GENERAL ASSEMBLY WOULD INVITE IMF TO CONSIDER SELLING GOLD RESERVE TO ADDRESS DEBT PROBLEM, BY SECOND COMMITTEE DRAFT

18 November 1996

Press Release
GA/EF/2753

GENERAL ASSEMBLY WOULD INVITE IMF TO CONSIDER SELLING GOLD RESERVE TO ADDRESS DEBT PROBLEM, BY SECOND COMMITTEE DRAFT

19961118 Other Texts Introduced Concern Israeli Settlements, Global Financial Integration, UNITAR, Land-Locked Developing States

The General Assembly would invite the International Monetary Fund (IMF) to continue devising concrete measures and actions to address the problems faced by indebted developing countries, including the possibility of selling part of its gold reserve, by the terms of one of seven draft resolutions introduced in the Second Committee (Economic and Financial) this morning.

Also by the draft's provisions, the Assembly would stress the need to ensure an expeditious, flexible, constructive and full implementation of the new debt initiative for heavily indebted poor countries of the IMF and the World Bank, and further stress that it should not be pursued through the reallocation of resources already designated for development purposes. The draft, which is sponsored by the "Group of 77" developing countries and China and the countries of the Non-Aligned Movement, was introduced by the representative of Costa Rica.

Two other drafts introduced by the representative of Costa Rica, on behalf of the Group of 77 and China, would have the Assembly:

-- Urge international financial institutions and donor countries to improve the quality of their loans through an extension of their maturity, a lowering of their interest rates, an increase in their grant element, and the removal of conditionalities; those institutions and donor countries would be called upon to remove non-economic barriers that seriously restrict their provision of loans to developing countries; and

-- Decide to discuss issues related to global financial integration and strengthening collaboration between the United Nations and the Bretton Woods institutions with contributions from the Economic and Social Council, the IMF and the World Bank; those issues would include proposals to enhance broader cooperation and coordination of macroeconomic policies among interested countries and monetary and financial institutions.

By another draft introduced this morning, the Assembly would reaffirm that Israeli settlements in the Palestinian territory are illegal and an obstacle to economic and social development. The draft was introduced by the representative of Syria, on behalf of the Group of Arab States, Afghanistan and Cuba.

A related draft, introduced by the representative of Malaysia, would have the Assembly reaffirm the obligations of Israel, the occupying Power, under international law, not to exploit, cause loss and depletion of, or endanger the natural resources of the occupied Palestinian and Arab territories.

Introduced by the representative of Kazakstan, a further draft resolution would have the Assembly call upon the United Nations system to continue to study possible ways of promoting more effective cooperative arrangements between land-locked States in Central Asia and their transit- developing neighbours. It would also encourage a more active supportive role by the donor community.

The Assembly would decide, by another text, in view of the successful implementation of the transfer of the headquarters of the United Nations Training and Research Institute (UNITAR) from New York to Geneva, not to consider any further relocation of that body. That text was introduced by the representative of Cameroon.

The Committee will meet again at a date to be announced.

Drafts Introduced

The draft resolution on enhancing international cooperation towards a durable solution to the external debt problem of developing countries (document A/C.2/51/L.24) would have the Assembly take note of the developing country debt situation as of mid-1996. It would stress the need for the international community to promote a conducive external economic environment through improved market access, stabilization of exchange rates, effective stewardship of international interest rates and increased resources flows, as well as improved access to technology for developing countries. It would also stress the importance of developing countries continuing their efforts to promote a favourable environment for attracting foreign investment.

Also by the draft, the Assembly would recognize that the evolving debt strategy must be accompanied by a favourable and supportive international environment, including the full implementation of the results of the Uruguay Round of multilateral trade negotiations, and the Marrakesh ministerial decisions in favour of the least developed countries and the net food importing developing countries. The Assembly would note that the recent heavily indebted poor countries initiative represented a step towards

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assisting countries with substantial debt problems, while stressing the need to ensure its expeditious, flexible, constructive and full implementation. It would stress that the implementation of the initiative required additional financial resources from both bilateral and multilateral creditors and therefore should not be pursued through the reallocation of resources already designated for development purposes.

In addition, developed countries would be urged to give the initiative the support it needed and to further refine it so that the required six-year performance period was reduced to one lasting a maximum of three years and the terms of eligibility to be used in qualifying countries did not introduce new conditionalities. Moreover, the Assembly would stress the importance of improving the terms of eligibility criteria so as to expand coverage to other heavily indebted poor countries. It would underline the importance of transparency and involvement of debtor countries in any review and analysis that would be conducted during the adjustment period, by other terms of the draft.

The urgent need for full, constructive and expeditious implementation of various debt-relief measures undertaken by creditor countries within the framework of the Paris Club would be emphasized. Bilateral creditors that had not participated in the Paris Club would be urge to undertake equivalent debt- relief measures including debt cancellations. Efforts of indebted countries in regard to fulfilling their commitments on debt servicing despite incurring of high social costs would be recognized.

