DEBT RELIEF FOR POOREST NATIONS MUST NOT COMPROMISE DEVELOPMENT AID, SECOND COMMITTEE TOLD AS IT CONSIDERS MACROECONOMIC POLICY

Press Release
GA/EF/2863

DEBT RELIEF FOR POOREST NATIONS MUST NOT COMPROMISE DEVELOPMENT AID, SECOND COMMITTEE TOLD AS IT CONSIDERS MACROECONOMIC POLICY

Members Hear Range of Views On Strategies for Relieving Indebtedness Burden

The most important point about financing the Heavily Indebted Poor Countries (HIPC) Debt Initiative was that debt relief for the poorest countries should not be provided at the expense of Official Development Assistance (ODA), the Second Committee was told this afternoon as it began its consideration of macroeconomic policy questions.

The ultimate objective of the HIPC Initiative, said Khalilur Rahman, Chief of the New York Office of the United Nations Conference on Trade and Development (UNCTAD), was to provide a clear exit from unsustainable debt burden. HIPC debt relief should seek to remove the binding constraint, whether it was scarcity of foreign exchange or lack of budgetary resources, or a combination thereof.

The representative of the United States said that the reason for debt relief was to free up resources for development purposes. The Cologne Initiative linked debt relief directly to poverty alleviation and development objectives, encouraging countries to target budgetary savings to social expenditures in such areas as health care, education and AIDS prevention.

While most attention continued to focus on the public debt of the poorest countries, he noted that several middle-income countries had also been experiencing difficulties dealing with their external debt load. In that regard, countries needed to maintain good working relationships with all creditors to ensure continued access to international capital markets. Normally, that meant meeting all Debt-repayment obligations in full and on time, and maintaining an environment conducive to further investment.

The representative of Finland, speaking on behalf of the European Union (EU) and associated States, said that EU countries were prepared to support an increase in the remission percentage on commercial loans and to renegotiate official bilateral debt up to 90 per cent. There

Second Committee - 1a - Press Release GA/EF/2863 8th Meeting (PM) 8 October 1999

was, however, also a need to look into preventive measures to avoid unsustainable public and private debt in the future. That included ensuring responsible lending and borrowing behaviour, notably through increasing the accountability and transparency of lending and borrowing activities.

On the subject of science and technology for development, the representative of Guyana, speaking on behalf of the “Group of 77” developing countries and China, said that the gap in knowledge and technology had exacerbated the income divide between developed and developing countries, with the threat of further economic and social disparity. Intensified international cooperation was needed to enhance endogenous capacity-building in developing countries. It was also necessary to promote, facilitate, and finance access to and transfer of environmentally sound technologies to developing countries on favourable terms, taking into account their special needs.

Susan Brandwayn, Economic Affairs Officer at UNCTAD, said that a central issue was capacity-building in developing countries to enable them to adapt to the challenges of continuous change. Priority should be given to increased investment in education -- especially engineering and science, promotion of vocational training, and improvement of the scope and methodology of scientific and technological education. In addition, new policies and services were needed to bring women into the mainstream of technological change. The goal of universal access to basic education for all women, in view of their vital role in many aspects of society and the economy, was particularly important in the process of using and diffusing new knowledge.

Also this afternoon, the Committee concluded its general debate with statements by the representatives of Malaysia, Paraguay, Benin, Venezuela, Antigua and Barbuda (on behalf of the Alliance of Small Island States), Tunisia, Democratic People’s Republic of Korea, Bolivia, Armenia, Dominican Republic, Chile and Nigeria.

The Committee will assemble again at 10 a.m. on Monday, 11 October, to continue its consideration of macroeconomic policy questions.

Committee Work Programme

The Second Committee (Economic and Financial) met this afternoon to conclude its general debate. It was also expected to begin its consideration of macroeconomic policy questions, particularly science and technology for development and external debt crisis and development.

