Delegates Stress Need for Global Financial System Reform, as Second Committee Continues Discussion on Macroeconomic Policy Questions

GA/EF/3431
27 October 2015
Seventieth Session, 20th Meeting (PM)

Delegates Stress Need for Global Financial System Reform, as Second Committee Continues Discussion on Macroeconomic Policy Questions

Developing countries must have their voices heard in international financial institutions, delegates in the Second Committee (Economic and Financial) heard today, as it continued its discussion on macroeconomic policy questions.

Expressing concern at the delay in implementing governance and quota reforms at the International Monetary Fund, the representative of Brazil said that was a basic and long-overdue step.

He also called for an end to entrenched protectionism in agricultural trade, noting that trade-distortive subsidies by developed countries were detrimental to domestic agricultural production in developing countries.  Yet, “we have not yet even begun” to address those immense distortions, he stressed.

The representative of Iraq also called attention to problems in international trade.  Crude oil and gas accounted for 90 per cent of Iraq’s budget, but pressure by speculators and investors had resulted in lowering their prices.  The interests of producers and consumers should be protected through legal mechanisms that governed the speculations market.

Belarus’s delegate echoed similar concerns, calling on international financial institutions to enable States to deal with changes in financial markets.  Stressing the importance of global financial system reform, he said unilateral economic measures of coercion were incompatible with the United Nations Charter.

The representative of Iran also spoke against the use of such measures to exert political and economic pressure on developing countries.  His country was acceding to the World Trade Organization (WTO) and he emphasized that acceding countries should not be asked to make commitments that went beyond their level of development and current WTO rules.

The representative of the United States called on Member States “to respect the division of labour between international organizations” and to tread cautiously around issues that were the purview of the WTO.  On debt restructuring, she said the Committee must discuss that issue without “getting bogged down in well-documented disagreements about sovereign debt restructuring”.

Norway’s delegate stressed the importance of enhancing domestic resource mobilization with private-sector-led economic growth.  She added that official development assistance (ODA) must become more “catalytic” and the 2030 Agenda for Sustainable Development could not possibly be achieved only through traditional forms of finance.

Delegates from small island developing States expressed concerns about the systemic challenges they faced, with the representative of the Maldives noting that his country’s graduation from least developed country category was both a blessing and a curse, as it struggled to ensure that the benefits of economic growth reached scattered populations.  The vulnerable economic structures of the Caribbean States could be easily overwhelmed by the risks inherent in a global economy, Jamaica’s delegate cautioned.

Also speaking today were representatives of Mexico, Philippines, Kyrgyzstan, Russian Federation, Venezuela, Japan, Algeria, Senegal, Cuba, Burkina Faso, Egypt, India, Sudan, Syria, Peru, Vanuatu, Kazakhstan, Morocco, Nigeria and China.

The Committee will meet again on Wednesday, 28 October, at 10 a.m., to conclude its consideration of macroeconomic policy questions.

Background

The Second Committee met today to continue its consideration of sustainable development.  For further information, see Press Release GA/EF/3430.

Statements

VITALY MACKAY (Belarus) said the United Nations Conference on Trade and Development (UNCTAD) could play an important role in international trade as a forum for coordinating trade and development issues.  The Addis Ababa Action Agenda had reflected the problems faced by middle-income countries.  Calling for more active support to those countries, he said it was necessary to build their trade potential.  International financial institutions must cooperate with those States to enhance their ability to successfully deal with changes in financial markets.  Stressing the importance of reforming the global financial system, he added that unilateral economic measures of coercion were not compatible with the Charter of the Organization.  Further, the United Nations must become more active in assisting countries that suffered from trade barriers.

SALVADOR DE LARA RANGEL (Mexico), associating himself with the Community of Latin American and Caribbean States (CELAC), said that global macroeconomic questions impacted all economies.  Each country was responsible for choosing its own model of development, whether closed or open.  International trade must provide the currency required to finance the imports needed to maintain and expand the economy.  Therefore, such trade had to be fair and non-discriminatory, and must not turn to unilateral measures.  Since the first International Conference on Financing for Development in Monterrey, there was widespread understanding that international trade was among the most important sources of financing for development.  The Addis Ababa Action Agenda continued that work and was the result of 10 months of negotiations.  It reflected a paradigm change by promoting a universal and inclusive vision of sustainable development.

