PRESS BRIEFING ON MEETING BETWEEN ECONOMIC AND SOCIAL COUNCIL AND BRETTON WOODS INSTITUTIONS

Press Briefing

PRESS BRIEFING ON MEETING BETWEEN ECONOMIC AND SOCIAL COUNCIL AND BRETTON WOODS INSTITUTIONS

Francesco Paolo Fulci (Italy), President of the Economic and Social Council, said at a Headquarters' press briefing this afternoon, that efforts were being made to instil new life into the Council with the effective implementation of the provisions of Article 65 of the Charter. That Article states that the Economic and Social Council may furnish information to the Security Council and also assist it upon request.

Briefing correspondents on the outcome of the second special high-level meeting between the Economic and Social Council and the Bretton Woods institutions, he said there had been exchanges with the Security Council on the activation of Article 65, and he had scheduled a meeting with the President of the Security Council for later today.

Mr. Fulci said a precise suggestion would be formulated by the next session of the Economic and Social Council for transmission to the Security Council on a project. That project would be the rehabilitation of Haiti, which, he said, should be the object of examination by the Economic and Social Council, and not by the Security Council.

Mr. Fulci said efforts were being made to transform the Economic and Social Council from being a "mini-General Assembly" into what it was originally meant to do -- to cope with the social and economic problems of States and with human rights.

He also said it had been decided that a 10-point manifesto should be prepared which outlined what the Economic and Social Council believed should be a strategy to eradicate poverty from the world. It would be based on all the documents adopted by the various United Nations conferences. "Our hope is that its message, which should be written in clear words, would be adopted at the high-level segment of the Economic and Social Council July session in Geneva", he said.

Turning to this morning's special meeting, the second of its kind, Mr. Fulci said the dialogue had been rich, wide-ranging and successful. The reason for the success was the presence of "top guns" of international economics, such as Carlo Azeglio Ciampini, Minister of the Treasury of Italy, who was also Chairman of the Interim Committee of the Board of Governors of the International Monetary Fund; Tarrin Nimmmanahaeminda, Minister of Finance of Thailand and Chairman of the Development Committee of the World Bank; and Mats Kaarlson, State Secretary for International Development Cooperation of the Ministry of Foreign Affairs of Sweden. There was also the Managing Director of the International Monetary Fund (IMF), Michel Camdessus, and James D. Wolfensohn, President of the World Bank. Also present had been the Prime

Minister of Saint Kitts and Nevis; two deputy Prime Ministers, from Turkey and Kazakhstan; and a number of finance ministers.

He said today's meeting had once more demonstrated the Economic and Social Council's success in building bridges between the United Nations and the international financial institutions, especially the World Bank and the International Monetary Fund. "There's no more Berlin Wall between the two. Now we are really working together, working towards the same goal." He said mutual suspicions were dissipating and it was clear that development could not be pursued without addressing the financial fundamentals. Focus could also not be on technical solutions without the development aspirations of poor millions being taken into account. He said globalization must be at the service of the people and not vice-versa.

Summing up the proceedings, he said that, on economic outlook, there had been a consensus that it was by no means certain that an economic recovery was fully under way. There were hopeful signs, but still risks. There had been consensus that the world economy appeared fragile. Growth rates were seen to be unsatisfactory, especially in the developing countries, but they were not as high as last year, as had been expected. They had been expected to be 4 per cent or more, but were only 1 per cent.

He said that, for many such countries, a crisis situation still prevailed, and it was thought that the goals for poverty reduction would not be met if the growth rates did not improve. Many participants had agreed that measures were needed to accelerate economic growth, especially in developing countries.

On the architecture of the international financial system, he said participants had noted the positive initial steps taken to address the financial crisis. Reference had been made to the beginning of the crisis in Thailand and the domino or contagion effect it had had on other countries. While some stability had returned to financial markets, many delegates had observed that vulnerability still existed, and therefore complacency would be dangerous. Measures should therefore continue to be taken to strengthen the international financial architecture, keeping in view the need for a holistic approach and, above all, never forgetting the needs of the developing countries. Particular attention, he said, had been paid to the need to enhance transparency in institutions, markets, governments and international organizations.

With regards to financing for development and the issue of external debt of developing countries, Mr. Fulci said the Italian Treasury Minister, Mr. Ciampi, had announced that his country was undertaking pioneering work in that area. Italy was cancelling the debts of some of the poorest countries and hoped its "good example" would be followed by others. Mr. Ciampi had insisted that it be ensured that the freed resources were not allowed to be invested in armaments or weaponry. Continuing, Mr. Fulci said the political

Mr. Fulci Press Briefing - 3 - 29 April 1999

momentum in dealing with the debt crisis should not be lost. Representatives of some African countries had indicated that they were not able to pay the interest on their debts, and, he said, "this certainly cannot go on forever".

He said participants had stressed that debt relief required additional resources, and that it should not be at the expense of development assistance. He had noted in his opening speech to the meeting that official development assistance had reached a historic low, and that the trend should be reversed and moved towards 0.7 per cent of gross national product. He added that the participants had welcomed the General Assembly initiative to convene a high- level international event on financing for development, and appreciated the readiness of the Bretton Woods institutions to support it.

On the social dimensions of the crisis, he said the participants had reaffirmed the principles which had emerged at the Social Summit in Copenhagen. It was clear that the economic crisis had brought the social dimensions of economic policy into sharper focus. Many had seen that as a vital opportunity for strengthening and achieving closer cooperation between the United Nations and the Bretton Woods institutions. It had been suggested that the World Bank's recently proposed Comprehensive Development Framework and the United Nations Development Assistance Initiative could provide further opportunity to that end.

One thing he had appreciated enormously during the proceedings was that the problems of the poor and the smaller countries were now becoming the problems of all. He recalled a statement of the Prime Minister of Saint Kitts and Nevis in which he had appealed that the poor should not be allowed to become poorer.

Asked whether the conflict in Kosovo had influenced the proceedings, Mr. Fulci said it had been mentioned many times. It was clear that the conflict was taking a heavy toll on the economies of neighbouring countries, and that they would need massive assistance when it was over.

Could he name the countries which would benefit from the Italian initiative on debt cancellation? a correspondent asked. He said a number of initiatives were being pursued. One was to raise money from civil society with matching funds from the Government for the benefit of targeted countries in Sub-Saharan Africa.

Also present at the briefing, Nitin Desai, Under-Secretary-General for Economic and Social Affairs, said in response to questions that one of the issues raised during the session was the link between the World Bank's Comprehensive Development Framework and the United Nations Development Assistance Framework. It had been stressed that the Bank, the United Nations and the IMF were all working towards the same objectives. The intention was that they should all work together towards poverty eradication and social development.

Mr. Fulci Press Briefing - 4 - 29 April 1999

Asked what safeguards were taken to ensure that funds meant for development were not diverted to the military, Mr. Fulci said it had been mentioned clearly that debts could not be cancelled for resources generated to be used for such a purpose. Mr. Desai commented that, as presently designed, the Highly Indebted Poor Countries Initiative of the IMF and the World Bank had generated debt forgiveness of over $6 billion, covering seven countries. The question of deepening and broadening the initiative so that more countries could be covered had been raised during the meeting. The positive outcome of the discussions was the agreement on making the debt burden sustainable for affected countries.

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