The devastating effects of the COVID-19 pandemic continue to hamper vulnerable States, slowing or reversing economic growth and sustainable development, speakers told the Second Committee (Economic and Financial) as it began its general debate today with a keynote address by Joseph Stiglitz, Nobel laureate in economics and University Professor at Columbia University.
Committee Chair Amrit Bahadur Rai (Nepal) opened the meeting formally approving its organization of work (document A/C.2/75/L.1) for the seventy-fifth session. Noting the importance of the theme of “Building back better after COVID-19: ensuring a more equitable global economy, inclusive societies and sustainable recovery”, he said that in a “global quagmire of disease”, the United Nations is expected to deliver now more than ever. Poverty eradication is a cross-cutting priority affecting “everything we do”, with the goal of ending absolute poverty everywhere, as progress on that endeavour has been pushed back by the pandemic, especially in rural areas. He said the Committee will focus on issues affecting groups of countries in special situations, including least developed countries, small island developing States and landlocked developing countries.
Liu Zhenmin, Under-Secretary-General for Economic and Social Affairs, said the effects of the pandemic and mitigation measures have overwhelmed global health systems, keeping up to 90 per cent of students out of school and shutting down businesses and factories. The pandemic is expected to push over 70 million people back into extreme poverty and cause 132 million more to suffer from undernourishment in 2020. Stimulus packages will be most effective if they contribute to achieving the Sustainable Development Goals. Moreover, everything must be done to avoid a crippling debt crisis in developing countries and create fiscal space in highly indebted low- and middle-income countries.
In his keynote address, Mr. Stiglitz, recipient of the 2001 Nobel Memorial Prize in Economic Sciences, said the prospects of a quick global recovery from the economic devastation of the pandemic had been a fantasy. The crisis exposed weaknesses in economies, Governments and societies, with developed countries unable to produce basic products like masks and ventilators, as their populations suffered poor health without adequate social protection. Meanwhile, the global slowdown is having a serious effect on developing nations, especially those depending on exports, as markets collapse. He said the world faces a potential new debt crisis, as incomes plummet, and lamented the lack of sovereign debt restructuring frameworks or adequate legal processes. The international community must recognize that it cannot “squeeze water from a stone” unless there is significant debt restructuring in developing economies and emerging markets.
In the ensuing general debate, several delegates, speaking on behalf of groups of countries, highlighted the specific economic crises and challenges faced by developing States as the pandemic rolls on.
The representative of the Philippines, speaking for the Like-minded Group of Supporters of Middle-Income Countries, said the pandemic has sent a global shockwave derailing development gains for middle-income States. Those countries face a substantial drop in remittances and specific debt risks, with forecasts of 14 per cent global work-hour losses in 2020, remittances down by $109 billion in developing countries and 270 million people facing acute food insecurity.
Malawi’s delegate, speaking for the Group of Least Developed Countries, noted that as a result of the pandemic global growth is expected to contract by 4.9 per cent, with hard-won social and environmental gains in least developed countries reversed. Least developed countries face indebtedness of $358 billion and debt servicing has tripled to 14.4 per cent, with a 1.6 per cent decline in value of exports in 2019, leaving them severely hit in the long term.
The representative of Viet Nam, speaking for the Association of Southeast Asian Nations, said the international community must respond to the pandemic with “vaccine multilateralism”, or greater cooperation to ensure equitable, universal and affordable access to COVID-19 vaccines. The representative of the Bahamas, speaking for the Caribbean Community, noted that her group of countries is under constant assault from climatic events, underscoring the importance of the international community’s pledge to mobilize $100 billion annually for climate finance.
At the outset of the meeting, the representative of Syria, speaking on behalf of a number of countries, condemned the violation of the Charter of the United Nations and the Headquarters Agreement by the United States. Noting the imposition of travel restrictions, violation of diplomatic property and arbitrary expulsion of members of missions, he said such actions aim to prevent Member States from fully exercising their rights and discharging their responsibilities.
As the Committee turned to its general debate, the Chair proposed an oral decision that, considering the current circumstances, all statements delivered during the seventy-fifth session of the General Assembly should be reflected in the Committee’s records.
