DEPUTY SECRETARY-GENERAL, AT IMF/ECONOMIC AND SOCIAL COUNCIL MEETING, STRESSES PARTNERSHIP TOWARDS A SINGLE VISION OF DEVELOPMENT

Press Release
DSG/SM/74
ECOSOC/5878

DEPUTY SECRETARY-GENERAL, AT IMF/ECONOMIC AND SOCIAL COUNCIL MEETING, STRESSES PARTNERSHIP TOWARDS A SINGLE VISION OF DEVELOPMENT

Following is the statement of Deputy Secretary-General Louise Frechette to the joint meeting of the Economic and Social Council and the Executive Directors of the International Monetary Fund (IMF) on 28 October:

I would like to extend a warm welcome to the Managing Director and Board of Directors of the International Monetary Fund (IMF). This is the Board's first visit to the Economic and Social Council and, therefore, something of a historic occasion. I am pleased the United Nations is returning the favour after the IMF kindly hosted Economic and Social Council ambassadors in Washington in June.

Collaboration between the United Nations and the Bretton Woods institutions has come a long way. The Board of the World Bank held a similar session with the Economic and Social Council last spring and just last week, the Secretary-General visited the World Bank, meeting with its Board of Directors and speaking to the staff about the relationship between development and peace.

In recent years, we have also had extremely fruitful exchanges with the IMF Managing Director at the Economic and Social Council’s high-level segments, as well as constructive ad hoc meetings with individual officials. So, our dialogue is underway and it’s all to the good. There are many issues on which the IMF and the United Nations can and should dialogue and cooperate. Let me mention just a few.

The first is the eradication of poverty. The IMF is being asked by its own governing board to pay more attention to this fundamental issue. This is a policy development that the United Nations can only welcome. Indeed the fight against poverty is emerging as one of the greatest challenges of our times and one that should engage all the energies of organizations. It is likely to be one of the major themes of the Millennium Summit to be held here next year.

Let me make three observations here.

- 2 - Press Release DSG/SM/74 ECOSOC/5878 29 October 1999

The first is that a number of United Nations agencies have developed considerable expertise in poverty eradication strategies whether in the health or education or population fields. I would hope that the joint poverty reduction strategies papers to be developed jointly by the Fund and the Bank will make as much use of this expertise as possible.

My second observation is to underline the need for coordination among ourselves especially at the country level -- which is as you know one of the key goals of the Secretary-General’s reform programme. We must all show sufficient flexibility to avoid burdening our developing country partners with competing or overlapping requirements.

My final observation is to -- again -- express our concerns over the declining level of official development assistance (ODA) resources. I am glad that the IMF has found a creative way to fund the Heavily Indebted Poor Countries (HIPC) Initiative. Clearly without an increase in ODA, poverty reduction goals will be hard to meet.

A second issue of common interest is that of our work on governance. Our programmes of technical assistance and capacity- building, mainly administered by the United Nations Development Programme (UNDP), are quite extensive. We are helping nations to privatize moribund state industries; reform their legal and institutional environments; improve public administration; fight corruption; promote human resource development. All of this prepares the groundwork for high levels of domestic and foreign investment.

A third area where cooperation between the United Nations and the IMF is highly desirable, indeed imperative, is post-conflict peace- building. One of the most difficult aspects of post-conflict peace- building is that it often involves parallel processes. On one track, implementing far-reaching political, social and institutional reforms aimed at addressing the root causes of conflict and on a second, rigorous economic stabilization and structural adjustment programmes.

The problem is that programmes on the first track almost invariably impose significant new burdens on government finances, causing interference with stabilization programmes and making additional external financing necessary.

Since in most war-ravaged countries the prospects for increasing domestic financing are very limited, the need for additional external finance will inevitably be acute. Unless the international community makes a special effort to facilitate financing for the crucial stage in the transition from post-conflict to durable peace, international and domestic peace efforts might well be put in jeopardy. This is, I believe, what the Secretary-General had in mind when he called for

- 3 - Press Release DSG/SM/74 ECOSOC/5878 29 October 1999

peace-friendly adjustment programmes in his report on the sources of conflict in Africa last year.

The three areas I have just mentioned all concern the country level. But we all know that whether we are talking of reducing poverty, improving governance or helping countries emerging from conflicts to find stability and prosperity, the global environment can make a big difference. That is why we in the United Nations have been very interested in the debate over what has been called a “new financial architecture” and as you know, early in 1999, the United Nations published a report in which we identified key areas for reform. While some of the feared impacts of the Asian financial crisis did not materialize, the upheaval and instability were not something any of us would wish to see repeated. Moreover, the risks of new crises and a slowdown in world economic growth are still significant. This is no time for complacency.

Significant progress has been made, for example in developing standards for monitoring the smooth functioning of the international financial system, and in the establishment of a Financial Stability Forum and Contingency Credit Line in the IMF. The momentum for reform needs to be maintained. Debates in the United Nations have focused, in particular, on the need to increase the participation of developing countries in the management of the world economy and for the institutions to reflect the role they play on the eve of the twenty- first century.

While the United Nations and the IMF have been speaking to each other for many years, it is only in the last few that we have been speaking with each other. And whether we are talking about poverty, peace or the many links between the two, we are recognizing that it does little good if we exist as separate pillars of development, with each institution having its own distinct expertise, but standing ultimately in magnificent isolation.

Today, we are much more intertwined and working towards a single, integrated vision of development. In short, your themes are our themes, too. In that spirit, let us move ahead as partners. Thank you very much.

* *** *