TECHNICAL, FINANCIAL ASSISTANCE CRUCIAL FOR ECONOMIES IN TRANSITION, ECONOMIC AND FINANCIAL COMMITTEE TOLD

28 October 1996

Press Release
GA/EF/2736

TECHNICAL, FINANCIAL ASSISTANCE CRUCIAL FOR ECONOMIES IN TRANSITION, ECONOMIC AND FINANCIAL COMMITTEE TOLD

19961028 World Bank, IMF Must Aid Transition, Says Belarus; Increased International Cooperation, Access to World Markets Also Stressed

Technical advisory and financial assistance from the United Nations, the World Bank and the International Monetary Fund (IMF) were crucial for countries making a transition to a market economy, the Second Committee (Economic and Financial) was told this afternoon, as it continued discussion of sustainable development and international economic cooperation.

The representative of Belarus said the transition process was not yet complete. Within countries in transition, a few countries in eastern and central Europe had performed better than others. Access to technology would be vital in enabling other countries, especially those in the Commonwealth of Independent States (CIS) and the Baltic States, to catch up.

The representative of Ukraine said the integration of economies in transition into the global economy could be less painful if adequate access was granted to European and other world markets. He stressed that the unprecedented transformations going on were in the interest of the whole international community.

The representative of Mozambique said only effective and increasing international cooperation could save developing countries from a deeper crisis and generate sustainable development. He stressed the importance of a predictable flow of official development assistance.

The representative of Albania agreed on the need for effective international cooperation and said the economic reconstruction of his country would not have been possible without help from the European Union, the United Nations and its agencies. Highlighting the seriousness of unemployment in her country, the representative of the Kyrgyz Republic appealed to the International Labour Organization (ILO) to help with programmes on employment and labour migration.

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Also this afternoon, the representative of Japan introduced a draft resolution on the United Nations University. The draft would have the General Assembly request the University's Council and Rector to continue their efforts to improve the University's interaction with other bodies of the United Nations system. In addition, it would request the Secretary-General to continue consideration of innovative measures to improve that interaction and to ensure integration of the University's work in all relevant activities of the United Nations system.

Statements were also made by the representatives of Egypt, Indonesia, Republic of Korea, the former Yugoslav Republic of Macedonia, El Salvador and Kazakstan.

The Committee will meet again at 10 a.m. Tuesday, 29 October, to hear the introduction of draft resolutions on the International Decade for the Reduction of Disasters and the Convention on Biological Diversity.

Committee Work Programme

The Second Committee (Economic and Financial) met this afternoon to continue consideration of sustainable development and international economic cooperation issues. (For background information, see GA/EF/2735 of 28 October.)

In addition, a draft text on the United Nations University (document A/C.2/51/L.3) is expected to be introduced. The draft would have the General Assembly request the University's Council and Rector to continue their efforts to improve the University's interaction and communication with other bodies of the United Nations system. The Secretary-General would be requested to continue his consideration of innovative measures to improve that interaction and to ensure the integration of the University's work into all relevant activities of the United Nations system.

By the draft text, the General Assembly would endorse the Secretary- General's suggestions to promote the University's participation in the Administrative Committee on Coordination (ACC) and would request him to take further steps towards that end. The Assembly would appeal to the international community to make voluntary contributions to the United Nations University, in particular, to its Endowment Fund.

The draft text is sponsored by Australia, Brazil, Bulgaria, Colombia, India, Indonesia, Japan, Papua New Guinea, Peru, Romania, Sierra Leone and Thailand.

Introduction of Draft Resolution on United Nations University

YUTAKA YOSHINO (Japan) introduced the draft text on the United Nations University. He said Cambodia, Honduras, Iran, Jordan, Marshall Islands, Republic of Moldova and Slovenia had become co-sponsors.