Also speaking were representatives of Guyana (on behalf of the “Group of 77” developing countries and China), Philippines (in national capacity), Belize (on behalf of the Alliance of Small Island States), Kazakhstan (on behalf of the Group of Landlocked Developing Countries), Australia (also on behalf of Canada and New Zealand) and Tuvalu (on behalf of the Pacific Islands Forum).
The Committee will meet again at 3 p.m. on Tuesday, 6 October, to continue its general debate.
AMRIT BAHADUR RAI (Nepal), Chair of the Second Committee (Economic and Financial), opened the meeting stating it formally approved its organization of work (document A/C.2/75/L.1), with the understanding that further adjustments can be made. As the seventy-fifth session will be unlike any in its history, he noted the theme — “Building back better after COVID-19: ensuring a more equitable global economy, inclusive societies and sustainable recovery” — will permeate every aspect of its work. The pandemic affects both methods of work and content of discussions, and each resolution will have to acknowledge those elements, while the Committee may come across more specific actions to consider.
In what he described as a “global quagmire of disease”, the United Nations is expected to deliver more than ever. “We all have to go the extra mile to understand what is essential” on the global agenda, he said, and will have to acknowledge the pandemic’s effect on the substantive elements of the session. Broad highlights will include poverty eradication, a cross-cutting priority affecting “everything we do”, with the goal of ending absolute poverty everywhere. Progress on that endeavour has been pushed back by the pandemic, especially in rural areas. He called for planning a world food system summit in 2021.
He said that the Committee will focus on issues affecting groups of countries in special situations, including least developed countries, small island developing States and landlocked developing countries, and address gaps in the Samoa Pathway. He said biodiversity will also be discussed, along with modalities for the midterm review of the Water Action Decade 2018–2028 scheduled for 22–24 March, 2023, in New York. A side event on “integrated disaster response” is scheduled for 15 October. The Committee will also address the quadrennial comprehensive policy review of United Nations system operational activities. It is imperative to discuss how the system can best bolster national responses to COVID-19. The task is clear, he said, as the world expects great things from the Organization.
The representative of Syria, speaking on behalf of a number of countries, condemned the violation of the Charter of the United Nations and the Headquarters Agreement by the United States. Noting the imposition of travel and movement restrictions, the violation of diplomatic property and the arbitrary expulsion of members of missions, he said such actions are aimed at preventing Member States from fully exercising their rights. Highlighting the abuse by the United States of its status as host country, including denial or delay in the issuance of visas, he called this a deliberate attempt at disrupting the full and efficient discharge of their responsibilities by representatives of the concerned States. Further, this is a violation of the Charter and the Headquarters Agreement, in particular sections 11, 12, 13 and 27, he said, adding that the affected Member States have repeatedly raised these issues without any solution. Noting the Legal Council’s statement on this matter, he called on the Secretary-General to guarantee that the work of all Member States can be conducted in a non-discriminatory and equal manner. Moreover, it is necessary to find a legal solution to the longstanding dispute between the United States and the United Nations, he stressed.
JOSEPH STIGLITZ, Professor at Columbia University and winner of the 2001 Nobel Memorial Prize in Economic Sciences, said COVID-19 has had devastating effects on the global economy, noting that predictions of a quick recovery made back in January were fantasies. However, the world now has a chance to “build back better”, he said, as the pandemic has exposed weaknesses in economies, Governments and societies. Even the most developed countries have been unable to produce basic products like masks and ventilators. It has also demonstrated that people in developed nations are suffering poor health without adequate social protection, which has led to undue hardship on workers as well as migration for work and further spread of the disease.
Continuing, he said nations must use scarce resources to combat the pandemic and construct societies that could better handle a crisis in the future. Resources must double or even triple in controlling the pandemic as a priority, but nations must also cooperate to develop vaccines, therapeutics and tests, ensuring that these are made available worldwide. The international community also needs to share intellectual property, although some companies and Governments refuse to follow this route.
The global slowdown is having a serious effect on developing nations, he added, especially those depending on exports for their livelihoods, as markets collapse. Many nations are once again heavily in debt, with the world facing the possibility of a new debt crisis, as incomes plummet due to the pandemic. He lamented the lack of sovereign debt restructuring frameworks or adequate legal processes in tackling rising debt. A multi-pronged strategy that exerts pressure on creditor countries to engage the private sector in tackling debt is urgently needed. The world must recognize that it cannot “squeeze water from a stone” unless there is significant debt restructuring in developing economies and emerging markets.
