Preparatory Committee for the

High-level International

 Intergovernmental Event on

 Financing for Development

5^th Meeting (PM)

PREPARATORY COMMITTEE FOR DEVELOPMENT FINANCING EVENT CONCLUDES SESSION;

RECOMMENDS EVENT BE HELD AS INTERNATIONAL CONFERENCE HOSTED BY MEXICO

The high level intergovernmental event on financing for development, scheduled for early next year, will take the form of an international conference under United Nations auspices by a decision of the General Assembly, according to a draft resolution adopted by the Preparatory Committee on the event as it concluded its second session on the evening of Friday, 23 February.

By terms of the text, the conference will be at the highest political level, including a segment at the summit level.  The General Assembly would accept with gratitude the generous offer of Mexico to host the conference -- to be known as the International Conference on Financing for Development -- on the understanding that its specific timing and location would be announced by Mexico during the third session of the Preparatory Committee.

The Assembly would also decide that the third session be in two parts:  2 to 8 May; and a full week in October/November 2001 (a firm date will be decided later).

In another action this evening, the Preparatory Committee for the High-Level International Intergovernmental Event, as the Committee is formally called, approved a draft provisional agenda for its third session, as well as the report of its second session introduced by Hazem Fahmy (Egypt), the Rapporteur. 

By the draft resolution, the General Assembly would invite governments to submit to the coordinating secretariat of the conference, not later than 15 April, possible initiatives or themes to be made available to the third session of the Preparatory Committee.

The Assembly would decide that the third session, in its first week, would consider in greater depth the issues contained in a working paper prepared by its facilitator, taking into account all inputs submitted at its second session.  At the second week of the third session, it would consider a concise first draft prepared by the facilitator, reflecting the progress made at the first week of the Committee, taking into account all other inputs received by the Committee thereafter.

The Bureau would be requested to explore ways and means for deepening the efforts of all relevant stakeholders, including at the regional level, as well as by civil society and the private sector in support of the preparatory process.  It

was to submit proposals on that for consideration by the Preparatory Committee.  The Preparatory Committee decided to hold an intersessional meeting to decide on the mode of participation of the business sector in its third session.

Mauricio Escanero (Mexico), the facilitator of the Committee’s informal consultations, said that his country was very happy to serve as host of the upcoming Conference.  He hoped the offer would raise political awareness to the development financing issue and draw the participation at the highest level of ministers of finance, commerce and trade.

In a concluding statement, Committee Co-Chairman Jorgen Bojer (Denmark) said the Preparatory Committee had achieved the goals that had been set out at the beginning of the session.  Active participation by delegations spoke to the broad commitment to accelerate the development financing process.  It was easy to see that delegations were seeking to find a common ground on international development financing issues that were ripening for collective action.

Bagher Asadi (Iran), on behalf of the “Group of 77” developing countries and China, said every effort should be made by all in a constructive spirit to ensure a successful outcome of the process.  The adoption of the draft resolution was a great achievement, and the statements of the co-chairs were a valuable input to the process.

Ruth Jacoby (Sweden), on behalf of the European Union , associated herself with the remarks of the representative of Iran.

Committee Co-Chairman Jorgen Bojer, along with Co-Chairman Asda Jayanama (Thailand), gave brief summaries of the Committee's review of the inputs to the substantive preparatory process and the upcoming High-level Event.

Action on Texts

MAURICIO ESCANERO (Mexico), the facilitator of the Committee’s informal consultations, said those consultations had been successfully completed and members had reached consensus on a draft text which the Committee would recommend for adoption to the General Assembly.  He read out several technical changes to the text.  He was pleased with the overall result and hoped that Committee members would continue to work together to reach consensus during the run-up to the Conference.

The Committee adopted the draft text.

After the text was adopted, RUTH JACOBY (Sweden), speaking on behalf of the European Union, thanked Committee members and looked forward to continued success as the preparatory process moved forward.

JOHN DAVISON (United States) said his delegation disassociated itself from the consensus on the draft.  It had hoped that the High-level Event would be held as a United Nations General Assembly special session in New York.  He said current United States legislation did not provide funding or payment of fees for United Nations conferences held in other locations.  That was not a reflection of disapproval of either Kenya or Mexico.  [Earlier in the session, Kenya reiterated its offer to host the Conference.]  He reiterated his Government’s strong support for the development financing process and assured the Committee that the United States would continue its participation.

Mr. ESCANERO (Mexico) said that his country was very happy to serve as host of the upcoming High-level Event.  He hoped that offer would raise political awareness to the conference and draw the participation of high ministers of finance, commerce and trade worldwide.  He looked forward to constructive and enriching debates that would lead to positive results for the common good.

BAGHER ASADI (Iran), speaking on behalf of the Group of 77, also thanked the facilitator and Committee members for their flexibility.