Statements

ADEL ABDEL-LATIF (Egypt) said the report on the General Assembly Declaration on International Economic Cooperation did not present an evaluation of the obligations and commitments agreed upon. It also did not present the obstacles that hindered the implementation of the Declaration. Developing countries had carried out measures to improve their economic situation and had also actively participated in international economic cooperation, but those had not been mentioned in the report. In addition, the report had not referred to the United Nations New Agenda for the Development of Africa in the 1990s, but had only mentioned the United Nations System-wide Special Initiative on Africa, which reallocated existing resources.

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To foster economic cooperation beneficial to developing countries, the latter should carry out domestic reforms, he said. At the same time, they should receive more resources, and the international trading system should be open to them.

PELLUMB KULLA (Albania) said his Governments's programme was aimed at the gradual integration of the country's economy into the European and the global economy. In 1992, inflation in Albania had been 400 per cent annually. That had been reduced to 7.5 per cent. Agricultural lands had been privatized and the unemployment rate had dropped from a high of more than 30 per cent in 1992 to its current 12 per cent.

He stressed that the economic reconstruction of Albania would not have been possible without help from the European Union, the United Nations and its agencies. Among others, he thanked the Governments of Italy, United States and Japan for their help. Albania had joined in the Sofia Declaration on Good Neighbourly Relations and was also engaged in trying to develop a modern infrastructure. In addition, it was trying to develop its agro-industry and tourism. Efforts were being made to attract investment in the mining and electric industries. He expressed the hope that Albania would receive the technological and financial support necessary for sustainable development.

ANDREI DASHUTIN (Belarus) said, among the countries in transition, a few countries in eastern and central Europe were doing better than others. The Commonwealth of Independent States (CIS) and the Baltic States were still lagging behind. In Belarus, the transition to a market economy had been complicated by other factors. Almost 20 per cent of the national budget went in tackling the consequences of the Chernobyl disaster.

It was optimistic to say that the transition process had been completed, he said. He stressed the importance of establishing a favourable investment environment and of providing access to technology. Also important was the technical advisory and financial assistance from the United Nations and the Bretton Woods institutions. In addition, the positive contribution of the Economic Commission for Europe (ECE) was notable, as was the constructive work done by the United Nations Development Programme (UNDP) and the United Nations Industrial Development Organization (UNIDO). In the new programme cycle, the UNDP had increased its financing for Belarus by two-and-a-half times.

WENING ESTHYPROBO MOE'MIN (Indonesia) said the review took place against a background of profound global changes. Since the beginning of the decade, those changes that had occurred had to be taken into account in trying to assess the Declaration on International Economic Cooperation and the International Development Strategy for the Fourth United Nations Development Decade, both adopted in 1990. The rapid globalization, interdependence and liberalization of the world economy had significantly changed the external environment since the adoption of those two agreements. Concurrently, there

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had been a resurgence of faith in the efficacy of the market together with an emerging consensus on the concept of development, which was now characterized as people-centred development. However, globalization and the private sector alone could not integrate the various facets of people-centred development.

The stunning growth rates of developing countries, such as the South-East and East Asian economies, had resulted from the success of their development strategies, she said. However, there was no universal policy panacea for promoting development. Even as many developing countries had recorded strong growth, others had stagnated and been marginalized. Their vulnerable economies had been left to fend for themselves in a world of retreating multilateralism, declining official development assistance (ODA) and lack of adequate access to markets and requisite technology.

ZAMIRA ESHMAMBETOVA (Kyrgyz Republic) said her Government had established a machinery for carrying out the transition to a market economy, in the process creating favourable conditions for investment and access to loans and privatization. The programme was also aimed at improving living standards and reducing inflation. Despite marked economic growth, however, her country still faced problems, due largely to its lack of natural resources. It was extremely grateful for international assistance, without which the situation would have been worse.

She said cooperation with the Economic and Social Commission of Asia and the Pacific (ESCAP) should be increased. Her Government had carried out joint projects with the United Nations Conference on Trade and Development (UNCTAD) aimed at encouraging private investment, and it looked forward to more cooperation with the International Fund for Agricultural Development (IFAD) and the Food and Agriculture Organization (FAO). Unemployment was a serious problem, and she appealed to the International Labour Organization (ILO) to help with programmes on employment and labour migration.

