SECRETARY-GENERAL HOPES DEVELOPMENT CONFERENCE WILL HELP INVIGORATE INTERNATIONAL COMMUNITY'S COMMITMENT TO PROGRESS IN DEVELOPING COUNTRIES

23 June 1999

Press Release
SG/SM/7042

SECRETARY-GENERAL HOPES DEVELOPMENT CONFERENCE WILL HELP INVIGORATE INTERNATIONAL COMMUNITY'S COMMITMENT TO PROGRESS IN DEVELOPING COUNTRIES

19990623 CHECK AGAINST DELIVERY

Following is the text of the message of Secretary-General Kofi Annan to the International Conference on Development, which will be delivered on his behalf in Tokyo on 24 June by the Under- Secretary-General for Communications and Public Information, Kensaku Hogen:

The United Nations attaches the highest priority to international cooperation for development as the most effective way to give meaning to a fundamental objective of its Charter, the achievement of better standards of living in larger freedom for all people.

This meeting is taking place at a time of renewed hope and vitality in the Asia region. We see signs of recovery in Korea, the Philippines, Thailand and Malaysia, and hopefully in Indonesia in the second half of this year. These are the countries which were hardest hit by the financial crisis of two years ago, and for all of them the prospects of economic recovery look good. This will be beneficial to the region and to the world economy.

Asia is home to more than 60 per cent of the world's population, and in the decade preceding the 1997-1998 financial crisis, Asia was the fastest growing region in the world economy. Most importantly, the leading economies of Asia achieved economic success while making enormous strides to reduce inequalities and promote human development.

Even as we view with some satisfaction the signs of renewed dynamism in the region, we cannot afford to be complacent. The challenges facing the global economy are immense.

The first priority of the international community must be to meet the needs of the poorest countries. Some 3 billion people, half of the world's population live on the margin of subsistence, and the gap between the average incomes of the richest and poorest countries has widened to 70:1.

Every region in the developing world is grappling with this problem. In East Asia where the largest advance against poverty in human history was achieved in the last few decades, overall living standards have fallen over the past two years. Latin America has experienced a recession and the outlook for the economies in transition is bleak. In Africa, where six out of every 10 persons live in conditions of absolute poverty, there is increasing evidence that the problem is getting worse.

The growth prospects of the poorest countries are constrained by the steady deterioration in their terms of trade, by the burden of heavy debt- service payments, by the decline in official development assistance, and by their lack of access to private capital markets. The responsibility for economic and social progress rests primarily with the developing countries themselves, but the poorest countries need the assistance of the international community to bolster their effort.

Japan has played a leading role in helping to support the recovery in Asia through the provision of $30 billion in credits and loans (the Miyazawa initiative) and has recently announced a bond guarantee programme to be operated by the Asian Development Bank to provide additional support. Japan is also providing credits to countries like Viet Nam which were not affected by the financial crisis. All of these measures are having a positive impact on growth in the region, and this, in turn, will help to stimulate a recovery in Japan through higher export growth.

At the global level, the United Nations has urged the industrial countries to take bold measures to relieve the debt burden of the poorest countries, and many governments have taken measures to address this problem. The decision of Japan to forgive about $3.3 billion of the debt of the highly indebted poorest countries (HIPC) is very encouraging news. However, further action is needed by the creditor countries to provide debt relief more quickly and to a larger number of developing countries. The provision of debt relief should not, however, come at the expense of official development assistance (ODA).

Flows of ODA have been in continuous decline since 1960, when they amounted to 0.52 per cent of gross national product (GNP). The corresponding figure today is 0.22 per cent. Since 1989, Japan has been the largest provider of ODA. Indeed, with a contribution of $9 billion, Japan alone accounts for one fifth of total ODA. But even in the case of Japan, the level of contribution remains at 0.4 per cent of GNP, which is well below the internationally agreed target of 0.7 per cent. The United Nations has also called on the industrial countries to take steps to reverse the decline in ODA flows and to explore new ways of mobilizing resources for development.

A second priority is for the leading industrial countries to adopt measures which can help bring about a more balanced pattern and higher levels of output growth. Little progress can be made in reducing global poverty if the world economy continues to grow at its present low rate. The news of Japan's return to high growth in the first quarter is very encouraging. A revival of output growth in Japan, which is the second largest economy in the world, and in Europe, is needed to provide the growing export markets that developing countries need for a sustained economic recovery.

A more balanced pattern of world growth is also needed to reduce some of the downside risks in the world economy. The United States economy is in its ninth year of steady expansion, but this growth is accompanied by growing external imbalances which have started to generate protectionist pressures and which are a threat to international financial stability.

A third priority is to maintain the momentum to strengthen the international financial system. Last year, there was widespread agreement on the need for a "new global financial architecture" which would better respond to the needs of today's complex and technologically advanced world economy. Some progress has been made to achieve this objective, but I hope that governments will adopt stronger measures in order to prevent the recurrence of devastating crises like those of 1997-1998.

The United Nations-sponsored conferences in the 1990s have set the agenda for global development and have established specific goals for the eradication of poverty and the improvement in living standards. Our task is to implement these commitments, and such a challenge requires international development cooperation in a number of areas.

I hope that your deliberations at this conference will lead to new and important initiatives that will invigorate the international community's commitment to economic and social progress in the developing countries.

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