COURTENAY RATTRAY (Jamaica), associating himself with the “Group of 77” developing countries and China, CELAC and the Alliance of Small Island States, said the Addis Ababa Action Agenda was a useful policy framework.  The Agenda had the potential to create greater coherence between global priorities and national goals in the mobilization of development finance for sustainable development.  Welcoming the creation of the global infrastructure forum, he added that efforts to implement the “Small Island Developing States Accelerated Modalities of Action Pathway”, adopted in Samoa in 2014, were crucial, since, in the absence of international support, the small, vulnerable economic structures of the Caribbean States were likely to be overwhelmed by the risks inherent in a global economy.  Systemic issues, such as unsustainably high debt burdens borne by small countries like his, had the potential to undermine the achievement of the 2030 Agenda for Sustainable Development.

MARIA ANGELA PONCE (Philippines), aligning himself with the Group of 77 and the Association of Southeast Asian Nations (ASEAN), said his country’s economic growth had been driven by a robust export of goods and services and growing investments.  The Philippines continued to consider the World Trade Organization (WTO) as the main vehicle for engagement in the global trading environment.  He strongly supported the work of UNCTAD and reiterated the need to strengthen its role.  Although the gross domestic product (GDP) of the Philippines had consistently increased over the past year, poverty had risen 25.8 per cent in the first half of 2014 due to high food inflation.  He expressed concern over the fragility of the global economic environment and warned that further contraction of already benign international demand could pose a challenge to poverty reduction efforts.

MADINA KARABAEVA (Kyrgyzstan), associating herself with the Group of Landlocked Developing Countries, said the 2030 Agenda reflected the many issues pertinent to financing for development.  The principles of open, fair and reliable trade were consistent with the Sustainable Development Goals, especially in enabling landlocked countries to integrate into global markets.  She outlined how Kyrgyzstan had used regional and international partnerships to build up its infrastructure and improve the country’s business and investment climate.  Economic growth in the first half of 2015 had been 7.3 per cent; however, Kyrgyzstan still suffered from the looming effects of the 2008 global economic crisis.  The reduction of remittances and the rise of food prices had placed further pressure on her country.  A rise in foreign currency exchange rates had resulted in an increase in Kyrgyzstan’s debt, therefore hindering its development aspirations, she noted, urging for debt easing and restructuring.

SERGEY VASILIEV (Russian Federation) said the General Assembly’s work on financing for development was critical in achieving sustainable development, and resolutions in the Second Committee needed to reflect such aspirations.  He welcomed mechanisms promoting the transfer of technology and said it was vital to have an intergovernmental discussion on tax issues.  The Assembly must discuss trade as a tool for achieving sustainable development, he said, welcoming the swift conclusion of the Doha round of trade negotiations.  Regional trade agreements could only supplement, not replace, international mechanisms.  He called for the harmonization of regional cooperation based on economic projects and expressed concern over unilateral trading pressures, which had to be stopped, as they hindered the attainment of sustainable development.  His country supported collective efforts to achieve multilateral trade agreements for the benefit of both producing and consuming countries.

Mr. AL SAFAR (Iraq), associating himself with the Arab Group and the Group of 77, said that fluctuation in world markets had adverse effects on developing countries.  Crude oil and gas accounted for 90 per cent of the State budget of Iraq and his country was concerned that pressure by speculators and investors had resulted in lowering prices of those commodities.  While price fluctuations were a part of the market, the current reduction had not been consistent with the supply and demand mechanism.  Further, such a large reduction in prices was dangerous as it could lead to a drop in investments in that vital sector.  The speculations market in commodities should be governed by legal mechanisms that protected the interests of producers and consumers.

SÉRGIO RODRIGUES DOS SANTOS (Brazil), associating himself with the Group of 77 and CELAC, said that, despite important achievements, the international community had not made sufficient progress in efforts to reform the governance structures of global economic and financial institutions.  The continued delay in the implementation of the 2010 International Monetary Fund (IMF) Governance and Quota Reform was a cause of serious concern.  That was a basic and long-overdue step towards improving the voice and representation of developing countries in international financial institutions.  The Addis Ababa Action Agenda also fell short in the lack of agreement on the upgrading of the Tax Committee to an intergovernmental body.  Tax evasion diverted considerable amounts of resources from developing countries.  Calling for an end to entrenched protectionism in agriculture, he added that his country was frustrated with the fact that “we have not yet even begun to concretely address the crux of the immense distortions in agricultural trade maintained by developed countries”.  Trade-distortive subsidies had a direct negative impact on the domestic agricultural production of developing countries, particularly in Africa.

