SPECIAL NEEDS AND PROBLEMS OF DEVELOPING COUNTRIES MUST BE CONSIDERED, PREPARATORY COMMITTEE FOR CONFERENCE ON DEVELOPMENT FINANCING TOLD
| Press Release DEV/2301 |
Preparatory Committee for the
High-Level International
Intergovernmental Event on
Financing for Development
2nd Meeting (PM)
SPECIAL NEEDS AND PROBLEMS OF DEVELOPING COUNTRIES MUST BE CONSIDERED,
PREPARATORY COMMITTEE FOR CONFERENCE ON DEVELOPMENT FINANCING TOLD
The special needs and problems of developing countries must be taken into account throughout the preparatory process, a number of countries stressed this afternoon, as the Preparatory Committee for the International Conference on Financing for Development met this afternoon to conclude its general discussion.
The Preparatory Committee began its third session at United Nations Headquarters this morning. The first part of this session is expected to continue until 8 May. The third session has been split into two one-week periods, with the second week scheduled to take place in October or November. The Conference will be held from 18 to 22 March 2002 in Monterrey, Mexico.
The countries of the South should not simply be spectators in the world economy, the Cuban representative said. Full participation of developing countries in decision-making must be ensured. Many countries were unable to generate internally the resources needed to sustain economic growth and meet the problems of human development. Hence, the international community must play an increasingly decisive role in mobilizing resources. It was only through sustained economic growth that poverty could be eradicated and human development achieved.
Speaking on behalf of the land-locked developing countries, the representative of the Lao People's Democratic Republic said that the group hoped that the Preparatory Committee would have sympathy for its cause and afford it special treatment at the Conference. The group's suffering had to do with the transit transport system, which included access to ports and railways. Improvement of the transit transport system was a complex endeavour and required cooperation from the donor community. Action needed to be taken by the World Trade Organization (WTO), the International Monetary Fund (IMF) and the World Bank in order to assist land-locked developing countries to integrate into the global market.
Burundi was committed to creating positive conditions for its development, but the international community must assist it down this road, its representative said. Efforts had to be made to help developing countries finance development. Specific goals must be set for the Conference in order to guarantee a minimum quality of life for all people in the world. A strategy to reduce poverty would have to be worked out, taking into account the specific needs of each country.
2nd Meeting (PM)
The countries that did not have a reliable economic base to finance poverty reduction had to be able to count on external resources to get their development going.
The representative of Barbados, speaking on behalf of the Caribbean Community (CARICOM), said that the Mexico Conference must give greater attention to the special needs and problems of such “micro-States” with small export bases, high production costs and “diseconomies” of scale. Special consideration should also be given to offset the balances inherent in countries like hers -- restricted by small economic size and significantly handicapped in their participation in the global economy. Developing countries needed financial assistance in order to adjust to a liberalized trading environment; small economies needed enhanced access to the markets of major economies, as well as time to assimilate the rapid changes of globalization.
Pakistan's representative said that clearly, development was the shared agenda of all humanity. It required a coherent and consistent effort by all stakeholders to address the issues of poverty eradication, financial flows, trade, debts and systemic issues. Donor countries and international organizations should help developing countries liberalize their trade sectors, and trading partners should liberalize trade in goods and services, particularly in areas which were of interest to developing countries, such as textiles, agriculture and clothing.
Statements were also made by the representatives of the United States, Australia, Russian Federation and Uganda.
The Preparatory Committee for the International Conference on Financing for Development will meet again at a time to be announced.
Background
The Preparatory Committee for the International Conference on Financing for Development met this afternoon to continue its review of the inputs to the substantive preparatory process and the International Conference. For background, see Press Release DEV/2300 issued earlier today.
Statements
JOHN W. DAVISON (United States) said it was time to narrow the focus of the preparations for the Conference. It was clear from their input thus far that the other institutional stakeholders valued the preparatory process. The Committee's relationship with the private sector needed to be formalized. While there was a formula for accreditation of civil society representatives, there was not one for the private sector. A formula must be worked out so that the private sector did not feel that its presence at the Conference was unwanted. The outcome and the format of the Conference would be discussed next week. His delegation looked forward to working towards an outcome that was action-oriented.
ILEIDIS VALIENTE (Cuba) said the issue of development financing had never been more relevant than today, when the world was dealing with the globalization process. The Conference had become a matter of urgency for all and presented an opportunity to propose new actions and initiatives. More than formal commitments, swift, effective and ongoing consistent action was needed to provide a positive answer to global development challenges. Developing countries were unable to generate internally the necessary resources to sustain economic growth and address the problems of human development. Hence, the international community must play an increasingly decisive role in mobilizing resources. It was only through sustained economic growth, backed by policies to enhance human and social development, that poverty could be eradicated and human development achieved.