When the floor opened for discussion, the representative of Malawi, speaking on behalf of the Group of Least Developed Countries, voiced disappointment that some States did not agree to a sovereign debt restructuring mechanism. He also noted that when the board of the International Monetary Fund (IMF) was considering the creation of special drawing rights, they did not get the two-thirds majority they needed.
Responding, Mr. STIGLITZ said lenders believe in the law of the jungle rather than the rule of law. In the absence of a principle-based system of debt restructuring, creditors will get what they want. One of the problems, he said, is the large number of conflicts among different categories of creditors. While there was an initiative to have the countries not using their special drawing rights to lend or donate them to those countries that need it, he said, this — while an important stop-gap measure — will not solve the broader problem. However, he remained hopeful that if there is a new administration in Washington, D.C., in January, there will be an issuance of special drawing rights.
Monaco’s delegate asked if he foresaw a debt crisis in the northern countries while the representative of Senegal asked about richer creditors on the verge of collapse. Nigeria’s delegate asked how to generate resources for financing for development.
Responding, Mr. Stiglitz said he is more worried about the long-term damage of not spending money. The United States and Europe have the capacity to raise money, he said, and there are instruments to deal with inflationary pressures, including underutilized tax capacities. The forces that led to economic recovery in 2009 after the 2008 crisis are just not present, he said, noting that while China had an impressive growth since then, that country’s growth rate is much more anemic in 2020. Turning to financing for development, he said it is particularly important that multinational corporations pay the taxes they ought to be paying. The prevailing ways of taxing corporations give them the ability to avoid paying their fair share of taxes, and they often pay lower taxes than local small business, he said. It is necessary to create a better framework for multinational taxation that includes a minimum global corporate income tax at the level of 25 per cent. While some reforms took place after the 2008 crisis, those reforms did not go far enough, he said.
The representative of Jamaica noted that in 2014, the General Assembly tried to adopt a resolution for sovereign debt restructuring, which was opposed by creditor countries.
The representative of Iran said the pandemic can only be fought in the spirit of multilateralism. However, unjust self-serving unilateral approaches adopted by a few States threaten those efforts. He asked Mr. Stiglitz about the effects of unilateral coercive measures and sanctions.
Mr. Stiglitz responded that global cooperation is essential in addressing the pandemic and ensuring a strong recovery, at every level. He noted he is “slightly” more optimistic than he was in 2014. However, he wondered if some restructuring of debt may be “too little too late”, leading to even further restructuring and thus more suffering. A strong global recovery must be universal, otherwise it will threaten the economies of developing and vulnerable countries, and therefore the recovery as a whole.
The representative of Bangladesh asked about remittances to developing countries from migrants living abroad, as a 20 per cent decrease is forecast in 2020.
Mr. Stiglitz said the United Nations Conference on Trade and Development (UNCTAD) has stated the economies of developing countries are being hammered by the pandemic. The agenda of dealing with the deficiency in remittances is part of the larger agenda of what IMF and donor countries can do to provide support. He noted that greening economies can be timely, targeted, labour intensive and provide good stimulus.
LIU ZHENMIN, Under-Secretary-General for Economic and Social Affairs (Economic and Social Council), said the effects of COVID-19 and measures taken to mitigate it have overwhelmed global health systems. It has kept up to 90 per cent of students out of school and caused businesses as well as factories to shut down. The pandemic is expected to push over 70 million people back into extreme poverty and cause 132 million more to suffer from undernourishment in 2020. Around 370 million children missed out on meals due to school closures this spring. While the virus has impacted everyone, it is affecting the world’s poorest the most and deepening gender inequality.
To set the world on a path towards recovery, COVID-19 response measures must support medium- and long-term sustainable development, he stressed. The pandemic has exposed glaring gaps in social protection and job security. Stimulus packages responding to COVID-19 will be most effective if they prioritize public investments that contribute to achieving the Sustainable Development Goals, especially those aimed at the green economy, climate-change mitigation and adaptation, and digital infrastructure. At the same time, investing in health, education, skills and technical know-how will help the international community better prepare for the future. Moreover, everything must be done to avoid a crippling debt crisis in developing countries and create fiscal space in highly indebted low- and middle-income countries.