The Committee had before it the report of the Secretary-General on science and technology for development (document A/54/270), which covers the activities falling within the mandates of the Commission on Science and Technology for Development and its supporting secretariat within the United Nations Conference on Trade and Development (UNCTAD). These activities comprise work on science and technology partnerships for national capacity-building; biotechnology and its impact on development, with particular emphasis on food production; the formulation of a common vision regarding the future contribution of science and technology for development; information and communication technologies; science, technology and innovation policy reviews; gender, science and technology; the coalition of resources; and cooperation and coordination of the science and technology-related activities of the organizations of the United Nations system.

According to the report, the new competitive environment has fuelled the growth of knowledge-intensive production by increasing scientific and technological interactions. To face up to new challenges, new forms of inter-firm cooperation, including networking and partnering, have evolved. The growth of partnering and networking, however, has until very recently been largely confined to firms in the developed countries, and increasingly in the newly industrialized countries in Asia and Latin America.

The Commission on Science and Technology for Development decided to adopt “science and technology partnerships and networking for national capacity-building” as the main theme for its fourth inter-sessional period, 1997-1999, and to address the subject at its fourth session, in May 1999, the report continues. The Commission set up the Working Group on Science and Technology Partnerships and Networking for Capacity-Building to review the evidence concerning the implications of partnering and networking, particularly the extent to which they have opened up new opportunities for developing countries and countries in transition to build up indigenous capacity and technological capability.

The Working Group agreed, continues the report, that partnerships and networking could: be effective mechanisms for technological development, national capacity-building and market access across a large number of industries; be vehicles, particularly for small and medium-sized enterprises, to learn new business and management cultures and to access international markets; provide firms and research institutions from developing and transitional countries with opportunities to leverage their own research and development activities and enable them to build the credibility necessary to attract the attention of potential partners abroad.

According to the report, on the recommendation of the Commission and the Working Group, the Economic and Social Council took a number of decisions. For example, the Council recommended that Governments explore ways and means of fostering partnerships among public and private institutions by, among other things, creating an enabling policy, regulatory and legal environment. It also invited Governments, the public and business sectors, academia and non-governmental organizations in industrialized countries to engage in partnerships and networking in the field with their counterparts in developing and transitional countries to facilitate access to, and the use and adaptation of, new technologies, improve their technological capability and build national capacity.

The report states that with its wide array of techniques and applications, agricultural biotechnology offers the potential for increasing and improving food production capacity and promoting sustainability. However, developing countries are deriving only limited benefits from it owing to declining public sector investments in agricultural research and development and to the dominant role that multinationals and the private sector currently play in biotechnology. Strong and restricted protection mechanisms of biological resources have made biotechnology less accessible, and this has led to serious inequities between developed and developing countries.

The Commission was called to organize a panel meeting during the inter- sessional period, 1997-1999, with a view to identifying issues relevant to development that were not sufficiently covered by existing forums, the report continues. Two issues of broad concern in biotechnology were the potential loss of biodiversity, as a result of adoption of a limited number of high-yield varieties, and bio-safety, particularly the impact of the release of genetically modified organisms (GMOs) into the environment. The broader socio-economic impacts of new biotechnology also needed to be better understood, including the potential limitations posed by intellectual property rights on the transfer of biotechnology to developing countries. The Economic and Social Council decided that the substantive theme of the Commission for the inter-sessional period 1999-2001 would be “national capacity-building in biotechnology”, with particular attention to agriculture and the agro-industry, health and the environment.

In addition, continues the report, the Council invited the Commission to give consideration to ways and means of taking advantage of the twentieth anniversary of the United Nations Conference on Science and Technology for Development to formulate a common vision for the future contribution of science and technology for development. Hence, the Commission set up a panel, which identified the following four themes as the basis for developing a common vision: the concrete impact of science and technology on development; capacity-building in science and technology, including aspects relating to conceptualization, experiences, management and the examinations of new opportunities; the interaction of private enterprises, governments, academic institutions and civil society groups with science and technology for development; and assessment of international cooperation networks and work of organizations active in the field. The Commission approved a text (contained in the report) as its common vision for the contribution on science and technology.