She said that the donor community should live up to its commitments in the area of official development assistance (ODA). Perhaps a target date could be set for attaining that noble objective. Foreign direct investment also played a very important role, but only a small part went to developing countries and almost nothing to least developed countries. Greater international links were needed between investment and development. The handling of debt had been inadequate and had not resulted in alleviation of the problem. Along with the debtors, the creditors bore the responsibility for finding a solution. They should completely forgive the debt of developing countries and increase financial flows. New kinds of multilateral institutions, which were truly democratic, should also be established, and current institutions should undergo structural reforms. Also, the full participation of developing countries in decision-making must be ensured. The countries of the South should not simply be spectators of the process.
ALOUNKEO KITTIKHOUN (Lao People’s Democratic Republic), speaking on behalf of the landlocked developing countries, said that during the last Preparatory Committee, his Group had voiced its special needs and problems due to its geographical handicap. Its suffering was well known to all. It had to do with the transit and transport, including access to ports and railways. The improvement of transit and transport systems was a complex endeavour and required cooperation from the donor community.
Because of the inefficiency of current systems, landlocked developing States faced high transit transport costs, he said. They spent approximately 18 per cent of their gross domestic product (GDP) on transport, while most developed countries spent less than half this. He was not asking for the world to solve this problem overnight. Instead, he was asking for special treatment for landlocked developing States at the Conference, so that they could compete in the global market. Action must be taken by the World Trade Organization (WTO), the International Monetary Fund (IMF) and the World Bank to assist landlocked developing countries to integrate. His Group would come up with concrete proposals and submit them to the facilitator. He hoped that the Preparatory Committee would have sympathy for the cause of the landlocked developing countries.
JUNE Y. CLARKE (Barbados), speaking on behalf of the Caribbean Community (CARICOM), said that member States of CARICOM were constrained in the global economy by their limited economic space and natural resources, and physical and structural vulnerabilities to natural disasters. Those challenges were exacerbated by the rapid and dynamic changes brought about by globalization, the effects of which were most often reflected in the global trading and economic systems. As a result, countries like hers, already restricted by limitations of small economic size, were significantly handicapped in their participation in the global economy. Special consideration was required to offset those imbalances.
She said that CARICOM hoped the Mexico Conference would highlight the need for a wider range of financial intermediaries for small developing countries, in order to enhance the potential of all market participants. Towards that goal, greater attention should be given to the special needs and problems of micro-States with small export bases, high costs of production and diseconomies of scale. Consideration must be given to the fact that reciprocity, as a concept in a liberalized trade environment, was inimical to the interests of small economies. Developing countries needed financial assistance, as they had particular difficulties in adjusting to a liberalized trading environment. Small economies needed time to assimilate the rapid changes of globalization and often were unable to keep up with them.
The Community and all small island developing States would benefit greatly from transfers of technology and skill, she said. The Conference should also consider reductions of structural deficiencies in financial and capital markets. The oligopolistic nature of commercial banking in developing countries worked against a reduction in lending rates to key sectors, even in an environment of very high liquidity. Thus, significant projects might not be funded. Greater flexibility in the rules of the Washington-based multilateral institutions was also needed. Those institutions had a tendency to rush to graduate middle-income countries with small economies simply on the basis of statistics on per capita income. Small economies needed enhanced access to the markets of major economies.
She said that all countries had a right to participate in the global financial market and must be treated equally. Action with far-reaching consequences for developing countries must be taken, with their full participation. Over the past three years, countries of CARICOM had been among a select group of developing States confronted by international financial initiatives that had tarnished their reputations. If left unchecked, they could retard their developmental progress. The situation had been exacerbated by the fact that action -- which was discriminatory and flawed -- had been taken unilaterally and without prior consultation. The CARICOM members had strong democratic institutions and met their international obligations. They also had strong regulatory frameworks to fight against the scourge of illegal drugs and illegal financial transactions.
Mr. CALLAN (Australia) said that his country agreed with the delegations of the European Union and the United States that the outcome document of the Conference should be action-oriented. The facilitator’s working paper was a good basis for discussion at this stage in the preparatory process. This session should narrow down the themes to be covered at the Conference. The discussion should also address the way in which initiatives, such as round-table discussions or high-level meetings, were to be developed in the lead-up to the Conference. His delegation hoped that the Committee would stake out a clear path for the themes to be discussed at the Conference in Monterrey.
