HIGH-LEVEL EVENT MUST BRING ALL STAKEHOLDERS TOGETHER TO MAXIMIZE SOURCES OF FINANCING FOR DEVELOPMENT

Press Release
GA/EF/2885

HIGH-LEVEL EVENT MUST BRING ALL STAKEHOLDERS TOGETHER TO MAXIMIZE SOURCES OF FINANCING FOR DEVELOPMENT

Needs and Development Strategies Of Individual Countries Should Be Target, Committee Told

It was both timely and necessary to bring together all relevant stakeholders to examine how to make more effective use of existing and emerging sources of financing for development, the representative of Norway told the Second Committee this afternoon as it concluded its survey of high-level international intergovernmental consideration of financing for development.

The high-level event, he continued, should examine the range of existing and potential sources of financing for development, including mobilization of domestic resources, official development assistance (ODA), external debt, international private capital flows and the role of trade in financing for development. The focus should be on the needs and development strategies of each country. While a broad approach to financing for development was needed, it should not lead to any reduced emphasis on the importance of increasing overall ODA levels. The ODA would continue to remain an important source of reliable development financing over time, particularly for countries and sectors where attracting increased private-sector investment was more difficult. It was necessary to discuss how to make ODA more effective.

The representative of Nigeria said that the ability of many developing countries to finance significant development projects from internal sources had been greatly crippled by factors like the external debt burden and limited market access. External financing for development, if it was to serve as a vehicle for poverty reduction, growth and development, should take into account the abundant supply of labour in developing countries. The idea that only market forces should determine allocation of resources had proven to be a misguided notion in developing countries.

In many developing countries, he continued, the sectors that badly needed an injection of capital were infrastructure and human-resources development. Mobilizing international private financial flows for those sectors required an appropriate balance between the investor’s need for a quick profit and the requirement that people-based sustainable development take place. That was a great challenge, which those preparing for the conference on financing for development must take very seriously.

Second Committee - 1a - Press Release GA/EF/2885 29th Meeting (PM) 1 November 1999

Speaking on behalf of Kenya and Uganda, the representative of the United Republic of Tanzania said that many international financial institutions had been long associated with financing for development. However, their credibility had begun to be questioned and their vulnerabilities exposed in the wake of the recent financial crises. It was now necessary to consider reform of the international financial institutions to make them more favourable to the development needs of the developing countries.

Colombia’s representative said that the objectives of the high-level event were still unclear. Was the aim to define a role for the United Nations in financing for development? To create a long-standing relationship with the Bretton Woods institutions and the private sector? Or was it to achieve an integral analysis of the subject from a conceptual point of view? The need for clarity on those matters demanded its consideration in the preparatory process. Also, the participation of the private sector had not been clearly established. It, too, as one of the key players in financing for development on the international level, should be part of the preparatory process.

Also this afternoon, the representative of Guyana, speaking on behalf of the “Group of 77” developing countries and China, introduced four draft resolutions linked to the Committee’s consideration of environment and sustainable development, and globalization and interdependence, as orally amended.

Statements were also made by the representatives of Morocco, Indonesia (on behalf of the Association of South-East Asian Nations (ASEAN)), Cuba, Chile, Saint Lucia, China, Madagascar, Romania, Mongolia, Japan, Iran, Bhutan and Venezuela.

The Committee will meet again at 3 p.m. tomorrow to hear an introduction of the report of the Secretary-General on international institutional arrangements related to environment and development.

Committee Work Programme

The Second Committee (Economic and Financial) met this afternoon to continue its survey of high-level international intergovernmental consideration of financing for development. (For further background, see Press Release GA/EF/2884, issued this morning.)

It was also expected to hear the introduction of four draft resolutions sponsored by Guyana, on behalf of the “Group of 77” developing countries and China.

By the terms of the text on the World Solar Programme 1996-2005 (document A/C.2/54/L.16), the Assembly would call on all relevant funding institutions and bilateral and multilateral donors, as well as regional funding institutions and non-governmental organizations, to support the efforts being made for the development of the renewable energy sector in developing countries.