The Committee next considered an informal paper containing the draft provisional agenda for the third session of the Preparatory Committee, which it adopted.

Mr. ASADI (Iran) suggested that the title for the Conference should be included in the agenda for the third session now that it had been agreed.

The Committee Rapporteur, HAZEM FAHMY (Egypt), then introduced the draft report of the Committee (document A/AC.257/L.5).  That document contained the procedural chapter of the report and would be further updated to include today’s proceedings following the closure of the session.

The Committee then adopted the draft report.

The representatives of Ireland, Portugal, Mexico and Pakistan requested that their States be included in the provisional list of participants in the preparatory session.  The representative of Australia requested that the names of Tonga and Fiji should also be included.

Concluding Statements

Co-Chairman JORGEN BOJER (Denmark) believed that the Preparatory Committee had achieved the goals that had been set out at the beginning of its second session.  The active participation by delegations spoke to their broad commitment to accelerating development.  He hoped such commitment would continue at the third preparatory session.  He noted with pleasure that Mexico would be hosting the Conference.  He noted that the report of the Secretary-General on development financing had anchored the Committees discussions.  The report had broken new ground and proved to be an invaluable tool, as it included unprecedented cooperation between United Nations agencies and high-level intergovernmental institutions dedicated to the financing for development process.

He was also pleased to note that the Committee’s general debate had revealed broad agreement with the general thrust of the report.  The five regional consultations and hearings with civil society had been particularly enriching exercises.  The high quality of those inputs, as well as the discussions with the Bretton Woods institutions and the World Trade Organization (WTO), had helped to raise confidence in the development process, as well as the notion that working together to attain international goals on development financing was critical.

He said it was easy to see that delegations were seeking to find a common ground on international development financing issues that were ripening for collective action.  That suited the goals set for the process.  It was important to note that all the Committees discussions should be seen as complementary to those being held on development financing in other forums.  Indeed, they were not an infringement on the mandates of other institutions.  All this had given him great optimism for the outcome of the third preparatory session.

He said that the Committee’s interaction with the International Monetary Fund (IMF), World Bank and the WTO and other intergovernmental organizations and civil society representatives had also been enriching.  Those fruitful discussions were a fitting response to the challenges put forward by the Secretary-General, the General Assembly President, and the President of the Economic and Social Council, among others, at the opening of the session.

He said issues relating to official development assistance (ODA) were discussed by delegations.  Better coordination of ODA was called for.  It was observed that ODA could be used to enhance national capacities, and to close gaps between the North and South in many areas, such as information technology.  Sound economic policies were seen as key requirements in the effective use of ODA.  Greater predictability of ODA flows was suggested, as was South-South cooperation, triangular cooperation and flexibility of aid delivery.  Speakers urged that the needs of landlocked and small island States should be taken care of and support was urged for countries suffering from balance-of-payments problems triggered by volatile situations.

Co-Chairman ASDA JAYANAMA (Thailand) gave a brief summary of the Committee’s consideration of domestic resource mobilization, international private flows, trade and debt.  He noted the very rich and interactive nature of the discussions, and was particularly encouraged by the participation the Bretton Woods institutions and other intergovernmental organizations.  Many delegations stressed that each country had primary responsibility for its development.  They also stressed sound macroeconomic policies, good governance, and increased participation by developing countries in the design of international financial standards and codes.  Overall, the mobilization of development resources was recognized as the main pillar of the process.

He went on to say that many delegations felt that emphasis should be placed on strengthening domestic development policies and how to incorporate international efforts into regional and subregional initiatives.  Delegations also focused much attention on debt reduction, trade liberalization and access to markets by developed countries.  There was further agreement that enhancing national capacity was key.  Most delegations stressed that public finance should constitute a key theme of the final event, as that was an area where action by governments could lead to early results.

Highlighting the dialogue on international private flows, he noted that most delegations felt that such flows should not be seen as a substitute for ODA.  On the other hand, it was also felt that some forms of foreign direct assistance could help fill the domestic investment gaps in some countries.  Under the right conditions, foreign investment could spark economic growth and development. It was clear that technical assistance for institutional capacity building was paramount to make financial flows more development friendly.  It was also felt that while fiscal incentives could be used to spur foreign investment, they should not jeopardize domestic development goals.

He added that debt problems were touched upon and speakers had urged an international strategy to deal with the question in a more comprehensive manner.  Transparency in the operation of the Paris Club of official creditors was also urged.  Governments that were not members of the Paris Club were also urged to contribute to debt rescheduling.  On the Highly Indebted Poor Countries (HIPC) Initiative, appreciation was expressed for debt relief granted by some individual countries.  It was emphasized that resources for underwriting debt relief should not be at the expense of other resources.  Debt cancellation was urged.  Some speakers called for a club of debtors to bargain collectively.  The United Nations was seen by many speakers as facilitator in international development questions.