SHAMSHAD AHMAD (Pakistan) said that the meetings yesterday between the Economic and Social Council and the Bretton Woods institutions were a manifestation of the importance that the world attached to the process of development financing. The current session of the Preparatory Committee was taking place in an atmosphere of renewed optimism. The latest note of encouragement was witnessed yesterday during the high-level meetings, where there was unanimous realization of the need to ensure the success of the financing for development process, which was now a focus of attention in every world forum. That realization emerged clearly yesterday from the interventions of nearly all participants in the interactive sessions.
He recalled his delegation’s emphasis yesterday on the following imperatives: market access; the swap between debt servicing and social sector requirements; capacity building and improved governance; and a focused approach by governments to strike a balance between fiscal deficits and their economic growth requirements. Clearly, development was the shared agenda of all humanity. That required a coherent and consistent effort by all stakeholders to address the issues of poverty eradication, financial flows, trade, and debts, and the systemic issues that warranted reform of the global financial architecture.
Measures should be strengthened against money laundering and illicit fund transfers. An ad hoc forum comprised of governments, international organizations, labour, non-governmental organizations and civil society, and the private sector could be set up to facilitate dialogue on policy and technical issues of foreign direct investments and its flows to developing countries. Donor countries and international organizations should help developing countries liberalize their trade sectors, and trading partners should liberalize trade in goods and services, particularly in areas which were of interest to developing countries, such as textiles, agriculture, and clothing. Developing countries had to sustain high rates of growth and remove social barriers to poverty reduction. Fiscal balance had improved in many developed countries, but ODA and private capital flows had declined.
EVGENY STANISLAVOV (Russian Federation) said that yesterday's meeting between the Economic and Social Council and the Bretton Woods institutions had confirmed the importance of the financing for development process. The preparatory process had come into a decisive stage. Delegations had to clearly define what they wanted to achieve at the Conference. It was obvious to his delegation that one of the most important outcomes of the Conference should be a more clearly defined mechanism for development.
It was difficult, he said, to define what innovative approaches might be appropriate but more effective cooperation between the United Nations, the Bretton Woods institutions and the private sector was a major issue that needed to be addressed. It was important to get the business community to make concrete proposals for its contribution to the Conference. The private sector should take part in the preparatory process, the Conference and the implementation of the final objectives of the Conference.
The agenda of the Conference had to be focused, he said. The problem of the least developed countries and countries with economies in transition had to be addressed. The outcome document should be compact and should define the major areas and goals in financing for development for the next 15 years. It was important to get overall agreement of all participants in the Conference. The overall review process should be based on existing intergovernmental machinery, and as much as possible, be connected to the Millennium Declaration.
EMMANUEL MUTEBILE (Uganda) said the solution to the development problem lay not only in increasing international transfers. Rather, an important part of the solution concerned a more effective and efficient use of both domestic and international resources coupled with a reformed trade and financial system. Reform was needed in both developing and developed countries in order for the development financing process to succeed. “Business as usual will not do”. The need for macroeconomic stability as the foundation for mobilizing additional resources for development was not receiving adequate attention. The scarcity of resources in both developed and developing countries called for economy and efficiency in their mobilization and use.
While a comprehensive, integrated and holistic approach to financing for development was needed, he said, the world could ill afford to give the impression that such an approach would somehow lift developing countries out of their need. Hard budget constraint was a fact of life in all countries and while the Conference might seek to relax budget constraints somewhat, it could not remove them altogether. Thus, pressing forward with macroeconomic reform was imperative. Moreover, there was “no chance in hell in raising ourselves out of poverty” without a level playing field. International donors should surrender the aid condition process to developing country governments and take all necessary steps to reduce the minimum costs of the transactions involved in the process of aid coordination. Technical assistance to least developed countries would help them cope with capital inflows.
BALTHAZAR HABONIMANA (Burundi) said his delegation believed that the Conference would make an important contribution towards achieving the goals set out in the Millennium Declaration. Burundi welcomed the current stage of the preparatory process. It was satisfied with the relevance of the themes chosen with a view to creating an international economic climate that supported development. Efforts had to be made to help developing countries finance development. An international consensus at the highest level was indispensable if a new international economic order was to be realized.
Specific goals, he said, must be set for the Conference in order to guarantee a minimum quality of life for all people in the world. A strategy to reduce poverty would have to be worked out, taking into account the specific needs of each country. It was imperative for each country to maximize resources for development. The countries that did not have a reliable economic base to finance
poverty reduction had to be able to count on external resources to get their development going. His country was such a country. Burundi was committed to creating positive conditions for its development but the international community must assist it down this road. It was well known that poverty and grinding want were root factors in instability and conflict.
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