The Assembly would also invite all governments to encourage the involvement of all relevant stakeholders, including the private sector, in the promotion of research on and development of renewable sources of energy within the context of the implementation of the World Solar Programme 1996-2005, in accordance with their respective national policies.

By the terms of the second draft resolution, on the report of the Governing Council of the United Nations Environment Programme (UNEP), the Assembly would endorse Governing Council decision 20/31 of 4 February, entitled "Proposed programme budget of the United Nations Environment Programme: revised requirements for the biennium 1998-1999 and proposed requirements for the biennium 2000-2001", which gives concrete support to UNEP's integrated work programme and endorses its new functional organizational structure, and provides for an increased level of funding to the Environment Fund for the biennium 2000-2001.

The Assembly would support the reform being undertaken in UNEP, and underscore the need for additional stable, adequate and predictable financial resources to ensure the full implementation of its mandates. Further, it would encourage the supporting role of UNEP to developing countries, particularly in Africa.

Also before the Committee was a text on the protection of global climate for present and future generations of mankind (document A/C.2/54/L.18). By the terms of the text, the Assembly would decide to include in the calendar of conferences and meetings for the biennium 2000-2001 the sessions of the Conference of the Parties and its subsidiary bodies entailing 12 weeks of meetings requiring conference servicing.

The Assembly would call on developed countries to undertake urgent and effective steps to implement their commitments under the Kyoto Protocol through domestic actions. It would request the Secretary-General to review the functioning of the institutional linkage of the Convention secretariat to the United Nations not later than 31 December 2001, in consultation with the Conference of the Parties, with a view to making such modifications as may be considered desirable by both parties, and to report thereon to the Assembly. It would also request the Secretary-General to make the necessary arrangements to include in the calendar of conferences and meetings for the biennium 2002-2003 those sessions of the Conference of the Parties and its subsidiary bodies that the Conference may need to convene during that period.

The fourth draft text is on the role of the United Nations in promoting development in the context of globalization and interdependence (document A/C.2/54/L.19). By its terms, the Assembly would call for effective governance of globalization through democratization of international economic policy decision- making; integrated consideration of trade, finance, technology transfer and development issues by the relevant international institutions; and reform of the international financial architecture -- and, in this context, call for close cooperation and coordination between the United Nations, the Bretton Woods institutions and the World Trade Organization (WTO).

The Assembly would call on the developed countries, in particular the major developed economies, to enhance coherence among their financial, trade and development cooperation policies, with a view to creating an enabling international economic environment supportive of the development of developing countries. It would also call on the international community, in particular the WTO, to immediately operationalize the special and differential treatment provisions of the multilateral trade agreements, so as to enable developing countries, including the African countries, least developed countries, small and vulnerable economies and small island developing States (SIDS), to derive the potential benefits from trade liberalization in the context of globalization and interdependence. Further, it would call for the reform of the global financial architecture to include greater participation by the developing countries in the decision-making processes of the international financial institutions, more emphasis on financing for development and greater financial stability.

The Assembly would request the Secretary-General to report to it on action taken in the area of information and communication technology. It would also request the Secretary-General to establish an ad hoc group of information and communication technology experts, taking into account equitable geographical representation, with a view to preparing action-oriented proposals on the role of the United Nations in: better integration of developing countries in the emerging global information network; greater developing-country's access to information and communication technologies on preferential and concessional terms; and the participation of developing countries in knowledge-intensive sectors of the global economy.

Introduction of Draft Resolutions

DONNETTE CRITCHLOW (Guyana), speaking on behalf of the Group of 77 and China, introduced the draft resolution on the World Solar Programme 1996-2005. Solar energy was being increasingly utilized, especially in developing countries. The Group viewed that as another step in the implementation of Agenda 21. It was against that background that the Group presented the draft.

