HIGH DEBT BURDENS CONTINUE TO BE CRITICAL OBSTACLE TO POVERTY REDUCTION IN MANY DEVELOPING COUNTRIES, SECOND COMMITTEE TOLD
Press Release
GA/EF/2934
HIGH DEBT BURDENS CONTINUE TO BE CRITICAL OBSTACLE TO POVERTY REDUCTION IN MANY DEVELOPING COUNTRIES, SECOND COMMITTEE TOLD
20001026High debt burdens continued to be a critical obstacle to poverty reduction in many developing countries, the representative of Canada told the Second Committee (Economic and Financial) as it met this afternoon to continue its consideration of macroeconomic policy questions.
It was clear that debt payments displaced spending on health, education and other social sectors, she said. Canada had been a strong supporter of the Heavily Indebted Poor Countries (HIPC) Debt Initiative since its inception and had worked hard to establish a consensus to offer deeper and earlier debt relief to more countries. Eleven countries had reached their decision point under the enhanced HIPC Initiative and were receiving relief, while nine more countries could reach their decision points by the end of the year.
Zambia, as a heavily indebted poor country, was currently being considered for the enhanced HIPC Initiative for supplementary debt relief from both bilateral and multilateral creditors, that countrys representative said. Access to the enhanced HIPC Initiative would enable Zambia to benefit from a significant reduction in debt. He recommended that the conditions for accessing the Initiative be more flexible, that its procedures be simplified and that the period for accessing it be reduced. The savings from debt reduction or cancellation would no doubt go a long way in enabling the country to achieve some of its objectives.
Several years ago, Poland had benefited from an important reduction in the level of its external debt, that countrys representative said. That measure had significantly contributed to the successful transformation of Polands economy. Without an adequate programme of debt relief, there would not be a real economic take-off of the poorest countries. Poland felt a moral obligation to demonstrate solidarity and join the HIPC Initiative to strive for significant debt reductions for the poorest heavily indebted countries. It was a considerable effort that amounted to $240 million.
The observer for Switzerland said that the foreign debt of many countries had become an unbearable burden for them and a serious impediment to their development. In 1991, Switzerland had launched a programme for bilateral debt relief, in order to reduce the debt of countries engaged in reform and create a link between debt relief and investment in the social sector. Her Government had erased almost all debt related to the poorest countries. The resources freed from debt servicing should be applied to areas such as health and education.
Second Committee - 1a - Press Release GA/EF/2934 27th Meeting (PM) 26 October 2000Togos representative said that the question of the external debt of Africa had always been a major concern for African leaders. Economic and social development on the continent required the elimination of all obstacles to development, including external debt. The international community should be encouraged to take more courageous measures, such as the pure and simple cancellation of debt of African countries. The question of external debt was urgent.
Also this afternoon, the representative of Nigeria, on behalf of the Group of 77 developing countries and China, introduced two draft resolutions related to sustainable development and international economic cooperation, and two draft resolutions related to environment and sustainable development.
Statements were also made by the representatives of Belarus, Philippines, Australia, China, Japan, Ethiopia, Yemen, Democratic Peoples Republic of Korea, Ecuador, United Republic of Tanzania (on behalf of the Southern African Development Community), Kazakhstan and Fiji.
The Committee will meet again on Friday, 27 October, at 10 a.m. to continue its consideration of macroeconomic policy questions.
Second Committee - 3 - Press Release GA/EF/2934 27th Meeting (PM) 26 October 2000
Committee Work Programme
The Second Committee (Economic and Financial) met this afternoon to continue its consideration of trade and development, commodities, and external debt crisis and development. (For background on related documents, please see Press Release GA/EF/2933 issued this morning.) The Committee was also expected to hear the introduction of four draft resolutions sponsored by Nigeria, on behalf of the Group of 77 developing countries and China.
The Committee had before it a draft resolution on the scope to be covered by the special session of the General Assembly on the overall review and appraisal of the implementation of the outcome of the United Nations Conference for Human Settlements (Habitat II) (document A/C.2/55/L.12).