The Council recommended that at the international level, the work of the Commission on coalition of resources focus on specific themes and common goals among recipients, donors and international financial institutions, according to the report. Increasingly coalitions of resources are acquiring a global dimension, with the active participation of and contributions by the private sector, technology suppliers and global service providers.

However, to maximize opportunities for a coalition of resources in support of science and technology for development, there is a need to balance private and social profitability in project design, the report goes on to say. There was also a need to design a clear and transparent national policy framework and regulatory environment, and develop the capacity to inform potential investors, lenders, donors, equipment suppliers and service providers about specific opportunities to create new coalitions of resources in a particular location or jurisdiction. In addition, there was a need to explore further the concept of a coalition of resources in the current global environment.

According to the report, science, technology and innovation policy reviews are being undertaken by UNCTAD, in collaboration with the Commission. The need for such reviews arose from the overall consensus that the ability of a country to sustain rapid economic growth in the long run is highly dependent on the effectiveness with which its institutions and policies support the technological transformation and innovativeness of its enterprises. Developing and transition countries, whose science and technology institutions are, for the most part, fragmented, uncoordinated and poorly adapted to meeting local industry’s needs, also require mechanisms enabling them to assess their performance and exchange experiences in this domain. The reviews focus on the concept of the national system of innovation, a network of institutions, public and private, whose actions initiate, import, modify and diffuse new technologies. The first review to be undertaken was in Colombia.

The importance which the Commission attaches to the gender aspects of science and technology is apparent from the fact that it was selected, at the first session of the Commission, as one of its substantive themes for the 1993-1995 inter- sessional period, the report states. The working group established by the Commission to examine the gender implications of science and technology presented its findings to the Commission at its second session, in May 1995. In its report, the working group made two sets of recommendations, one directed at Governments and the other aimed at the organizations of the United Nations system. Also, the report recommended the establishment of a gender advisory board for four years, funded by extra-budgetary resources, to ensure that gender issues were adequately addressed in the Commission’s future deliberations. On the recommendation of the Commission, the Council decided this year to extend the Board’s mandate until 30 June 2001 to allow it to complete its work programme within the extra-budgetary resources allocated for this purpose.

Also, before the Committee was the report of the Secretary-General on recent developments in the debt situation of developing countries (document A/54/370), which analyses recent developments, as well as new initiatives introduced by the international community to tackle the debt problems of developing countries. The debt problem of the heavily indebted poor countries (HIPCs) has remained largely unresolved. However, the group of seven industrialized countries (G7) at their Summit in Cologne in June 1999 agreed on a number of measures aiming at giving a renewed impetus to the HIPC initiative, making debt relief faster and deeper. The worst phase of liquidity crisis in the middle-income countries has been overcome, and recovery has timidly redressed the economies of Asian countries, which are, however, still struggling with problems of corporate sector debt. The G7 has also looked into proposals to involve the private sector more in crisis management and prevention.

The report examines recent trends in external debt in all developing countries, Asia, Latin America, Africa, countries in transition and the HIPCs. Among the international debt strategies it highlights are the Paris Club debt rescheduling, the HIPC Initiative, the commercial debt buy-backs for International Development Association (IDA)-only countries, and the Cologne debt initiative for enhanced HIPC relief.

Regarding the HIPC Initiative, the debt sustainability targets should realistically reflect the capacity to pay of those countries, according to the report. HIPC debt relief should seek, first of all, to remove whatever is the binding constraint. To begin with, the additional two criteria on exports to Gross Domestic Product (GDP) and fiscal revenue to GDP ratios could be dropped. Benchmarks on debt service ratios, debt service to exports and debt service to fiscal revenue could better reflect the debt servicing capacity of debtor countries. The most important point about the financing of the HIPC Initiative is that debt relief for the poorest countries should not be provided at the expense of ODA funding for development programmes and projects in these and other countries, which are also dependent on aid for their welfare and development aspects. Thus, it is essential that debt relief be financed by resources that are additional to budgetary ODA allocations.