CRISTIANE ENGELBRECHT SCHADTLER (Venezuela), associating herself with the Group of 77 and CELAC, said resources that should be dedicated to national development were being used in the pursuit of individual interests.  The international economic and financial system should be reformed to place the human being at its centre.  Calling for a new vision based on solidarity, she added that it was important to democratize decision-making mechanisms to ensure greater participation of developing countries.  It was also vital to establish innovative mechanisms to resolve the problem of external debt.  Middle-income countries were already weak from the financial crisis and shrinking liquidity.  Vulture funds represented a huge threat to developing countries, and Venezuela would support negotiations to establish a regulatory legal framework on that matter.

MARIANNE LOE (Norway) said that financing and reaching the ambitious Sustainable Development Goals at a time of slower economic growth and increased need for humanitarian assistance constituted no small challenge.  The 2030 Agenda could not be achieved if the United Nations only used traditional forms of finance.  Domestic resource mobilization spurred by the private-sector-led economic growth must establish the backbone of financing for development.  Curbing massive illicit financial flows consisted of another key element of the Agenda.  Furthermore, huge infrastructure financing gaps required filling.  It was crucial that the United Nations increase investment in infrastructure and welcome new multilateral initiatives, including the Asian Infrastructure Investment Bank.  Finally, official development assistance (ODA) must become more catalytic and leverage funds from many sources to enable private sector development.

MICHIKO MIYANO (Japan) said her country welcomed the 2030 Agenda and remained committed to quality growth through investments in infrastructure, improvements in the business climate, and the protection and empowerment of people in vulnerable situations.  The main forum to follow up on the Addis Ababa Action Agenda must be the Economic and Social Council, she said, warning against the duplication of work and efforts.  Implementation of the Action Agenda must be complemented by regional partnerships.  All stakeholders, including the United Nations system, civil society, regional organizations and the private sector, had a role to play in implementing the 2030 Agenda.  She looked forward to active initiatives, especially from the World Bank Group, to achieve development aspirations.

MOURAD MEBARKI (Algeria), associating himself with the Group of 77, said that achieving the Sustainable Development Goals would depend primarily on each Member State.  Macroeconomic issues had become part and parcel of a global and integrated system.  Given increasing interdependence and instability in the world, he called for the momentum of solidarity that grew from the launching of the 2030 Agenda to be extended to other areas in need.  Major action must be taken to design and implement a plan for the global economy.  He trusted that the Assembly could become the most universal, democratic and sovereign organ, and welcomed synergy among all stakeholders as the international community moved towards its shared goals based on multilateralism.  A new international structure must be inclusive, open and beneficial to all people as “we cannot wait any longer and turn our backs on economic instability”.

GORGUI CISS (Senegal), associating himself with the Group of 77, urged the establishment of a multilateral and equitable trading system.  Among the main challenges facing least developed countries was their trade integration and access to the world trade system.  He called for radical reforms to remove tariff barriers and subsidies of agricultural trade.  The upcoming WTO conference in Kenya had to give priority to countries in special situations, provide a solution to food storage for purposes of food security and seek a rapid and balanced conclusion of the Doha round of trade negotiations.  The Bretton Woods institutions were limited in scope, he said, calling for a more balanced and stable system.  Attention also needed to be paid to tax evasion and other mechanisms that drained country funds.

YAIMA DE ARMAS (Cuba), associating herself with the Group of 77, CELAC and the Alliance of Small Island States, said the multilateral trade system faced the problem of perpetuating inequalities.  Institutions in that system continued to accentuate imbalances in favour of developed countries.  The volatility of the economic crisis persisted, placing a particular burden on developing countries.  She called for a multilateral system that was fair and inclusive and urged for the conclusion of the Doha round of trade negotiations.  It was essential to guarantee a political space for developing countries so that they could voice the needs of the underprivileged.  There was more to be done in the restructuring of sovereign debt and the limiting of the power of vulture funds.  Developing countries should adopt agreements that would protect their markets, she urged, calling for the urgent elimination of unilateral economic measures.

OUINIBANI KONATE (Burkina Faso), associating himself with the Group of 77 and the African Group, said that international trade could be a powerful engine for change by enabling countries to access larger external markets.  That was recognized by the 2030 Agenda and Goal 17, on partnerships, had made it explicit.  The international community must work for a universal multilateral trade system that was rule-based and equitable.  The Addis Ababa Action Agenda encouraged developed countries to go beyond the ODA goals and his delegation stressed that donors must make procedures easier to handle.  Recalling General Assembly resolution 68/304, which called for a multilateral legal framework for restructuring sovereign debt, he stated that, while his country did not suffer from the debt crisis, it stressed the importance of resolving the debt crisis.