CARLOS DOS SANTOS (Mozambique) said only effective and increasing international cooperation could save developing countries from a deeper crisis and generate sustainable development. The objectives of the structural adjustment programme being carried out by his Government was far from being achieved. His Government was implementing a package of comprehensive macroeconomic policy measures to create a conducive environment for private investment, including the streamlining and updating of investment legislation and incentives. Official development assistance should flow at predictable rates to enable developing countries to overcome the crisis situation in which they found themselves.

RAE KWON CHUNG (Republic of Korea) said that the developing world would continue to play an increasingly important role in the dynamic interactions of the globalized world economy. It was encouraging to note an increasing

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convergence of views on what constituted an appropriate development strategy, despite the diverging performance of various groups of developing countries.

The Declaration on International Economic Cooperation and the International Development Strategy had laid a solid foundation for current positive economic performance and the convergence of views on development policy directions, he said. Newly emerging orthodoxy as to what constituted an effective development policy should be further strengthened and pursued during the second half of the 1990s. He welcomed the marked improvements in macroeconomic performance of the economies in transition and said an increasing number of Korean firms were investing in those economies, with some ranked as major investors in several of the economies in transition. His Government had also decided to strengthen its economic cooperation with countries in transition through the Organisation for Economic Cooperation and Development (OECD).

IGOR DZUNDEV (The former Yugoslav Republic of Macedonia) said the countries with economies in transition continued to face many difficulties, such as the privatization of large, State-owned enterprises, the lack of investments, and the reform of their banks and other financial institutions. They also faced problems with widening trade deficits and insufficient business infrastructures. His Government was focused on the stabilization of the macroeconomic and micro-economic parameters of the economy and finalizing market reforms. The programme had been closely coordinated with the International Monetary Fund (IMF) and the World Bank.

Priority had been given to privatization, which was almost complete, and on banking reforms, he continued. The results so far had been encouraging, considering external factors and the political situation in the region. The Government had succeeded in decreasing inflation and had last week completed negotiations with the London Club of commercial banks on reducing its debt by $364 million, down to $1.1 billion. Despite those positive facts, the economy still faced problems of production growth, high unemployment, and lack of foreign direct investment.

CARLOS GARCIA-GONZALES (El Salvador), speaking on behalf of Costa Rica, Guatemala, Honduras, Nicaragua, Panama and his own country, said he supported the statement by the representative of Costa Rica on behalf of the "Group of 77" developing countries and China. Profound changes had occurred in Central America. The region had managed to put armed disputes behind it and had moved towards regional cooperation. Human development and a holistic approach involving investment in human capital had been placed at the centre of development efforts.

That approach was enshrined in the Alliance for Sustainable Development, he said. In addition, there had been a focus on planning and managing policy programmes on a joint basis. Such a sustainable development strategy was

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compatible with the vision of the international community. He called for better access to resources and technology transfer. Stressing that international peace and security were intertwined with development, he said broader access to education was one of the pillars of the Alliance.

SERGEY AGEYEV (Kazakstan) said the economies in the CIS had definitely improved. Difficulties remained, however, with many experiencing socio- economic difficulties. It would be useful for them to continue their cooperation with the organs of the United Nations system in accelerating their transition to market reforms and attracting foreign investment. Large-scale assistance was required to help them reduce the length of the reform efforts.

YURI BOHAYEVSKY (Ukraine) said the first stage of the reform process had been practically completed in his country. The strict monetary reform had resulted in financial stability, which had enabled the Government to introduce a new national currency. The Government considered the results of the first stage of reforms satisfactory regardless of the remaining difficulties. A second stage had begun aimed at a serious transformation of the national economy. Domestic production was being encouraged, and conditions for sustainable economic growth were being created. Yet, the integration of such economies into the global economy could be less painful if they were granted adequate access to European and other world markets. He stressed that the transition of their countries to market economies was not a one-way street. The unprecedented transformations going on were in the interest of the whole international community.

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