The report states that in addition to enhancing HIPCs external viability, reducing fiscal pressure and creating room for transferring resources to social expenditures should also be a key concern under the HIPC Initiative. There is merit in establishing a link between debt relief and poverty reduction, and in channelling resources freed up from debt service to finance social and human development projects. However, any such link should not take the form of additional conditionality imposed on the debtor countries; even “benign conditionalities” could have the effect of further slowing down the HIPC process. The effectiveness of such linkage will also depend on how it is going to be made. Debt relief should be complemented by new aid flows to provide full funding of social expenditures.

RAMLI TAIB (Malaysia) said that in the next millennium humanity’s better instincts would continue to prevail, and the world would be a better place for future generations. Multilateralism, with all its deficiencies, would still serve its purpose for the betterment of humankind. Malaysia hoped to become a developed country twenty years into the millennium. Eradication of poverty had been a primary concern, as poverty amid abundance posed grave dangers to social and political stability, both within countries and internationally.

Having succeeded in eradicating poverty to a great extent, Malaysia was suddenly confronted with a speculative attack on its currency. Not only was the country suddenly impoverished as a result, it was also blamed for being impoverished. The present global financial system, which gave free rein to movement of short-term capital, had many households back into poverty. The world must give serious attention to systemic problems that resulted in impoverishment.

The new international financial architecture (IFA), Mr. Taib said, should therefore preclude disruptive destabilizing capital flows to maximize benefit from globalized capital markets, mitigate the effects of future crises, limit the contagion effect of such crises, contain the adverse impact of currency trading on small economies, and impose symmetry in the good behaviour of governments and the private sector. The international financial system should, in other words, quickly put in place a system of checks and balances in order to discourage people from abusing the system.

LUIS GONZALEZ (Paraguay) said that developing countries, including his own, were the ones most directly affected by the recent financial crises. By the end of 1999, Paraguay would record a growth rate of 0.5 per cent –- an alarming figure and the lowest for the last two decades. The current economic crisis went hand in hand with an increase in poverty, crime and unemployment. The low rate of growth was due partly to the drop in prices commanded by the country’s major products. It could also be attributed to the fact that the economy was in the midst of transition to industrialization. Adverse natural conditions were also a factor. Affecting Paraguay’s situation further were problems arising from globalization and deficiencies in the international trading system. The process of worldwide globalization, while benefiting a few, had led to new problems and risks for many. What was needed was a new and stable international financial system capable of dealing with the onset of crises.

Much remained to be done. Paraguay, which depended heavily on foreign trade, suffered under the imbalances of the current international trading system. New trade barriers would have severe results. That was why rapid implementation of the Uruguay Round agreements was crucial. Efforts should continue to make the system more solid, fair and equitable, while avoiding the dangerous path of sectoral negotiations. In the context of regional trade, he stressed the importance of the MERCOSUR process, an economic bloc whose chief objective was economic development.

EDOUARD AHO-GLELE (Benin) said that issues pertaining to development were of major concern to countries like Benin, which had made enormous sacrifices simply in order to survive within the international community. Upon entering the new millennium, he would have wished better conditions for the international community. Instead, the situation of developing countries continued to deteriorate, the number of people living in poverty was on the rise, and financial resources for development were going down. The situation of developing countries, especially least developed countries, required the increased attention of the international community.

MARIO GUGLIEMELI (Venezuela) said that his country was experiencing a peaceful and democratic renovation of the State and its political institutions. That new model would be humanist, productive, competitive and diversified. Globalization had brought about new relations of interdependence. Issues could no longer be dealt with in isolation.

The new international financial architecture should carry the political moral authority that only the United Nations could give it. The multilateral trading system should be based on clear cut, fair and non-discriminatory rules. Protective measures based on environmental or trade union issues must be rejected.

Venezuela had been blessed by nature and had an immense wealth of natural resources. It was committed to an environmentally responsible and rational use of those resources and should benefit the people, while protecting the patrimony of future generations, he said.

