group grew slightly faster than during the last decade, there are significant differences among the LDCs, with some performing very well and others very poorly. Even for those LDCs performing well, the critical question is the sustainability of recent positive growth trends, especially for non-oil commodity-exporting LDCs. Many LDC economies are characterized by growth instability, especially agriculture-dependent LDCs.

Over the period 2000-2002, only seven countries achieved the 7 percent growth rate target set by the Brussels Programme. The annual average growth rate of real GDP, in 22 Least Developed Countries was less than half the target rate and it actually declined in 13 LDCs.

LDCs are caught in a "poverty trap" where slow growth and low income limit domestic savings, which, in turn, limit increases in investments and economic growth for poverty eradication and the overall implementation of the Brussels Programme and of the Millennium Development Goals.

The challenge remains daunting. If these current economic and social development trends continue, the majority of LDCs may not be able to achieve the Brussels goals by 2010, which would consequently impact negatively on the achievement of the Millennium Goals by 2015.

LDCs must keep up their domestic efforts to reform, to reorganize themselves, with a view to creating an enabling policy and regulatory environment, with improved efficiency, transparency and accountability in the administration of public resources and expenditures, and facilitate the emergence of an effective governance structure and a business-friendly environment.

However, the creation of an enabling environment requires mutually reinforcing international relationships between the LDCs and their development partners. The appropriate domestic policies regarding aid, investments and trade, should be implemented in partnership with all stakeholders. The international community is called upon to fulfill their commitments, not only through increased and better quality development assistance, but also through increased investment, debt relief and free and fair trade.

In 2002, aggregate net resource flows to the group increased 7% by reaching nearly 17 billion US$. However, the backbone of the increase of the total ODA flows to LDCs was related to the substantial increase of ODA to a handful of LDCs. In fact, only four countries accounted for more than two thirds of the total ODA growth in 2002. These are: Mozambique, Afghanistan, Democratic Republic of the Congo and Zambia.

Besides the amount of ODA flows, the quality of ODA delivery has also a major impact on ODA effectiveness. In this regard, substantial progress has been made in the aid harmonization agenda. The alignment of donor assistance and the simplification and harmonization of donor requirements would go a long way to contribute to reducing the transaction cost of development assistance and enhancing aid effectiveness. Another major improvement in aid modality would require a medium to long-term ODA commitment flow to LDCs, thus reducing the uncertainty and unpredictability of fluctuating yearly allocation of ODA.

ODA is not, however, a panacea for solving the root constraints to economic and social development in the LDCs. Speedy and effective implementation of the enhanced HIPC Initiative is urgently needed, combined with bilateral debt cancellation. Distorting subsidies and high peak tariffs in industrial countries should be eliminated so as to allow LDCs' producers to compete on a fair ground at the international level. Current preferential schemes in favour of LDCs are to be lauded, but there is still room for improvement in terms of long-term predictability, wider product coverage and more realistic rules of origin to take into account the limited industrial capacity and other supply-side constraints in LDCs.

Remittances and transfer from migrants to their country of origin have become for a significant number of LDCs a major source of resource flows. LDCs are encouraged to facilitate the transfer of remittances through the formal financial system at reasonable costs and fees. Policy incentives for channelling these resources to productive sectors could provide an important contribution to domestic efforts for growth and development.

South-South cooperation has the potential to open up additional source of resource flow for the LDCs. Such cooperation therefore needs to be geared to give special attention to the specific needs of these most vulnerable countries. Already a significant share of LDCs' trade takes place with other developing countries. The share of LDCs' exports to developing countries rose from 15% in 1989 to 34% in 2002, while the share of developing countries in LDCs' imports increased from 32% to 56% in 2002. Thus, there is a potential that both LDCs and the more advanced developing countries stand to gain mutually from increased trade and investment linkages between them. If developing countries were to halve the average tariffs applied to each other, this would generate an additional $15.5 billion in trade.

The recent launch of a third round of negotiations for the Global System of Trade Preferences (GSTP), which is expected to embrace a larger number of developing countries than the existing parties, bears great promise and LDCs are urged to benefit from this window of opportunity and avoid further marginalization in international trade.

Madame President,

Three years have already gone by since the conclusion of the Third United Nations Conference of the LDCs. I strongly hope that the Ministerial Declaration, to be adopted at the end of this High-Level Segment, will be truly action-oriented. Actions, big or small, that can be set on the road to implementation right away, and no further promises or reiteration of commitments, are what the LDCs need.

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