The draft would have the Assembly take actions with regard to the following areas: arrangements regarding participation of Habitat Agenda partners in the special session; arrangements regarding accreditation of Habitat Agenda partners to the special session; action at the local, national, and regional levels, partnership and the role of civil society, monitoring and assessment; and international cooperation.
With regard to action at the local, national and regional levels, the draft would have the Assembly call upon all States to strengthen broad-based, participatory, gender-balanced national habitat committees or similar consultative mechanisms to review and report on local and national plans of action. It would have the Assembly urge the regional commissions within their mandates and in cooperation with the United Nations Centre for Human Settlements (Habitat), to organize one consultation in each region and request that each regional consultation produce a report for the consideration of the preparatory committee at its second session.
The text on preparations for the special session of the General Assembly for an overall review and appraisal of the implementation of the outcome of the United Nations Conference on Human Settlements (Habitat II) (document A/C.2/55/L.13) would have the Assembly decide that the special session shall be held from 6 to 8 June 2001 at United Nations Headquarters. It would also have the Assembly decide that the provisional agenda shall include the following items: review and appraisal of progress made in the implementation of the Habitat Agenda; further actions and initiatives for overcoming obstacles to the implementation of the Habitat Agenda; and a declaration on cities and human settlements in the new millennium.
Further, the draft would have the Assembly decide to defray the cost of the participation of one governmental representative from each least developed country in the meetings of the preparatory committee and the special session itself through the use of extrabudgetary resources and, in the event that those resources prove to be insufficient, request the Secretary-General to consider all other options.
A text on implementation of the United Nations Convention to Combat Desertification in Those Countries Experiencing Serious Drought and/or Desertification, particularly in Africa (document A/C.2/55/L.14) would have the Assembly call on Governments, particularly developed countries and the donor community, to enhance their financial support to the Global Mechanism to enable it to promote the effective implementation of the Convention. The Assembly would also call on the Global Environmental Facility to enhance its ongoing support for land degradation activities in developing countries.
Further, the Assembly would urge all parties to the Convention that have not already done so to pay promptly and in full their contributions to the core budget of the Convention, so as to ensure continuity in the cash flow required to finance the ongoing work of the Conference of the Parties, the subsidiary bodies, the secretariat and the Global Mechanism. It would also urge Governments, multilateral financial institutions, regional development banks, regional economic integration organizations and all other interested organizations, as well as non-governmental organizations and the private sector, to contribute generously to the General Fund, the Supplementary Fund and the Special Fund, in accordance with the relevant paragraphs of the financial rules of the Conference of the Parties.
Another text, on the ten-year review of progress achieved in the implementation of the outcome of the United Nations Conference on Environment and Development (UNCED) (document A/C.2/55/L.15), would have the Assembly decide, among other things, to organize the review in 2002 at the summit level and to hold it outside United Nations Headquarters in a developing country, and welcome the offers by Indonesia and South Africa to host the summit.
The Assembly would also decide that the review should focus on areas where further efforts were needed to implement Agenda 21 - the plan of action adopted at UNCED -- and should result in action-oriented decisions and renewed political commitment and support for sustainable development consistent with the principle of common but differentiated responsibilities. Further, the Assembly would decide that the meetings of the tenth session of the Commission on Sustainable Development shall be transformed into an open-ended preparatory committee for the event.
Statements
ANDREI POPOV (Belarus) said that the creation of a more universal, just and transparent international trading system was a strategic goal for the international community. The lessons of Seattle and the results of Bangkok showed that fairness should have greater priority in the multilateral trading system. Yet, the application of protectionist discriminatory measures could still be seen with regard to goods and services. He shared the concern expressed by a number of delegations with respect to the attempts to impose protectionism under the guise of ecological and labour standards. The United Nations must be more effective in reacting to the use of any unilateral measures of coercion.
The question of greater integration into the world economy was acute for many countries with economies in transition, he said. Currently, many of them had been able to make use of trade liberalization and had attained rapid growth. However, there was still the problem of reciprocity with regard to access to domestic markets, which had political overtones. The reality was that transition countries were opening up their markets to the goods and services of developed countries, but that was not reciprocated on the part of the developed countries. The principles of fairness and graduality should be applied in the integration of developing countries and countries with economies in transition into the multilateral trade system and with regard to their accession into the World Trade Organization (WTO).