As the Committee turned to its general debate, the Chair proposed an oral decision that, taking into account the current circumstances, decides that all statements delivered during the general debate of the seventy-fifth session of the General Assembly should be reflected in the Committee’s records. However, the Russian Federation’s delegate said he could not support this decision because it contradicts the rules of procedure of the Assembly and proposed an amendment that the President will circulate a compilation of the statements delivered in pre-recorded format. The representative of Mexico welcomed the oral decision, and said it is absolutely consistent with the rules of procedure. The Chair said he would consult with the Bureau and Secretariat regarding the matter.
The representative of Guyana, speaking on behalf of the “Group of 77” developing countries and China, noting that the seventy-fifth session of the General Assembly signals the start of the decade of action and delivery for sustainable development, said that already daunting development challenges have been exacerbated by the impacts of the COVID-19 pandemic. Further, climate change remains an existential threat, he said, calling for the mobilization of action and support for climate change adaptation, mitigation, loss and damage, and sea-level rise considering the specific needs and special circumstances of developing countries. Underscoring the criticality of financing for development, he said that developing countries are disproportionately affected owing to their development bottlenecks. International trade is an engine for inclusive economic growth and poverty eradication. Unfortunately, the global economic contraction of about 5 per cent in 2020 in connection with the COVID-19 lockdown has slowed this engine. Calling for international cooperation in the revival of the global economy, including in strengthening the international financial safety net, maintaining stability of the global supply chain and improving cross-border payment services, he reaffirmed the significance of a universal, rules-based, open, transparent, predictable, inclusive, non-discriminatory and equitable multilateral trading system under the World Trade Organization (WTO).
The representative of the Philippines, speaking on behalf of the Like-minded Group of Supporters of Middle-Income Countries, said the pandemic has affected States indiscriminately. Commending the Secretary-General for the comprehensive response of the United Nations development system, he called on all Governments to ensure the system works on the ground in helping States recover. The pandemic has sent a global shockwave derailing development gains, exacerbating challenges faced by middle-income countries and generating new vulnerabilities. He noted a substantial drop in remittances and debt risk specifically felt by States in that category, with forecasts of 14 per cent global work-hour losses in 2020, remittances down by $109 billion in developing countries and 270 million people facing acute food insecurity. He called on the United Nations to address the 100 countries in the Group as they represent over half its Member States, most of the world’s population and two-thirds of its poor.
Speaking in his national capacity and associating himself with the Group of 77, he quoted the Philippines motto “we heal as one, we recover as one” and therefore called for strengthened multilateralism. He noted the country had been poised to become an upper-middle-income country, but the pandemic sent its economy into recession. The country is gradually recovering but must remain vigilant. He called for a COVID-19 vaccine to be made available to all as a global good.
The representative of Malawi, speaking on behalf of the Group of Least Developed Countries and associating himself with the Group of 77, said States have battled challenges under the pandemic and worked towards supporting multilateralism and development for all. According to IMF and the World Bank, the pandemic has meant global growth is expected to contract by 4.9 per cent. Hard-won social and environmental gains in least developed countries are being reversed and progress hampered, with economic vulnerability driving social upheaval, threatening women’s rights and other gains. While least developed countries thank those States providing official development assistance (ODA), there is a very slow increase, and he expressed concern that bilateral assistance is not meeting commitment targets. Least developed countries face indebtedness of $358 billion and debt servicing has tripled to 14.4 per cent, with a 1.6 per cent decline in value of exports in 2019. Those countries will be severely hit in the long term due to health-care system vulnerabilities and the threat of external shocks.
The representative of Belize, speaking on behalf of the Alliance of Small Island States and associating herself with the Group of 77, noted the retreat by some delegations from the development agenda and from climate change obligations. There are tangible warnings that the already insufficient implementation of the 2030 Agenda has been set back substantially. The COVID-19 pandemic did not unravel the development gains of small island developing States, she said, “it simply shined a light on the threadbare approach at development”. Her group has been demanding concrete measures and has instead been fed a lukewarm acknowledgement of structural constraints, she said, noting the additional challenges posed by collapsed tourism revenues, falling remittances and high debt service costs. Underscoring that the finance available for climate adaptation is woefully deficient, she said that small island developing States cannot access even the climate finance that is available, at the speed and scale needed, because of cumbersome processes and competition with other better capacitated countries.