PATRICK ALBERT LEWIS (Antigua and Barbuda), speaking on behalf of the Alliance of Small Island States (AOSIS), said the fact that the infrastructures of small island States could be wiped out in a matter of a few hours was graphically illustrated on 14 September, when the Bahamas suffered the devastating effects of Hurricane Floyd. Small island developing States (SIDS) were also struggling with the challenges of globalization and trade liberalization. The loss of trade concessions had a dire impact on their vulnerable economies. He hoped that the special session of the General Assembly on review and appraisal of the implementation of the Barbados Programme of Action had played a pivotal role in kindling the full engagement and support of the international community, and the United Nations system, in assisting small island States to find and implement tangible and workable solutions. The 1994 Barbados Global Conference had called for a partnership approach and for specific donor commitments. That need became even more critical as the States undertook an action-oriented and targeted focus on areas identified as requiring urgent attention.

Small island countries were deeply committed to the Programme of Action, he continued. The Programme covered the whole range of priorities and concerns of small island Governments. It established their “special case” in the context of environment and development, and represented the acknowledged global consensus on objectives for the modern and sustainable development of the SIDS. Those countries could take pride in knowing that there had been real if limited progress at the national level to move towards sustainable development. Their Governments had worked hard at establishing effective partnerships within their countries and regions. It was action at the national level, supported by efficient regional and sub-regional institutions, that must continue if the fundamental issues of development were to be addressed. In the global sense, there was a need to ensure recognition that the agenda for small islands was the agenda for all.

MOHAMED FADHEL AYARI (Tunisia) said that globalization was the most important challenge facing the world today. While it had some positive effects, it had much more of a negative impact on the economies of the developing countries, thereby widening the gap between rich and poor. Tackling those negative effects required the maintenance of an international economic climate favourable to growth and development, especially for developing countries, which were more vulnerable to processes such as deregulation. The international community and the United Nations bodies should work in cooperation with the Bretton Woods Institutions to implement measures to mitigate wild swings in the economies of developing countries. Also needed was multilateral machinery to stabilize and manage the international financial and monetary system and guarantee fair competition. It was also necessary to undertake implementation of the commitments made at major United Nations conferences and to see to it that globalization had a human face.

In the area of cooperation for development and poverty, he said the Secretary-General’s report on the Organization stated that problems of development could be solved by well-planned, coordinated and funded action. Official development assistance, while a small proportion of global resources, constituted a major source of external financing, particularly for African countries. For Africa to cut poverty in half by the year 2015, GDP would have to increase by 0.7 per cent per annum. Currently that figure was nowhere close to the target. He welcomed the initiative launched at the Cologne Summit to reduce debt, and hoped that the efforts of the international community to resolve problems of external debt would also benefit the so-called middle-income countries.

LI HYONG CHOL (Democratic People’s Republic of Korea) said that since the launching of the Fourth United Nations Decade for Development, considerable efforts had been made by the international community to achieve the goal of sustainable development and implement its commitments on environmental protection. In spite of those efforts, the problems of external debt, poverty and environmental protection had been further aggravated, thus accelerating the economic marginalization of developing countries. Developed countries were now seeking high interest rates rather than moving towards development-orientation in their economic relations with developing countries. They were also enforcing protectionism in trade.

Unilateral economic sanctions remained a serious obstacle on the path to sustainable development. Those sanctions were obstructing the economic development of a large number of developing countries and having a negative impact on regional economic development. He urged that all unilateral economic sanctions should be eliminated immediately.

Developed countries should be more faithful in fulfilling their commitments on ODA, in the spirit of non-interference in the internal affairs of others. Appropriate measures must also be adopted to consolidate further the role of the funds and programmes of the United Nations system in the field of development. Such steps would enable developed countries to realize their commitments on the transfer of funds and technology.

ROBERTO JORDAN-PANDO (Bolivia) said that in some places globalization had been seen as a promise, and in others as a threat, as an impoverishing factor. Notwithstanding four United Nations development decades, the world was still manufacturing poor people. The results demonstrated the asymmetries between countries that resulted from globalization. The recent financial crises had revealed the inherent weaknesses of the current international financial system. Bolivia had made great efforts to promote development and had created the necessary conditions for sustainable development. Yet, just as its economy seemed to be taking off, the financial crisis “slammed the brakes” on its economic growth. Capital markets did not distinguish between productive and speculative capital. Notwithstanding its achievements, the country’s growth rate was still inadequate and inequitable, as it reflected no provision for the reduction of poverty. With regard to the decline in international financial assistance, the international community must implement their commitments. Development financing must maintain a consistent level.