In addition, the Assembly would invite the IMF to continue devising concrete measures and actions to address the problems faced by indebted developing countries, including the possibility of selling part of its gold reserve. The Assembly would also stress the need to continue to provide social safety nets to vulnerable groups most adversely affected by the implementation of economic reform programmes in the debtor countries, in particular low-income groups.

The need for the Secretary-General to monitor closely the implementation of the heavily indebted poor countries initiative on multilateral debt would be stressed so that the Assembly at its fifty-second session would be ably guided in its deliberations on external debt crisis and development.

By a draft resolution on net flows and transfer of resources between developing and developed countries (document A/C.2/51/L.26), the Assembly would stress the need to increase the flow of substantial resources to developing countries through expansion of multilateral credits, promotion of foreign direct investment, and increase in resources in the concessional and non-debt category.

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It would reaffirm the pressing need of developing countries for official development assistance and the urgent need for industrialized countries to substantially increase that assistance so as to reach the internationally agreed target of 0.7 per cent of gross national product (GNP) as soon as possible. It would urge all countries, particularly the major industrialized countries, to apply sound macroeconomic policies, to continue to narrow global economic imbalances between developed and developing countries, to cooperate with developing countries to enhance their capacities for addressing and alleviating their problems in the areas of money, finance, resource flows, trade, commodities and external indebtedness, and to promote an international economic environment more conducive to sustained economic growth, particularly in developing countries.

The Assembly would stress the importance of the role of the International Development Association (IDA) as a highly concessional lending arm of the World Bank in promoting development in developing countries and would urge donors to fully honour their commitments to its eleventh replenishment. It would appeal to all countries, particularly the developed countries, to cooperate and work together on issues relating to financing of the Enhanced Structural Adjustment Facility during the interim period, including the sale by the IMF of a part of its gold reserves, with a view to achieving a self-sustained Facility.

The Assembly would urge international financial institutions and donor countries to improve the quality of their loans through an extension of their maturity, a lowering of their interest rates, an increase in the grant element of such loans, and the removal of conditionalities, so as to enable the recipient countries to fully utilize the loans for their own development purposes. It would call upon international financial institutions and donor countries to remove non-economic barriers that seriously restrict their provision of loans to developing countries.

Moreover, it would request the Secretary-General to continue to monitor developments in the net flows and transfer of resources between developing and developed countries and, utilizing all relevant reports, such as those provided by the United Nations Conference on Trade and Development (UNCTAD), the World Bank, the IMF and the regional development banks, to report thereon in the World Economic and Social Survey, 1997.

A two-part draft on global financial integration and strengthening collaboration between the United Nations and the Bretton Woods institutions, particularly with the IMF (document A/C.2/51/L.28) would have the Assembly decide, with contributions from the Economic and Social Council, the IMF and the World Bank, to engage in the discussion of a number of issues related to the subject. They include proposals aimed at enhancing broader cooperation and coordination of macroeconomic policies among interested countries, monetary and financial authorities and institutions, as a means of promoting a

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stable international economic environment conducive to sustained economic growth, particularly in developing countries.

The others are the need to encourage private capital flows, especially long-term ones, to all countries, in particular to developing countries, while reducing the risks of volatility; and the steps taken by the IMF to promote a strong and central role for the Fund in the surveillance of all countries in a symmetrical manner.

Other subjects would include measures aimed at broadening and strengthening the participation of developing countries in the international economic decision-making process; and actions to promote more transparency and openness, including increasing the participation of developing countries in the work of the IMF and the World Bank. The Secretary-General would be requested to report to the Assembly at its fifty-second session on those discussions and to submit action-oriented proposals.

Also by the draft, the Assembly would recognize that technological advances have reduced the costs and increased the speed of international financial transactions and that, as policy liberalization has facilitated international capital flows, financial institutions have increasingly added foreign assets to their portfolios, paving the way to the phenomenon of global financial integration. The Assembly would stress that such integration has created opportunities and challenges for the international financial system and that the Bretton Woods institutions, in particular the IMF, should further contribute to the creation of a favourable international economic environment. It would stress that governments and international financial institutions have a role to play in preventing the negative effects of the volatility of short- term capital flows and in promoting stability in domestic financial markets.

Additionally, the Assembly would stress the need for the expansion of private capital flows and for broader access to them by all developing countries. It would also stress that a number of developing countries, among them most of the least developed countries, especially those of Africa, have not benefited from the globalization of finance and continue to be in great need of official development assistance. It would note that a number of developing countries have been able to take advantage of that globalization, in spite of the negative effect of the volatility of some capital flows. Further by the draft, the Assembly would stress that international economic cooperation has become an increasingly important aspect of official measures to reduce systemic risks in the financial sector. It would note with concern that sharp fluctuations in both interest rates and exchange rates had the potential effect of disrupting the international monetary and financial system, thus aggravating the volatility of short-term capital flows. It would also note that while sound domestic macroeconomic policies of each country to promote macroeconomic stability are essential elements for determining the volume and structure of private capital flows, international macroeconomic policies play an important role in reinforcing their effectiveness.