MOHAMED OMAR GAD (Egypt) said that a multilateral trading system was a great platform to support developing countries.  It was crucial to put an end to distortive trade practices in agriculture, as that would enable developing countries to deal with the challenge of food security and overcome the negative effects of price volatility in food markets.  His continent faced food insecurity and it was vital to provide necessary support to countries that were classified as net exporters of food.  Reaffirming the importance of supporting middle-income countries, he added that, despite development progress, many such countries faced poverty and the United Nations must support them in eradicating that problem.

AHMED SAREER (Maldives) said his country was a “textbook example of the island paradox”.  While it had been able to graduate from least developed country status in 2011, that achievement had been both a blessing and a curse.  The country continued to face the same systemic challenges as a small island State: limited access to markets, dispersed populations in small areas and over-reliance on the economies that were beyond their national control.  While GDP had risen, there were critical gaps in sustaining that economic growth and redistributing its benefits to scattered populations.  In addition, the Maldives suffered from high debt burdens and the existential, economic and structural challenges caused by climate change.

AMIT NARANG (India) said the Committee should focus on the systemic aspects of development policy in order to create the necessary conditions for development to take place, and for developing countries to generate the resources they needed themselves.  That would involve looking at the international financial system, trade, commodities, external debt and financing for development from a strictly developmental lens.  Pointing to a significant weakening of the prospects of the global economy, he said multilateral negotiations such as those envisaged under the Doha Development Agenda — aimed at addressing existing inequities in the global trading system — should be given priority.  Turning to financing for development, he said that, while the Addis Ababa Action Agenda was relevant and meaningful, it also contained several significant failures, such as an “underwhelming” section on aid commitments.  Further, on global taxation, that document would be remembered as a “historic missed opportunity”.

GHOLAMHOSSEIN DEHGHANI (Iran) said that trade, services and agricultural trade all had important roles to play in poverty reduction.  As an acceding State to the WTO, his country believed that the accessions of developing countries should be based on clear rules and pre-established objective criteria.  It was also crucial that accession be accelerated and carried out without political impediment and acceding countries should not be asked to make commitments that went beyond their level of development and current WTO rules.  In the context of the 2030 Agenda, he added, the imposition of unilateral coercive measures as a means of exerting political and economic pressure on developing countries was a flagrant violation of international law and the aims and principles enshrined in the United Nations Charter.

OMER DAHAB FADL MOHAMED (Sudan), associating himself with the Group of 77, the African Group and the Group of Least Developed Countries, said international trade could be a “real engine” for sustainable development.  A multilateral trade system must be inclusive, fair and must offset problems faced by developing countries, vis-à-vis the WTO.  As it stood now, the international financial structure had many gaps and must be made more effective to provide balance and stability to avoid another international economic crisis.  Changes must include proper representation for developing countries so that they could play a real role in development.  External debt remained a major obstacle and undermined the production and services sector of Sudan.  It also led to conflict and interfered with ODA.  Implementing debt relief for developing countries was critical, as it allowed those States to free up resources.  Unilateral sanctions imposed on Sudan had a negative impact on its economy and food security.

RABEE JAWHARA (Syria), associating himself with the Group of 77, called for a serious commitment to be made to cope with everything that was obstructing fair trade.  He condemned unilateral measures and sanctions that had been imposed against his country.  Those measures had a “catastrophic” effect on the Syrian people and he rejected some of the “nonprofessional opinions” included in the Secretary-General’s report that tried to claim that those imposing unilateral measures against his State were innocent.  Those who continued to impose measures ignored the suffering that had been caused, only so they could achieve their own “very limited” interests.  Sanctions had caused widespread unemployment, mass migration, inflation and a large increase in the price of basic commodities.  The United Nations needed to follow up on how those measures had affected the Syrian people, he said, stressing the importance of respecting resolutions that prohibited such policies.

GUSTAVO MEZA-CUADRA (Peru), associating himself with the Group of 77 and CELAC, said economic growth and poverty alleviation were not sufficient to achieve sustainable development.  That was especially true in a country such as Peru — an upper middle-income country.  Those States faced structural inequalities and limitations that affected their ability to invest and redistribute.  They were also particularly vulnerable to slow economic growth, fluctuations in the prices of export commodities and the effects of climate change.  More than 70 per cent of the world’s poor lived in middle-income countries and were subject to an income criteria underpinning the allocation of ODA and trade preferences.  In that vein, his delegation expected the Committee to follow up on commitments made at the Third International Conference on Financing for Development.  Furthermore, the United Nations must act to promote greater access to technology and technical cooperation.  Peru welcomed the decision to establish the Technology Facilitation Mechanism for the implementation of the 2030 Agenda and looked forward to the adoption of measures to support new paradigms of cooperation.