PARUYR HOVHANNISYAN (Armenia) said that no country would benefit spontaneously and automatically from the globalization trend. The major tasks Governments faced today were development, the pursuit of sound policies, and appropriate structural adjustments to meet the challenges and exploit the opportunities that globalization offered. Armenia, a country in transition, was trying to adjust to the multiple stresses of post - Soviet economic, cultural and political transformations. Establishment of the institutional and structural machinery and capacities necessary to increase export-led production among the country’s top economic priorities. Accession to the WTO was another priority.

Armenia’s economic problems of transition were further aggravated by economic blockade. Lack of territorial access to the sea, combined with the blockade of its transportation routes, continued to rank high among constraints on Armenia’s potential for economic progress.

Armenia attached great importance to environmental issues, and was committed to implementation of the United Nations conventions on biological diversity, climate change and desertification. Loss of forest cover, drought, and soil erosion caused by wind and water added up to a multipronged attack on Armenia’s land resources. The country therefore supported establishment of an additional regional instrument to the United Nations Convention to Combat Desertification, designed to cover the specific concerns of the countries of Central and Eastern Europe.

JOSE MANUEL CASTILLO (Dominican Republic) said that in the course of its rich history the United Nations had scored tangible successes, such as decolonization, the establishment of democratic systems and the maintenance of international peace and security. However, it had not been able to tackle poverty effectively. Eradicating poverty was the greatest challenge to the United Nations system as the millennium approached. One out of every three people in the world lived in very precarious conditions –- which in turn contributed to high migration and displacement levels among populations. That situation would continue if a more equitable international financial system were not soon established. He called for compliance with the terms agreed to at the Uruguay Round. There had been an overall lack of awareness of the needs of developing countries, as well as a decline in financial aid. The situation had been compounded for many countries by the calamities unleashed by natural disasters.

Most developed countries had not reached their set goals in terms of ODA, he said. Only Nordic countries had attained the target of 0.7 per cent. Debt continued to be the major obstacle to development for many, with the total amount tripling over the last decade. In Latin America and the Caribbean, total debt increased to $735.8 billion in 1998, almost 17 times what it was in 1980. It had become an “eternal debt”, a tragic and negative burden on the most marginalized economies. The Dominican Republic had managed levels of sustained economic growth over the last three years, while maintaining an inflation rate of barely single- digit proportions. Notwithstanding those achievements, it still faced many limitations typical of a developing nation. Access of developing countries to the developed markets must be ensured; a new international financial architecture must be established.

JUAN LARRAIN (Chile) said that the world was in a delicate period of transition from an industrial era into an era of instant communication, from an era of multiple markets to an era of a unified market. There were two interconnected fundamental themes now facing the Committee: the eradication of poverty and globalization. On the eve of UNCTAD X and the third ministerial meeting, it should be hoped that trade negotiations would become a true development round.

The issue of the environment was an important concern for his country, he said, in which the needs of generations to come should be taken into account. On the question of the international financial architecture, he said that consensus should be developed in favour of a system that adequately served development needs. Effective participation of the United Nations and the Bretton Woods Institutions, along with the private sector, was of extreme importance.

O. AKINSANYA (Nigeria) said that Africa, the least developed of all regions, was also the least able to take advantage of the benefits of globalization. In fact, Africa faced the risk of further marginalization unless urgent steps were taken to enhance the capacity of its economies to reap the benefits of globalization of the world economy. Initial gains made in the immediate post- independence era had all been virtually wiped out. While Africa accepted its own share of responsibility for that state of affairs, the international financial and economic climate had also contributed. What Africa needed was a global system of economic interaction that promoted fair trade; a system that guaranteed greater market access for its products; a system that allowed increased net flow of capital into Africa; in short, a system that globalized development and invested in globalization with a human face.