The WTO member States could demonstrate greater flexibility in a number of areas, he said. The organizations negotiating process with regard to accession should be seen as a means of supporting reforms in a candidate country. The indisputable success of UNCTAD X showed that it was the forum in which a new paradigm for social and economic development could be formed.
GLENN CORPIN (Philippines) said that in considering the question of external debt and development, his delegation wished to contribute three points. First, it was clear that the international community was working in an environment of globalization and greater interdependence. Second, debt relief should not come at the expense of official development assistance (ODA). His delegation believed that both ODA and debt relief needed to be complementary tools in the pursuit of an integrated development agenda. Finally, the best way to prevent debt crisis in the first place was to minimize the amount of debt incurred.
The Philippines was encouraged by the progress made in convening the high- level event on financing for development in 2001, he said. This event was central to the development work of the United Nations. His delegation wished to highlight the importance of devising concrete ways to enhance access to international resources and to enhance the coherence and consistency of the international monetary, financial and trading systems in support of development.
OSITADINMA ANAEDU (Nigeria), speaking on behalf of the Group of 77 developing countries and China, introduced the text on the scope to be covered by the Assemblys special session on the overall review and appraisal of the implementation of the outcome of the United Nations Conference on Human Settlements (Habitat II).
He then introduced the text on preparations for the special session.
Next, he introduced the text on the 10-year review of progress achieved in the implementation of the outcome of the United Nations Conference on Environment and Development.
Lastly, he introduced the text on the implementation of the United Nations Convention to Combat Desertification in Those Countries Experiencing Serious Drought and/or Desertification, particularly in Africa.
ALAN FERGUSON (Australia), on behalf of the Cairns Group of 18 agricultural fair trading countries, said that the Group continued to be deeply concerned with the fact that world agricultural and agri-food markets remained highly distorted by export subsidies, huge levels of domestic support and severely restricted access to markets. This situation persists, despite important achievements in developing international disciplines on international trade in agriculture through the Uruguay Round of multilateral trade negotiations. Fundamental reform of world agriculture and agri-food markets was necessary to ensure sustained improvements in the well-being of all the world's people. This was both a political and a moral responsibility.
The Cairns Group welcomed the start of the mandated WTO agriculture negotiations, he said. The Group had submitted negotiating proposals, which covered the elimination of export subsidies and major reductions leading to the elimination of trade-distorting domestic subsidies. It encouraged other WTO members who had not done so, to submit reform proposals as soon as possible and to begin preparing for the second stage of the negotiations from March 2001. The Group welcomed the significant role played by developing countries in the WTO agriculture negotiations and the growing recognition that achieving agriculture reform was essential for eradicating poverty.
ARIANE WALDVOGEL, Observer for Switzerland, said that the foreign debt of many countries had become an unbearable burden for them and a serious impediment to their development. In 1991, Switzerland had launched a programme for bilateral debt relief, in order to reduce the debt of countries engaged in reform and create a link between debt relief and investment in the social sector. Her Government had erased almost all debt related to the poorest countries. It supported the Heavily Indebted Poor Countries (HIPC) Debt Initiative and had tried to improve coordination among countries participating in that Initiative.
Switzerland supported efforts to establish close links between the Initiative and the fight against poverty. The resources freed from debt servicing should be applied to areas such as health and education. Only dialogue between government and civil society would assure the effective allocation of resources. The success of the HIPC Initiative would determine the future economic development of the poorest countries.
ARTUR KLOPOTOWSKI (Poland) said that several years ago Poland had benefited from an important reduction in the level of its external debt. That measure had significantly contributed to the successful transformation of Polands economy. Because of the profound negative consequences of external debt crisis on economic growth for the poorest countries, debt relief must be one of the pillars of global solidarity for development and eradication of poverty. The HIPC Initiative could have a very beneficial impact on the development of poor countries. However, to be successful, it must be properly managed.
