NOTING FEARS OF GLOBAL RECESSION DID NOT MATERIALIZE, DEPUTY SECRETARY-GENERAL CAUTIONS 'NOW IS NOT THE TIME FOR COMPLACENCY'
Press Release
DSG/SM/48
ECOSOC/5819
NOTING FEARS OF GLOBAL RECESSION DID NOT MATERIALIZE, DEPUTY SECRETARY-GENERAL CAUTIONS 'NOW IS NOT THE TIME FOR COMPLACENCY'
19990429 Louise Fréchette Tells Meeting of Economic and Social Council and Bretton Woods Institutions It Would Be Grave Mistake to Return to Business as UsualFollowing is the opening address by Deputy Secretary-General Louise Fréchette to the Joint Meeting of the Economic and Social Council with the Bretton Woods institutions, in New York today:
It gives me great pleasure to welcome our colleagues from the Bretton Woods institutions.
The Secretary General regrets that he is unable to attend this meeting. As you know, the crisis in Yugoslavia requires his presence in Moscow. But he has asked me to convey to you his continued support for this dialogue and his best wishes for our deliberations.
Since he took office, one of the Secretary-General's prime objectives has been to forge greater unity of purpose and action in the operations of the different entities of the United Nations system, so that the United Nations can respond more effectively to the needs of the global community. Meetings such as these are a very useful step towards that goal.
When we met a year ago we were in the midst of a great financial crisis. Under the impact of that crisis, there was widespread agreement on the need for a new "global financial architecture" which would respond better to the needs of the new global economy.
Today we can be grateful that our worst fears of a global recession did not materialize. The United States economy is still booming. Europe has successfully launched its new currency. Even some developing countries are showing signs of recovery.
But now is not the time for complacency. The effects of the crisis are still with us, and it would be a grave mistake to return to business as usual.
To anyone tempted by complacency I would make three simple observations:
1. The rate of growth of the world economy has been slowing down, and indeed the down-side risks remain significant. The present rate is not high enough to reduce the high levels of unemployment in many industrial countries, or even to sustain existing levels of imports from developing countries. The decline in the prices of primary commodities, which are the principal source of export earnings for many such countries, further dampens any hope of rapid growth in the developing world.
2. In many developing countries, the crisis has reversed in a matter of months the social gains of several decades, and its impact will continue to be felt for some time to come. The resulting problems must be dealt with.
3. A large part of the developing world remains on the margins of the global market, and cannot enjoy the potential benefits of the liberalized world economy. Hundreds of millions of people continue to live at a subsistence level, with little hope of a better future for their children.
Faced with this reality, it seems to me our priorities should be very clear:
First: we must reverse the decline in the rate of growth of the world economy. There is little hope of promoting faster growth and social progress in developing countries and reducing the gap between "haves" and "have-nots" unless there is faster growth in the world as a whole. This, in turn, requires a real commitment by industrial countries to make that goal the centre of their macroeconomic policy. I am happy to note that this view has been endorsed by the Ministers of Finance at their meetings in Washington this week.
Second: we must complete the work that has been started on establishing a new global financial architecture.
Considerable progress has been made over the past year in efforts to strengthen the international system. But much remains to be done to improve the ability of governments and international agencies to reduce instability in private capital markets, and so prevent the recurrence of the kind of crises we had to confront last year.
It would be most unfortunate if -- because the crisis has abated and the worst has for now been avoided -- the political will to make tough decisions were allowed to fade.
- 3 - Press Release DSG/SM/48 ECOSOC/5819 29 April 1999
The United Nations has put forward a number of ideas for reforming the system, which I commend to your attention. The issue of the governance of the strengthened system is especially important: neither its design nor its management must be the prerogative of only a few States.
Third: we must help developing countries build the capacity to engage in the global economy on a sustainable basis.
Liberalization is not, in and of itself, sufficient to achieve this goal. Developing countries also need to put in place the appropriate policies and mechanisms to provide economic security and social welfare for all their people.
In turn, the prescriptions offered by the multilateral economic and financial institutions should be supportive of these aims.
We in the United Nations welcome the increased attention which you in the Bretton Woods institutions are now giving to social issues. The results of the major conferences held by the United Nations earlier this decade should serve as the common frame of reference. The achievement of the goals set out by these conferences, particularly those related to the eradication of poverty, should become an integral part of any development strategy.
Fourth: we must ensure that sufficient resources are available for the task.
The role of trade and private investment in the development process is now well recognized. But official development assistance (ODA) plays, and will continue to play, a critical role in many of the poorer countries. Therefore it is imperative that the decline of ODA be reversed, and that further steps be taken to relieve the burden of external debt carried by the highly indebted countries.
In this regard, we welcome recent proposals to expand the Heavily Indebted Poor Countries (HIPC) Debt Initiative, and to further reduce official bilateral debt.
But we continue to stress that action on debt should not be taken at the expense of ODA. Therefore we support proposals to finance debt relief for the poorest countries by International Monetary Fund (IMF) sales of some of its gold holdings, and we are encouraged by the willingness to do so which many ministers of member States have expressed.
Fifth: we must continue to reinforce cooperation and coordination among all the stakeholders in the development process.
- 4 - Press Release DSG/SM/48 ECOSOC/5819 29 April 1999
To achieve sustainable development, a holistic approach is required -- one that attempts to integrate economic, social, political and environmental goals. All actors must pull in the same direction and work together in such a way as to maximize the impact of available resources.
This is why the Secretary-General launched the United Nations Development Assistance Framework. It is also, I believe, the goal Jim Wolfensohn is pursuing with his proposal for a "Comprehensive Development Framework". It must be in the interest of all that these various initiatives complement and support one another.
Let me conclude by once more welcoming our guests this morning. Much of the world's expertise on development issues is concentrated in this hall at this moment. People throughout the world are looking to us for ideas, and for practical assistance. Let us all make every effort to rise to the challenge.
* *** *