She then introduced the draft resolution on the report of the Governing Council of the UNEP. She added a new operative paragraph 7, which reads as follows: “stresses the importance of strengthening the Nairobi location of the United Nations Centre through, inter alia, enhancing the conference service facilities of the United Nations office at Nairobi”. The previous operative paragraph 7 would now become operative paragraph 8.

Next, she introduced the text on the protection of global climate for present and future generations of mankind. She said that operative paragraph two, as well as two preambular paragraphs, was pending the outcome of the fifth session of the Conference of Parties, which was currently under way.

GEORGE TALBOT (Guyana), also speaking on behalf of the Group of 77 and China, introduced the draft resolution on the role of the United Nations in promoting development in the context of globalization and interdependence. He said that globalization continued to influence the global economy, and presented both opportunities and risks.

Statements on Financing for Development

AHMED AMAZIANE (Morocco) said that the problem of financing for development was all the more urgent in the midst of international financial crises, pervasive poverty and inequality. The main responsibility for mobilizing resources for development lay with each country. Development could not be breathed into a country by some divine miracle. Each country must create the necessary political conditions needed for economic and social development. That political framework must be accompanied by corresponding economic measures to combat poverty and fraud, which prevented the appropriate allocation of resources. The international community must adopt equitable rules, tailored to channel capital to where it was most needed. It must also take into account the structural vulnerabilities of the economies of developing countries.

Currently, he said, there was a resurgence in disguised protectionist measures, whose sole goal was to limit the access of developing countries to international markets. The obstacles to trade continued to hinder the development of developing countries. In addition, official development assistance (ODA) levels continued to decline. Access to the markets of developed countries, together with an increase in ODA, were critical elements of any international policy to rectify the problem of financing for development. He hoped that the coming high-level event would make it possible to restructure the international financial system. The international community must use the opportunity presented by the event to crystallize the right to development. It must not remain a dead letter.

MAKARIM WIBISONO (Indonesia), speaking on behalf of the Association of South- East Asian Nations (ASEAN), said that during the Asian financial crisis, many developing countries suddenly faced economic collapse after a decade of spectacular economic growth. The complex question of revitalizing the crippled economies was a major challenge faced by the international financial and monetary system. Standards and transparency should be applied equally to the public and the private sectors. In particular, highly leveraged institutions with systemic significance should be subject to regular and timely transparency and disclosure requirements.

Regarding the high-level intergovernmental consideration of financing for development, he called for a concrete decision on a machinery, such as a preparatory committee, to function as a broad-based steering mechanism representing all geographical regions. The highest possible level of participation should undoubtedly give greater leverage in considering the issues. The agenda of the event should not be too long, since it sought to attract the attendance of high- level officials. Nor should it be too short, since participants needed to be able to cope with all issues on the agenda. He recommended a conference format for the final event.

The event should take into account other relevant processes taking place. That was crucial, he said, especially if the aim was to chart a new path towards a strong, effective and genuine partnership in financing for development. A time- frame to implement the outcome of that event was also needed, as well as modalities for a possible review at such a time and where it was deemed necessary by all member countries.

RAFAEL DAUSA CESPEDES (Cuba) said that the subject of financing for development was particularly important for the Second Committee. Issues such as foreign debt, declining ODA flows and the need to address the reform of the present financial and monetary system had to be considered. New policies must be established to meet present needs. There was an overall need to increase financial assistance, foremost in the productive sectors. Current short-term flows did correspond to the needs of developing nations. Rich countries should earmark the agreed 0.7 per cent of their gross domestic product (GDP) for the development of those countries.

He said that Heavily Indebted Poor Countries (HIPC) and medium-income countries should receive assistance with their debt problems. Trade was an equally serious issue, and should be included on the agenda of the event. Unilateral sanctions, which were violations of the principles of free trade and international law, could be addressed under that chapter. Establishing a preparatory committee, he said, was of great importance.