Certainly, the core of the matter remained to assess whether the very poor countries involved had a chance to gain access to capital markets and to new outlets for their commodities, he said. New financing seemed to be a necessary compliment to debt relief, in order to accelerate economic growth in highly indebted poor countries. Without an adequate programme of debt relief, there would not be a real economic take-off of the poorest countries. Poland felt a moral obligation to demonstrate solidarity and join the HIPC initiative to strive for significant debt reductions for heavily indebted poorest countries. It was a considerable effort that amounted to $240 million.
HUANG XUEQUI (China) said that, regrettably, globalization was uneven and inequitable. In spite of the prosperity enjoyed by developed countries, developing countries were confronted by formidable challenges presented by globalization. So far, many developing countries had not achieved the expected results, and many least developed countries had faced marginalization. The multilateral trade system was the primary tool in facilitating globalization. However, the interests of developing countries were not represented in the Uruguay round of trade talks. The unbalanced implementation of the Uruguay round was not in the best interests of the developing countries. The multilateral trade system must be reformed expeditiously.
The WTO meeting in Seattle and UNCTAD X in Bangkok had sent a signal to the international community that with the deepening of globalization, the interdependence among States was increasing, he said. Developed and developing countries needed more effective means to continue cooperation and dialogue to reform the international trade system. He hoped that the developing countries would play a bigger role in establishing a new international trade system. He appealed to the developed countries to adopt feasible and practical measures to ensure that products from the least developed countries were duty and quota free, to improve official development assistance, provide technical assistance, increase investment and reduce debt.
For the past 20 years, China had been actively promoting its opening up and liberalization process, he added. Its application for WTO membership was part of that process. Once it became a member, it would play a constructive role in formulating new rules for the new multilateral trade system.
ROLAND Y. KPOTSRA (Togo) said it had been acknowledged that poverty was one of the major problems that the international community would have to deal with in this century. In order to reduce by half the level of poverty by 2015, the number of people living in poverty would have to be reduced by 4 per cent every year. How would that be possible when three to five times the resources spent on development went to external debt? The ratio of debt to exports had exceeded 200 per cent in 1998. The meeting in Cairo of heads of State and governments had recognized that Africa had less access to private capital markets, and that it had undergone a loss of confidence with its investors.
The question of the external debt of Africa had always been a major concern for African leaders, he said. Economic and social development on the continent required the elimination of all obstacles to development, including external debt. The international community should be encouraged to take more courageous measures, such as the pure and simple cancellation of debt of African countries. Although it was encouraging that nine countries had been selected for the HIPC Initiative, it was obvious that much more was needed in that regard. The question of external debt was urgent. Togo waited with impatience for the high-level meeting on financing for development, which would allow the international community to tackle problems that were raised by the debt of developing countries.
YUJI KUMAMARU (Japan) said that the current deflated prices of commodities were causing a decrease in real income for those developing countries that were largely dependent on commodities. It was necessary to continue efforts to provide support to those countries , so that they might be able to participate in the rapid and accurate exchange of information concerning the commodity market, as other countries did. That effort should have among its objectives diversifying commodity products, as well as strengthening processing capacity. Japan, as one of the largest importers of commodities, was determined to continue to support the Common Fund for Commodities, which should assist capacity-building in the markets of developing countries. It was also providing financial support for the projects implemented by UNCTAD since 1996, aimed at diversification of commodity products of countries strongly dependent on commodity exports.
He said that, in and of itself, debt was not disadvantageous. Developing countries could obtain far greater resources in the form of concessional loans than in the form of grant assistance. Concessional loans made it possible for developing countries to improve their economic infrastructure, which, in turn, attracted private financial inflows. That was an effective way for them to boost economic growth. On the other hand, debt relief was needed for those poor countries whose debt had reached an unsustainable level. Hence, the international community should concentrate on effective and speedy implementation of the enhanced HIPC Initiative.
AZANAW T. ABREHA (Ethiopia) said that the international community had long recognized the need for mobilization and effective deployment of financial resources to the African continent, so that poverty would be reduced and the overall living standard of the population would be improved. In reality, the situation did not tally well. The debt-servicing burden, lack or skewed distribution of foreign direct investment, a perennial loss in terms of trade, and a decline in ODA had all worked against the expectations of external resource mobilization for Africas development.