Mr. BUCHWALD (Vanuatu), associating himself with the Group of 77, the Group of Least Developed Countries and the Alliance of Small Island States, called trade a powerful facilitator for growth and development. For small island States, trade provided an important opportunity to gain access to greater markets and compete in the global marketplace.  Non-tariff barriers remained a major challenge, he said, calling for cooperation to overcome regulatory divergences and other non-tariff measures in order to facilitate further trade by streamlining national and international regulations.  He called for a timely conclusion of the Doha Round that must specifically take into account the special case of least developed countries and small island developing States.  Exploiting the linkages and synergies between the services sector, particularly tourism, and the agricultural sector, provided great potential to promote sustainable development.

AZIZA YESHMAGAMBETOVA (Kazakhstan) said that, in order to implement sustainable development at the national level, her Government had outlined several institutional reforms aimed at diversifying the economy and creating a transparent and accountable State based on the rule of law.  As a new member of the WTO, her country had unveiled a number of challenging yet necessary reform measures that would allow it to engage with others without impediments, all while maximizing membership benefits.  Her country’s geographical isolation from global markets remained a major obstacle to development.  As the world’s largest landlocked country, Kazakhstan had been focused on improving its infrastructure to transport goods to international markets.  She emphasized the importance of economic partnerships and noted that her State had attracted more than $200 billion in foreign direct investment (FDI) over the past decade.

ABDELLAH BENMELLOUK (Morocco), associating himself with the Group of 77 and the African Group, said the international community must carry out the commitments made in the Addis Ababa Action Agenda for adequate financing for development.  Innovative financing that engaged the private sector and non-profits could offset downward trends in ODA.  In order to mobilize resources domestically, it was necessary to reform tax policies and combat corruption and illicit financial flows.  A national environment conducive to investing was crucial and the donor community must channel support to the countries of the South.  Africa should be a focus for international cooperation, he stressed, noting the continent was rich in resources and had the potential to be an engine of growth that generated its own financing.

JILL DERDERIAN (United States) said that, as the world’s largest bilateral provider of development assistance, her State would continue to support partner countries.  As the Addis Ababa Action Agenda had made clear, ODA was a small piece of the resource picture.  Greater funds were being raised from growing economies and more money was moving across borders through trade and investment.  While ODA would remain an important resource for those least able to access international capital markets, the Action Agenda rightly recognized that ODA would increasingly serve as a catalyst for unlocking private sector resources.  Emphasizing the importance of access to lending for development, she added that it was vital to discuss that issue without “getting bogged down in well-documented disagreements about sovereign debt restructuring”.  Further, the home for the global trading system was the WTO and her delegation called on other Member States “to respect the division of labour between international organizations and to tread cautiously around issues under the purview of the WTO”.

ADEOYE BANKOLE (Nigeria), associating himself with the Group of 77 and the African Group, said that a rule-based, open and equitable multilateral trading system, as well as meaningful trade liberalization, were necessary to galvanize economic growth.  Further, the impact of remittances on the national economies of developing countries and the potential role of migrants in the diaspora as “facilitators of knowledge, trade and investment” could not be overemphasized.  “We are not under any illusion that the task of creating a stable and responsive international financial system would be easy to accomplish”, he said.  But it was necessary to resist the temptation of narrow national and group interests and redress the status quo to create a new world economic order that was equitable and transparent.

LU MEI (China), associating herself with the Group of 77, called for the reform of the international financial system based on a fair and inclusive approach.  Emerging markets and developing countries must be given greater representation and global financial regulation mechanisms must be improved.  The global North and South divide must be closed.  China had signed debt relief protocols with 50 countries in Africa, the Caribbean and Asia.  That had mostly benefited least developed countries, landlocked developing countries and small island developing States, in helping them implement the 2030 Agenda.  The international community should consider the multilateral trading system represented by the WTO as the main trading mechanism.  It was necessary to lend greater impetus to strengthen infrastructure development and inject fresh vitality into global trade and improve market governance.  The development of the global North and the global South remained “woefully unbalanced”, she said, calling on developed countries to honour their ODA commitments.

For information media. Not an official record.