One issue that the Committee should consider was the question of illegal capital flight from Africa. Much of Africa’s wealth had been illegally stashed away by corrupt regimes and unpatriotic individuals, working in close collaboration with foreign partners. Recovery of that capital, which represented a serious depletion of Africa's resources, might well enable African countries to pay up a large portion of their debts. The time had come for concerted international action to deal with the issue. That was why Nigeria had proposed elaboration of an international convention on the repatriation of capital illegally transferred from Africa and other developing regions of the world. He hoped the Committee would take the matter in hand during the current session.

Macroeconomic policy questions

SUSAN BRANDWAYN, Economic Affairs Officer of UNCTAD, said that production had become more knowledge-intensive across a wide range of industries, including those considered as “traditional” sectors. Competition had become increasingly innovation-based, and liberalization had diffused that form of competition everywhere. Creating support structures and a policy environment conducive to learning and innovation in the enterprise sector was a critical element in building and sustaining competitiveness at home and abroad.

A central issue continued to be the need to build capacity in developing countries so that they could adapt to the challenges of continuous change. Priority should be given to increased investment in education -- especially engineering and science, the promotion of vocational training, and improvement of the scope and methodology of scientific and technological education. Collaboration with the private sector would be helpful in matching skills and needs.

New policies and services were needed to bring women into the mainstream of technological change, she said. The goal of universal access to basic education for all women, in view of their vital role in many aspects of society and the economy, was particularly important in the process of using and diffusing new knowledge. Greater support for research in the public sector, particularly in health and agriculture, would encourage the development of indigenous knowledge systems, and increase capacities for the assimilation of transferred technology. Science and technology should serve to improve the well-being of mankind in the areas of justice, equity and dignity for all peoples, and in respect of future generations.

KHALILUR RAHMAN, Chief of the New York Office of UNCTAD, said that the most noticeable efforts in the field of international debt strategies had been those aimed at enhancing the effectiveness of the HIPC Initiative and involving the private sector within the framework of the Paris Club. A major development had been the Cologne debt initiative, aimed at making HIPC debt relief deeper and faster by lowering debt-sustainability thresholds; offering of a deeper degree of cancellation; providing interim relief; and introducing “floating completion points”. Another important aspect of the Cologne initiative was its link between debt relief poverty reduction. The Ministerial Communiqué issued at the Development Committee meeting on 27 September had endorsed those measures, while noting that debt relief alone would be insufficient to achieve the goal of poverty reduction.

Overall, he continued, the Cologne initiative clearly brought an appreciable improvement to the HIPC framework, aimed at lower debt-sustainability targets and larger debt reductions, notably the Paris Club reduction of 90 per cent or more, and ODA debt cancellation. The ultimate objective of the HIPC initiative was to provide a clear exit from unsustainable debt burden. HIPC debt relief should seek to remove the binding constraint, be it scarcity of foreign exchange or lack of budgetary resources, or a combination thereof. The most important point about financing the HIPC initiative was that debt relief for the poorest countries should not be provided at the expense of ODA funding for development programmes and projects in those countries, as well as in other developing countries that were also dependent on official aid for human welfare and development.

The effectiveness of linkages between poverty reduction programmes and debt relief would depend on how such linkages were going to be made, he added. Attention should be given to concerns over inflationary risks for HIPCs, additional budgetary pressure on them, and new demands on their limited administrative resources.

DONNETTE CRITCHLOW (Guyana), speaking on behalf of the Group of 77 developing countries and China, said the gap in knowledge and technology had exacerbated the income divide between developed and developing countries, with the threat of further economic and social disparity. She therefore underscored the importance of intensifying international cooperation in the field. Such cooperation should enhance endogenous capacity-building in developing countries It should promote, facilitate, and finance access to and transfer of environmentally sound technologies and corresponding know-how to those countries, on favourable terms -- including mutually agreed concessional and preferential terms -- and taking into account their special needs. The developing countries should have access to new technologies without obstacles such as export restrictions on new technology, imposed under different pretexts.