The international community had, over the past decades, designed various strategies for the alleviation of the debt burden of the developing countries, he said. While his delegation welcomed the enhanced HIPC initiative, it strongly believed that the initiative needed further measures that took into account the link between the resources these countries would retain and the challenges they faced with regard to poverty eradication. Another important source of external financing for developing countries was ODA. His delegation called upon its development partners to reverse the decline of global ODA.
Ethiopia believed that export diversification and removal of the supply side constraint of the developing countries and market access were areas that needed international cooperation. The international community had the means and the wherewithal to achieve these objectives. What was missing was the political will.
AHMED A. AL-HADDAD (Yemen) said that, following the Seattle Ministerial Meeting of the WTO, it had been realized that it was up to everyone to deal with the macroeconomic policy of the Organization. There was an urgent need to respond to the concerns of developing countries. The main concern of developing countries had to do with the fact that the gains of the international trade system were not available to them. Their inability to benefit was due partly to the fact that some partners refused to meet their obligations.
Developing countries had always reaffirmed that it was necessary to integrate the agricultural sector into the areas covered by WTO rules, he said. As for the least developed countries, it was necessary for their exports to get into international markets without quotas and customs duties. The concept of special treatment must be strengthened, as it was the best way to reflect the changing realities of trade and international production.
He praised the efforts by the Secretary-General of UNCTAD to strengthen the capacity of developing countries to negotiate to protect their own interests in international trade negotiations. Yemen was one of nine least developed countries which were preparing to become members of the WTO. It was making every effort to fulfil the requirements for membership. At the same time, one of its concerns in becoming a member was having to give up special treatment.
RIM SONG CHOL (Democratic Peoples Republic of Korea) said that the external debt crisis in developing countries constituted one of the major obstacles in their efforts to eradicate poverty and accelerate sustainable development. In accordance with the agreement of the Group of Eight industrialized countries summit held last year in Cologne, a number of creditors of the Paris Club were taking substantial measures to reduce the debts of the developing countries, which encouraged them in their efforts to speed up economic development and eradicate poverty.
Such debt relief measures must go towards drastically reducing or canceling debts in the majority of developing countries and further creating favourable conditions for the developing countries to establish their own industries, he said. Furthermore, no strings should be attached to debt reduction or cancellation.
FERNANDO YEPEZ LASSO (Ecuador), speaking on behalf of the Andean Community, said that the firm political will of its people and governments had fostered the consolidation of the Andean integration process and its growing international projection. There was now a free trade area among the four member countries, and Peru would fully join this in 2005. In the field of foreign relations, the Andean Community had advanced considerably in designing a common foreign policy that included joint negotiations in economic and trade issues, as well as political consensus and achievements within international forums.
The Community had outlined with the European Union an interrelation based on political dialogue, preferential access to European markets, cooperation for development, and the fight against drug trafficking. The Andean countries were willing to further strengthen these bonds for the negotiations of an eventual association agreement. The possibility of further strengthening relations between the Andean Community and the Russian Federation, as well as the Pacific Basin and China, were equally positive. The Community supported holding a new round of multilateral negotiations without excluding any sectors.
DAUDI N. MWAKAWAGO (United Republic of Tanzania), speaking on behalf of the Southern African Development Community (SADC), said that as Africa, particularly SADC countries, moved towards fully implementing the WTO rules on commodities, it was necessary that a package of financial and technical assistance be instituted to assist them in building capacity and improving their trade performance. At the same time, a higher level of cooperation would enable the countries of the region to more effectively address problems on national development and to cope with the challenges posed by a changing and increasingly complex regional and global business environment.
In recognition of those facts, the SADC Protocol on trade had been negotiated and concluded, he said. The Protocol provided for the gradual establishment of a SADC Free Trade Area over a period of eight years. Since its elaboration, members had been preoccupied with intensive negotiations for tariff liberalization and special arrangements that should be observed to ensure beneficial participation for each member. By August 2000, agreement had been reached on a set of tariff liberalization schedules, which committed members to liberalize their trade by at least 85 per cent by the year 2008 and by 100 per cent by the year 2012, with some least developed countries given more time to implement the schedules.