M.K. IBRAHIM (Nigeria) said the ability of many developing countries to finance significant development projects from internal sources had been greatly crippled by factors like the external debt burden and limited market access. External financing for development, if it was to serve as a vehicle for poverty reduction, growth and development, should take into account the abundant supply of labour in developing countries. The idea that only market forces should determine allocation of resources had proven to be a misguided notion in developing countries.

In many developing countries, he continued, the sectors that badly needed an injection of capital were the infrastructure and Human-resources development. Unfortunately, returns on those investments were not only long-term, they were also small compared to other sectors. Mobilizing international private financial flows for those sectors required an appropriate balance between the investor’s need for a quick profit and the requirement that people-based sustainable development took place. That was a great challenge, which those preparing for the conference on financing for development must take very seriously.

RICHARD T. DOGANI (United Republic of Tanzania), speaking also on behalf of Kenya and Uganda, said that the report of the working group gave direction on how to proceed on the subject of financing for development, and the important points it raised should be built upon. The benefits of globalization were not equitable. Many developing countries, especially in Africa, had been marginalized and left behind in the process. Despite the structural adjustment programmes undertaken, African economies remained among the poorest in the world economy. Lack of access to credit and external debt servicing were just some of the issues that had contributed to problems in financing for development. The ODA was the traditional form of financing in the continent. However, levels had been declining in recent years. That trend must be reversed.

The twin processes of globalization and trade liberalization had had a profound impact on the East African economies. He hoped that the WTO ministerial meeting in Seattle and the United Nations Conference on Trade and Development (UNCTAD X) would adequately address the inequalities in the current international trade regime. Many international financial institutions had been long associated with financing for development. However, their credibility had begun to be questioned and their vulnerabilities exposed in the wake of the recent financial crises. It was now necessary to consider reform of the international financial institutions to make them more favourable to the development needs of the developing countries. The United Nations had a vital role to play and should continue to coordinate such bodies as the Bretton Woods institutions and the regional commissions. As for the final event, it should be at the highest possible level so as to generate the political will necessary for its success. He called for the early convening of a preparatory group to organize the event.

EDUARDO GALVEZ (Chile) said that the preparation of the high-level event was of great importance. Decisions on the procedures and mechanisms needed to make progress on organizing the event had to be taken now. The preparatory process should also be of a high-level nature, with the working group's report serving as a guide for its decisions. Success required the establishment of a clear and precise agenda before the beginning of substantive discussions. Establishing a preparatory committee should be the first priority.

As soon as the preparatory committee was in place, he continued, it must begin work along the lines set out in the Working Group report. It should also actively seek formulas to insure that the preparatory process was a high-level event. The scope of the event's agenda was clearly laid down in the report. It was up to the Assembly to make the recommendations in the report feasible.

OLE PETER KOLBY (Norway) said it was both timely and necessary to bring together all relevant stakeholders to examine how to make more effective use of existing and emerging sources of financing for development. The approach to the issue of financing for development must be broad-based and flexible in terms of instruments to be used. The high-level event should examine the range of existing and potential sources of financing for development, such as mobilization of domestic resources, ODA, external debt, international private capital flows, the role of trade in financing for development and innovative sources of financing.

The focus, he continued, should be on the needs and development strategies of each country. While Norway believed that a broad approach to financing for development was needed, that should not lead to any reduced emphasis on the importance of increasing overall ODA levels. The ODA would continue to remain an important source of reliable development financing over time, particularly for countries and sectors where attracting increased private-sector investment was more difficult. It was necessary to discuss how to make ODA more effective. For the high-level event to be successful, it was vital to draw the attention and participation of key ministers, the private sector and other relevant stakeholders, as well as multilateral institutions.

ALFONSO VALDIVIESO (Colombia) said that the objectives of the high-level event were still unclear. Was the aim to define a role for the United Nations in financing for development? To create a long-standing relationship with the Bretton Woods institutions and the private sector? Or was it to achieve an integral analysis of the subject from a conceptual point of view? The need for clarity on those matters demanded its consideration in the preparatory process. The participation of the private sector had not been clearly established. It, too, should be part of the preparatory process. The private sector was one of the key players in financing for development on the international level.