It was imperative to address such exclusion in considering the development of developing countries. It was a source of deep concern to the Group that the United Nations still seemed ill-equipped to deal with current challenges in the field. The Organization must be urgently strengthened in that area if it was to effectively serve development in the next century.

Turning to the external debt crisis and development, she said that the Group had given consideration to some feasible measures. First, a new set of standards for determining the sustainability of external debt could be established, based on the fiscal consequences of the debt burden. Also, to provide a clear and lasting exit from an unsustainable debt burden, debt-sustainability targets should, as a matter of principle, realistically reflect the capacity to pay of the concerned debtor countries. The Group also suggested that the debt or Government and the international institutions could agree on a multi-year fiscal scenario that addressed macroeconomic stability consistent with non-inflationary financing, and domestic rates of taxation consistent with rapid growth.

That kind of debt-reduction programme, she continued, could then be presented to the Paris Club for consideration. Beyond that, the Group would continue to advocate a global approach that contemplated not only the linkages within countries, but also the critical importance of an enabling international economic environment, supportive of long-term growth and development in developing countries.

MATTI KAARIAINEN (Finland), speaking on behalf of the European Union (EU); Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, Slovenia, Cyprus and Malta, said that information and communication technology had advanced with giant steps, touching those best equipped to answer its challenges. Developing countries, especially the least developed countries, were in danger of being left out. It was the world’s duty to see that that did not happen. The needs of developing countries must be addressed first and foremost by concentrating on natural-resource management, agricultural production and health. The EU was convinced that transfer of technology was of paramount importance to the developing countries, contributing to the enhancement of national scientific and industrial capacities, including the capacity to innovate. Within that context, it was also crucial to develop technological partnerships within an agreed context of the relationship between technology transfer and intellectual and industrial property rights. Mechanisms for access to research results and technologies needed further development, taking account of local and regional needs.

On the issue of external debt, Mr. Kaariainen said that there was an urgent need for effective, equitable, development-oriented and durable solutions to the external debt and debt-servicing problems of the HIPCs. The European Union welcomed proposals for linking debt relief to poverty reduction, and in particular the proposal that debt relief should be used to back poverty reduction strategies prepared by national Governments.

The countries of the EU were prepared to support an increase in the remission percentage on commercial loans, as well as the renegotiation of official bilateral debt up to 90 per cent (and more if necessary for the poorest HIPCs) in order to achieve debt sustainability. He said that beyond the immediate task of reducing the excessive debt burden of developing countries, there was a need to look into preventive measures to avoid unsustainable public and private debt in the future. That included ensuring responsible lending and borrowing behaviour, notably through increasing the accountability and transparency of lending and borrowing activities. In addition, the debt-management capacity of debtor countries should be further strengthened.

SIM FARAR (United States) said the reason for debt relief was to free up resources for development purposes. The Cologne Initiative linked debt relief directly to poverty alleviation and development objectives, encouraging countries to target budgetary savings to social expenditures in such areas as health care, education and AIDS prevention. While most of the attention continued to be focused on the public debt of the poorest countries, he noted that several middle-income countries had also been experiencing difficulties dealing with their external debt load. In that regard, countries needed to maintain good working relationships with all creditors to ensure continued access to international capital markets. Normally, that meant meeting all debt repayment obligations in full and on time, and maintaining an environment conducive to further investment. However, while attention remained focused on the effects of excessive debt, countries must not lose sight of how the debt crisis arose. Economic reforms must continue, or more countries would become enmeshed in the cycle of debt that was so destructive of development.

Turning to science and technology for development, he said that the potential effects of advances in science and technology on the achievement of sustainable development were enormous. Science and technology advances of the last two decades, however, were unevenly distributed among the world’s population. To bolster the capacity of developing countries to take advantage of science and technology developments, illiteracy must be eliminated and investments in higher education increased. Women must be assured equal access to education. Furthermore, public-sector research, particularly on health and agriculture, must be encouraged in order to safeguard local interests, strengthen the ability to assimilate acquired technologies, and help attract trade and technology partners.

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