He called on the international community to seriously address the decline in commodity prices. Commodity prices of developing countries should be stabilized and commodity-producing countries should be assisted in their efforts to diversify the commodities produced. Also, all forms of tariffs on commodities of export interest to developing countries should be removed and all technical barriers to exports of developing countries abolished. He urged developed countries to increase their contributions to the Common Fund for Commodities to enable it to work more effectively and efficiently towards assisting developing countries.
MADINA B. JARBUSSYNOVA (Kazakhstan) said that her country continued to give priority attention to the development of a transit-transport system in the landlocked States in Central Asia. By reason of their special geographical location, the landlocked States in Central Asia faced an acute problem of access to world transport routes. Today, trade to or through Central Asia was hampered by prohibitive transport costs. In many cases, these made up to 60 per cent of the value of manufactured imports. This was a very heavy burden for the landlocked States and their transit developing neighbours.
Kazakhstan was currently focused on shaping an optimal transport network that would eventually be integrated into the world system, she said. In that regard, her delegation viewed the work of UNCTAD as an important part of the United Nations effort aimed at promoting the integration of the countries of the Central Asian region into the world economy. The basic problems of the landlocked States in Central Asia would be a subject of discussion at various international forums. Kazakhstan hoped cooperation with donor countries and international organizations for the purpose of improving the current transit environment in Central Asia would be mutually beneficial.
AMENATAVE YAUVOLI (Fiji) said that developing countries needed adequate timeframes to adjust and diversify, with special and targeted development and financial assistance to sustain the cost of those adjustments. Experience had indicated that adjustment to broaden the economic base was a painful process, which deserved focused and committed attention from the developed world and its multilateral agencies.
If those vital issues were not recognized nor factored into future negotiations, he said, it could result in social dislocations, such as increases in unemployment, poverty and hunger, which might trigger political instability and prolong hardships for people. The short-term pains would never transform into long-term gains. He urged the United Nations system, Member States and the donor community to further support the socio-economic development needs of developing countries and to provide effective assistance to mitigate the costs of those adjustments. Only then could the gradual integration of those countries into the global economy be effected.
GINETTE LACHANCE (Canada) said that high debt burdens continued to be a critical obstacle to poverty reduction in many developing countries. Debt payments displaced spending on health, education and other social sectors. Canada had been a strong supporter of the HIPC Initiative since its inception and had worked hard to establish a consensus to offer deeper and earlier debt relief to more countries. Eleven countries had reached their decision point under the enhanced HIPC Initiative and were receiving relief, while nine more countries could reach their decision points by the end of the year.
When Canada had agreed to the HIPC enhancements last year, it was agreeing to put the Poverty Reduction Strategy Papers at the heart of the process. The experience to date made it clear that the development of a comprehensive, broad- based strategy was tremendously complicated and time consuming. It was important to be more flexible in linking poverty reduction strategies to debt relief, particularly if the country had a solid track record of implementing economic and social policies. Canada had long been an advocate of debt relief for the poorest countries, and it would continue to work towards removing heavy debt burdens.
MWELWA C. MUSAMBACHIME (Zambia) said that as long as external debt for the poorest developing countries remained at unmanageable levels, the objective of reducing poverty, improving the delivery of social services and achieving sustainable economic development would remain a mirage. In an attempt to improve the delivery of social services, his Government had committed itself to increasing the national budget expenditure in the social sectors. Zambias objectives of reducing poverty, improving the delivery of social services, addressing the HIV/AIDS pandemic and stimulating economic growth would be difficult to achieve if the countrys external debt was not drastically reduced
or completely cancelled. The savings from debt reduction or cancellation would no doubt go a long way in enabling the country to achieve some of its objectives.
In an effort to reduce the debt burden, Zambia, as a highly indebted poor country, was currently being considered for the enhanced HIPC Initiative for supplementary debt relief from both bilateral and multilateral creditors, he said. Access to the enhanced HIPC Initiative would enable Zambia to benefit from a significant reduction in debt. He recommended that the conditions for accessing the Initiative be more flexible, its procedures simplified and the period for accessing it reduced.
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