The first session of the preparatory body should elect the bureau, so that substantive discussions could begin by defining, with the participation of the other stakeholders, the nature of the final event, the objectives, the agenda and other important matters. It was also crucial that the regional commissions and banking institutions be allowed to participate actively from the beginning of the preparatory process. High-level technical experts should be involved from the beginning of the discussions as well. That would lead to a more accurate definition of the objectives, issues and agenda of the event.

SONIA LEONCE-CARRYL (Saint Lucia) said that her country supported a high- level event that would address national, international and systemic issues relating to financing for development, in a holistic manner and in the context of globalization and interdependence. She also supported the active involvement of all relevant stakeholders of the monetary, financial and trading systems that contributed to the financing of development, including the WTO, World Bank and the International Monetary Fund (IMF). Special attention should be given to the needs of vulnerable groups of States, including small vulnerable economies and small island developing States like Saint Lucia. She favoured an event held under the auspices of the United Nations, and did not support co-sponsorship by the World Bank. While the event could consider the financing of the implementation of United Nations conferences, that should not be the focus or outcome of the event. Saint Lucia looked forward to the convening of the preparatory process, so that a more comprehensive discussion of the report could begin to refine and finalize the scope, agenda and form of the event.

SHEN GUOFANG (China) said that consideration of financing for development should be complete and thorough. In order to realize development, a country must rely mainly on its domestic financial resources, and work to create a favourable domestic environment to attract foreign investment. Without strong support from the outside, however, domestic efforts by developing countries alone would not be sufficient to extricate them from their current situation.

With the development of globalization, private capital was playing a more and more important role in financing for development, she said. However, profit-driven private capital hardly entered the field of development. More often than not, by its speculative and volatile nature, it dealt heavy blows to countries that were able to attract foreign investments. Therefore, it was all the more important that effective measures be taken to channel private capital into the field of development, and that the international financial market be made to operate safely and in orderly fashion by the reform and improvement the existing international financial system. Discussion of financing for development should focus on “intergovernmental international cooperation”, and aim at mobilizing the political will to solve the real problem of financing shortages faced by developing countries.

MARTIN RAKOTONAIVO (Madagascar) said that the event must adopt an integrated approach to the fundamental elements of international economic cooperation, in the context of globalization and interdependence, the goal being to mobilize the necessary financial resources for sustainable development. On the national level, favourable conditions must be created for the mobilization of internal resources. For that purpose, his country had set up a privatization fund covering Malagasy employers in privatized companies and also covering those victimized by privatization. The creation of a stock exchange was also an innovative instrument in the guest for development.

Issues to be considered in devising policies for financing for development should include: ODA, problems of external debt within the context of authentic international cooperation, foreign direct investment and financing for trade. African countries were in particularly urgent need of attention. Development financing needs there were more acute than ever. Reform of the international monetary and trade systems should also be an integral concern of the high-level meeting, he said.

ALEXANDRU NICULESCU (Romania) said that mobilizing both domestic and international resources and creating a supportive international environment were essential prerequisites for succeeding in efforts to consolidate a market economy responsive to social demands, and integrating it into the global economic system. He acknowledged the importance of an inclusive and continuing preparatory process for the high-level event, which would increase awareness and build international support and participation, while it deepened the substantive content of the final event. Further substantive work should be undertaken in the preparatory process to select shared priorities in a pragmatic way. There should be flexibility, for example, in devising an innovative format for the final event, which could be co- sponsored by the United Nations and the World Bank. He also underlined the importance of using the expertise of other relevant institutions and players. The Bretton Woods institutions, particularly the World Bank, should be involved as active partners, both in the preparatory process and in the final event.

P. NARANGUA (Mongolia) said that land-locked developing countries continued to require more financial resources for their development, especially in developing transit transport infrastructure. For those countries, trade was one of the most important instruments of growth and development. However, they spent twice as much on average of their export earnings for the payment of transport and insurance services than developing countries. Solving the needs and problems of those countries would benefit not only the land-locked developing countries themselves, but also other countries and international trade in general. She attached great importance to the draft resolution on specific actions related to the particular needs and problems of those countries, to be adopted at the Committee’s current session.