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The Assembly would recall that further efforts have to be taken at both the national and international levels to avoid future crises of confidence in the international financial markets, which have the potential of negatively affecting not only developing countries, but the international economic system.

An 11-Power draft on transit environment in the land-locked States in Central Asia and their transit developing neighbours (document A/C.2/51/L.25) would have the Assembly call upon the United Nations system to continue to study possible ways of promoting more effective cooperative arrangements between those States and their neighbours. It would also encourage a more active supportive role by the donor community.

The Assembly would invite the UNCTAD Secretary-General, in cooperation with the United Nations Development Programme (UNDP), the Economic and Social Commission for Asia and the Pacific (ESCAP), the Economic Commission for Europe (ECE) and relevant regional and international organizations to continue to elaborate a programme for improving the efficiency of the current transit environment in the newly independent and developing land-locked States in Central Asia and their transit developing neighbours. Donor countries and multilateral financial and development institutions would be invited to provide those States and their transit neighbours with appropriate financial and technical assistance to improve their transit environment.

The text is sponsored by Afghanistan, Armenia, Azerbaijan, Belarus, Georgia, Iran, Kazakstan, Kyrgyzstan, Tajikistan, Turkey and Uzbekistan.

A draft resolution introduced by the representative of Syria on behalf of the Group of Arab States, Afghanistan and Cuba, on economic and social repercussions of the Israeli settlements on the Palestinian people in the Palestinian territory, including Jerusalem, occupied since 1967, and on the Arab population of the occupied Syrian Golan (document A/C.2/51/L.29) would have the Assembly reaffirm that those settlements are illegal and an obstacle to economic and social development. The Assembly would recognize their economic and social repercussions on the people there. It would reaffirm the inalienable right of the Palestinian people and the population of the occupied Syrian Golan to their natural and all other economic resources, and would regard its infringement as illegal. The Secretary-General would be requested to submit to the Assembly at its fifty-second session a report on the progress made in the implementation of the resolution.

A draft resolution on natural resources of the occupied Palestinian territory, including Jerusalem, and other occupied Arab territories (document A/C.2/51/L.30) would have the Assembly reaffirm the inalienable rights of the Palestinian people and the population of the occupied Syrian Golan to sovereignty over their natural resources, including their land, water, archaeological ruins and artifacts, and geological resources.

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The Assembly would reaffirm also the obligations of Israel, the occupying Power, under international law, not to exploit, cause loss and depletion of, or endanger the natural resources in the occupied Palestinian territory, including Jerusalem, and other Arab territories occupied by Israel since 1967, and request that Israel abide by those obligations. The Assembly would recognize the right of the Palestinian people to restitution and full compensation as a result of any exploitation, loss or depletion of, or damage to, their natural resources.

The Assembly would request the Secretary-General to report on the implementation of the present resolution, and would decide to include on the agenda of its fifty-second session an item "Permanent sovereignty of peoples under foreign occupation over their natural resources".

The draft is sponsored by Bangladesh, Egypt, Malaysia, Mauritania, Sudan, Tunisia, United Arab Emirates and Yemen.

The draft text on the United Nations Institute for Training and Research (UNITAR) (document A/C.2/51/L.27) would have the Assembly note with interest the steps taken to complete the restructuring process of the Institute and welcome the recent progress made by it in its various programmes and activities, as well as the opening of the Institute's Liaison Office in New York.

In addition, the Assembly would recognize that training activities should be accorded a more visible and larger role in support of the management of international affairs and execution of economic and social development programmes of the United Nations. It would reaffirm the relevance of UNITAR, particularly in view of the growing importance of training within the United Nations and the new training requirements of all Member States and the pertinence of research activities related to training undertaken by the Institute within its mandate.

In addition, the Assembly would request UNITAR's Board of Trustees to take relevant measures for the regularization of the post of Executive Director of the Institute. It would renew its appeal to Member States and to private institutions to provide generous financial support to it. The States which had interrupted their contributions would be urged to consider resuming them now that the Institute was restructured and revitalized.

The Assembly would decide, in view of the successful implementation of the transfer of the headquarters of the Institute from New York to Geneva, not to consider any further relocation, taking into account the doubts raised by the Board of Trustees at its session in September regarding the impact of such a move on the consolidation process and on the Institute's work. Further, it would request the Secretary-General to explore more systematically with the Institute's Executive Director, as well as with heads of United Nations

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programmes and funds, ways of cooperation, in order to better define the Institute's role in training, research and methodology, assessment and capacity-building within the United Nations system, and to report thereon to the Assembly's fifty-second session.

In addition, the Institute's Executive Director would be requested to prepare and conduct a comprehensive survey of existing training programmes at the level of the United Nations system, as recommended by the Joint Inspection Unit (JIU) in its report and to submit a progress report to the Assembly at its fifty-second session.

The draft is sponsored by Benin, Cameroon, Central African Republic, Chad, China, Cote d'Ivoire, Gabon, Ghana, Guinea, Nigeria and Pakistan.

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