The representative of the Bahamas, speaking on behalf of the Caribbean Community (CARICOM) and associating herself with the Group of 77, called for a multidimensional approach to assessing developmental levels that considers structural gaps and levels of exposure to exogenous shocks. She noted that CARICOM island States are under constant assault from the enhanced frequency and intensity of climatic events, underscoring the importance of the international donor community’s pledge to mobilize $100 billion annually for climate finance. She also stressed the urgent need for integrated action to stem the quickening pace of biodiversity loss, and to rapidly decelerate global greenhouse gas emissions through investments in low-emission climate-resilient pathways.
The representative of Kazakhstan, speaking on behalf of the Group of Landlocked Developing Countries, said the pandemic constrained the already tight fiscal space of those States, with commodity prices collapsing and ODA in decline. Landlocked developing countries have been among the hardest hit, relying on neighbouring countries to reach markets, with global supply chains hampered. He said overall growth of economies is set to slide negatively, with the livelihoods of 520 million people increasingly at risk, and many countries potentially being left behind. In that respect, the Second Committee holds a special place in addressing their challenges. He called for facilitating implementation of domestic resources, trade, South-South and triangular cooperation. The international community must also act on debt for landlocked developing countries to rebuild and transform economies. Requesting enhanced support to address climate change, desertification and food security, he reminded Member States that strength is in unity and all must continue to act collectively and build back better.
The representative of Australia, speaking also on behalf of Canada and New Zealand, said that implementation gaps that were already evident before the pandemic have now been exacerbated. “There should be no rollback of existing commitments,” he stressed, reaffirming the role of the 2030 Agenda as the key framework for development. Calling for practical guidance on how best to work together to implement that Agenda, he noted that the multilateral system is under strain. It is also vital to promote inclusivity, and full participation of people with disabilities, women and children, and lesbian, gay, bisexual, transgender and intersex persons who remain underrepresented in development efforts. Stressing the need for disaster-risk-informed COVID-19 recovery, he said gender equality remains a huge challenge, while climate change and biodiversity loss threaten human existence. Further, new approaches are urgently required to address debt crisis and maintain jobs, particularly in least developed countries.
The representative of Viet Nam, speaking on behalf of the Association of Southeast Asian Nations (ASEAN), noted that COVID-19 has caused great disruption, affecting the most vulnerable countries and populations. What the international community needs is “vaccine multilateralism”, he emphasized, or greater cooperation to ensure equitable, universal and affordable access to COVID-19 vaccines. It should also work closely to address the pandemic through international institutions, paying particular heed to the most vulnerable and fragile countries as well as communities. Turning then to the Sustainable Development Goals, he stressed the importance of means of implementation, including capacity-building, technology transfer and financial support as key enablers for developing countries to contribute to them. He also underscored the need to advance cooperation on environmental protection and conservation, with greater efforts to address sustainable development issues like climate change, marine debris, biodiversity conservation and transboundary haze pollution.
The representative of Tuvalu, speaking on behalf of the Pacific Islands Forum, said the group welcomed the theme of the session, as the major crisis of the pandemic will affect the Blue Pacific region for years to come. The international community must rethink, plan and work collectively at the national, regional and global level, with a coordinated response. He noted that economic ministers of Pacific Islands Forum States have called for support in the form of debt relief in line with the April 2020 Group of 20 decision, and enhanced flexibility in development financing modalities and priority areas of focus. Most of the countries have held back COVID-19 outbreaks, but across-the-board access to a vaccine is necessary. He noted that Pacific States have some of the world’s highest rates of non-communicable diseases accounting for 70 to 75 per cent of all deaths. Climate change remains the single greatest threat to the livelihood, security and well-being of the Pacific and its peoples. “The ocean is inseparable from Pacific peoples, cultures, economies and societies,” he said, noting that 98 per cent of the region is ocean, with Pacific island countries custodians to over 40 million square kilometres of the Pacific Ocean. “We must come out of this pandemic more unified, safe and resilient,” he said.