Reform of the international financial architecture should focus on developing financial standards and codes of good practice, seeking greater cooperation with regard to financial-sector supervision, improving emergency assistance and the role of foreign private investors and creditors. In addition, it should develop early warning systems and aim to reduce uncertainty about countries and financial markets, through greater transparency and more through complete and prompter provision of relevant information. Better coordination was needed among existing multilateral organizations. Also, key international institutions and national authorities involved in financial sector stability should be brought together to cooperate on policies to reduce systemic risk.

RYUICHIRO YAMAZAKI (Japan) said that the process of considering financing for development, scheduled to culminate in a high-level intergovernmental event, could help to set broad policy directions for international development efforts in the twenty-first century. It was impossible to overstate the importance of preparatory work in ensuring the success of the final event. Agreement on a mechanism to prepare the ground for the preparatory process was needed as soon as possible.

Focussing only on the level of resources available for financing for development was not enough, he said. There must also be focus on how those resources were to be used. Involving the private sector in achieving development objectives was important, since the potential of private-capital flows, which already exceeded official flows, had not been fully tapped. The active involvement of the Bretton Woods institutions, both in the final event and in the preparatory process, was crucial if deliberations on financing for development were to be meaningful. Only through the coordinated efforts of the United Nations and the Bretton Woods institutions, taking advantage of each organization’s accumulated expertise, could the common objective of poverty reduction and sustainable development be achieved.

MOHAMMAD ALI ZARIE ZARE (Iran) said that the issue of financing for development was an important element for policy making in the area of macroeconomic policies at the international level. Given the formidable nature of the challenges of financing for development in the globalized economy, it was imperative to address the challenges facing developing countries seeking to finance their development. The developing countries had devised the necessary policies, and made great strides to mobilize financial resources from domestic and external sources, for their sustained economic growth and sustainable development. Nevertheless, the challenges had intensified, and the number of people living in poverty in the developing world was growing.

It was necessary to establish and facilitate a substantive preparatory process, based on the previous successful experiences of past United Nations conferences, and building on the outcome of the working group report. The process should be participatory, transparent and open to all Member States, members of specialized agencies, observers and all other relevant stakeholders. Contributions from regional commissions, regional banks and other regional bodies could be useful. The final event should be a self-standing conference, with the participation of political decision makers at the highest possible level, and should have a clear follow-up mechanism for monitoring, assessing and evaluating the implementation of the outcomes.

KUNZANG C. NAMGUEL (Bhutan) said that major decisions had been taken at global conferences in the 1990s on issues relating to the social and economic sectors. Many of the plans of action that emerged had remained unfulfilled due to paucity of resources, thus further exacerbating poverty. The key to fulfillment of those noble objectives and plans of action was financing for development. It was therefore imperative that a coordinated international effort be made to address the problems faced by the developing countries and to enhance their capacities to play a more active role in the world economy.

Shrinking ODA was a source of great concern to the developing countries, she said. The decline had reached alarming proportions, and had even affected project of the United Nations Development Programme (UNDP) and other United Nations and specialized agencies. Increased private flows of capital, while desirable, could not finance the much-needed investments required for funding programmes in the social sectors. It was in that context that Bhutan looked forward to the proposed conference.

DELMA MIRALLES (Venezuela) acknowledged that progress had been made in the field of financing for development, as was demonstrated by the interest of the international community. The next step was vital: establishment of a substantive preparatory process which included participation at the highest level. It should cover official and private capital flows, as well as public and private foreign debt, and new and innovative sources for financing development. The process would have to involve the active participation of all the relevant organizations of the United Nations system, as well as the Bretton Woods institutions and the WTO. The preparatory process should also provide for participation by the private sector as well as non-governmental organizations s and civil society.

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