Highlights of Session

During this session, the Committee focused most of its attention on reviewing the inputs, at all levels, to the substantive preparatory process and the High-level Event thus far.  It also began initial preparation of the outcome of the Event.  The Committee's goal was to lay the groundwork for the historic conference by undertaking a thorough assessment of how the world's financial development needs could be met. 

Opening the session, Secretary-General Kofi Annan said the Committee's work would inaugurate the final stage in a process of vital importance to billions of people.  He urged members to address the broad concerns expressed by world leaders during the Millennium Summit, particularly the obstacles developing countries faced in mobilizing resources needed to finance their sustained development.  The task now was to ensure the commitments made at the Summit were not forgotten and that the means to achieve the Committee's priority goals received high-level support.

To facilitate its deliberations and meet the Secretary-General's challenge, the Committee set a programme of work that mirrored the six themes identified in the Secretary-General's comprehensive report on development financing:  mobilizing domestic financial resources for development; mobilizing international resources for development, including foreign direct investment and other private flows; enhancing trade for financing development; increasing international cooperation for development; confronting external debt challenges; and addressing systemic issues -- including financial architecture reform.

As the session's general debate began, the President of the General Assembly, HARRI HOLKERI (Finland), called the Committee's in-depth examination of each of the report's themes "unprecedented"; indeed, such an examination would highlight the important link between the domestic international levels of decision-making.  The Committee Chairman, also encouraging a holistic and integrated approach, urged stakeholders to harmonize their activities at national and State levels for the benefit of all the world's people.

The theme of broad cooperation in financing for development was echoed by several intergovernmental agencies.  The representative of the World Bank said the notion of a high-level event had emerged at the time when there was a general confluence of international recognition on some of the most critical development issues, including the need for enhancing global poverty reduction strategies and focusing new emphasis on concerted action.  The Committee should, therefore, build on that momentum by identifying key action areas to solve problems that begged for international cooperation.

The representative of the IMF said his agency would work to build the consensus needed to underpin a new and more effective approach to development.  He urged the Committee to structure its deliberations around two crucial pillars of development:  sound domestic economic policies; and external financing.  The representative of the WTO said there was a need for donors, developing countries and all international institutions to address development through operational objectives informed by economic good sense and supported by the highest level of political commitment.

The Committee also heard summaries of intersessional consultations held by the five regional commissions:  Economic Commission for Latin America and the Caribbean (ECLAC); Economic Commission for Africa (ECA); Economic Commission for Europe (ECE); Economic and Social Commission for Asia and the Pacific (ESCAP); and Economic and Social Commission for Western Asia (ESCWA).  Those meetings and their subsequent summaries had been essential to the preparation of the Secretary-General's report.

The Coordinator for the United Nations regional commissions, who also serves as the Executive-Secretary of ECLAC, said while the consultations had been designed to emphasize local and regional inputs, they had also featured contributions by other relevant stakeholders at the regional and subregional levels such as non-governmental organizations, businesses and research institutions.  Representatives of each group identified specific regional needs and presented relevant recommendations to the Committee.

The balance of the Committee's general debate saw consensus emerge on a number of issues, especially on how developing countries could be helped to improve their economies and share in the benefits of globalization.  There was general agreement on the need for institution-building, including good governance, pro-growth policies and the creation of liberalized investment regimes, as well as the opening of markets for the exports of developing countries.

There was also a general understanding that while building sound national frameworks and domestic policies could certainly spark development, it was essential that those measures be complemented by similar efforts at the global level.  Further, while the need for maintaining macroeconomic policies was agreed, some developing countries called for a more realistic consideration of the issue that addressed deepening poverty, falling commodity prices and low savings.

Noting that ODA was declining, developing countries urged the industrialized nations to match national efforts by reaching the United Nations target of 0.7 per cent of gross national product (GNP) for their ODA contributions.  There was also agreement on the need for more equitable foreign direct investment to the developing countries.

Some Committee members, particularly the representatives of countries in the Asian and African regions, called for the development of a new international financial system that could meet the unique needs of developing countries.  Many felt that the "one-size-fits-all" approach of the present system was especially ill-equipped to deal effectively with the complex problems and challenges of globalization.  Indeed, the East Asian financial crisis had exposed major flaws in macroeconomic policies and had proved that even countries with sound economic fundamentals were vulnerable to shocks in the international financial markets.

While not challenging the legitimacy or relevance of the Bretton Woods institutions, some believed the issue now was how to enhance the transparency and accountability of those agencies.  There was also a call to increase the representation of developing countries within those agencies, as well as in their decision-making processes.  There was equal concern expressed, however, that the mandates of international financial institutions be respected.  One representative from the developed world cautioned against using the development financing process as a vehicle for the United Nations to interfere in their governance and decision-making mechanisms.

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