PRESS CONFERENCE BY ECONOMIC AND SOCIAL COUNCIL

PRESS CONFERENCE BY ECONOMIC AND SOCIAL COUNCIL

The fourth high-level meeting of the Economic and Social Council with the Bretton Woods institutions (the International Monetary Fund (IMF) and the World Bank) had been particularly significant for a number of reasons, the ECOSOC’s President, Martin Belinga-Eboutou told correspondents this afternoon at Headquarters during a press conference by participants in that meeting.

He said it was the first joint meeting after the Millennium Summit, and it came before a series of events where cooperation between the United Nations and the Bretton Woods institutions was crucial, such as the Preparatory Committee for the International Conference on Financing for Development starting this week, and the United Nations Conference on Least Developed Countries in Brussels later this month.  July’s ECOSOC session would be devoted to Africa.  There would also be a meeting on HIV/AIDS.

This morning’s meeting had been organized around two topics relating to financing for development: “Development financing, in particular poverty eradication, official development assistance and debt”; and “Towards a development-friendly international financial system: public and private responsibility in the prevention of financial crises”.  These two themes were also discussed in the “round tables” which took place in a “brotherly atmosphere” and during which participants could speak freely, he said.

Key concepts that had emerged were:

-- The need to secure lasting growth in order to combat poverty;

-- The importance of upholding the cooperation between the United Nations and the Bretton Woods institutions;

-- The imperative need to increase official development assistant (ODA);

-- Streamlining market access for developing countries, which was a reliable way of generating necessary funding to finance development;

-- Strengthening of the Heavily Indebted Poor Countries (HIPC) Initiative; and

-- Reviving international economic cooperation.

Paul Martin, Chairman of the Group of 20 and Minister of Finance of Canada, said he had come directly from his Group's meeting in Washington over the weekend.  The meeting had been an important contribution towards the Preparatory Committee meeting for Financing for Development.  Total cooperation between the United Nations and the Bretton Woods institutions was important.  The weekend’s meeting had proposed that the next item on its agenda had to be education, focusing on education for women, as the best means of narrowing the gap between the rich and the poor.  While acknowledging the absolute necessity of establishing codes, standards, sound financial practices and banking regulation as an essential prerequisite to sustain economic growth (the “Washington consensus”), the meeting had also recognized that sustainable economic growth would only occur if there was security such as functioning health care systems, education and sound environment.

Chief J.O. Sanusi, Chairman of the Group of 24 and Governor of the Central Bank of Nigeria, said that the current trend in the world economy, particularly in advanced economies where growth had been moderate or recovery difficult, would have a very adverse impact on developing countries.  Commodities of developing countries would attract lower prices, and the adjustment process of those

countries was likely to be hampered.  The Millennium Summit goal of reducing poverty by half in 2015 required resources which at the moment were not available.  The normal standard for ODA of 0.7 per cent of gross national product (GNP) for developed countries had not been met.  The ODA levels were now at 0.24 per cent

of GNP.

He said a lot had to be done to accelerate actions in the HIPC Initiative.  A number of developing countries still encountered obstacles in accessing developed countries’ markets.  While recognizing the need to strengthen the financial system through standards and codes, he was concerned that the integrity of the financial system had not been protected in the case of money laundering by corrupt leaders of developing countries.  He was, however, impressed by the emerging consensus, especially in establishing a special fund for preventing and treating HIV/AIDS.

Andrew Crockett, Chairman of the Financial Stability Forum and General Manager of the Bank for International Settlements, stressed four points from today’s discussion:  the importance of strengthening financial systems as a means of preventing or alleviating crises; the development of standards and codes of best practices in financial markets; continuously reviewing vulnerabilities in the international and national financial systems; and creating a framework for a dialogue between those responsible for the stability of financial systems (central banks, regulators, finance ministries) and those who had wider responsibilities and interests.

Developing countries had justified concerns about the drawbacks of globalization because of existing inequalities, Mr. Belinga-Eboutou, President of ECOSOC, said.  With that in mind, the heads of State in the Millennium Summit had invited all members of the international community to ensure that globalization was positive for all.  That meant that international cooperation must be organized, stressing the fundamental values of equity and solidarity.  It would be short-sighted to imagine that three quarters of the world’s population should miss out on the benefits of globalization and that the remaining quarter should benefit with impunity.

Mr. Martin, in response to another question, said he was not concerned that developing countries, against the backdrop of an economic slowdown, would not live up to their commitments to debt relief.  Those were long-term commitments, taking into account ups and downs in the business cycle.  Moreover, Finance Ministers of the G-7 had expressed great confidence in the medium-term outlook of the economy.

Addressing a correspondent’s question about proposals for a tax on international currency exchange and stock transactions, the creation of an Economic Security Council, and an independent panel to sanction stand-stills, Mr. Crockett said that most of those ideas, while having commendable objectives, had distinct draw-backs in practice.  The tax on financial transactions, seemed like a good idea, because there would be less financial flows, less volatility in capital markets, and it could mobilize finance for development.  In practice, however, the capacity of the international community to track and close the loopholes that would be created by international financial engineering was very limited.  There was no theoretical or empirical justification for the idea that by preventing certain financial transactions one could reduce volatility.

Commenting on the same question, Mr. Martin said the Canadian Parliament had voted in favour of such a tax on the basis that it might be able to raise funding. 

It had defeated an amendment that said it would stop speculation.  On the stand-stills, he said there was active discussion, but there was a number of finance ministers that felt the timing was not appropriate at this point.

Commenting on the Secretary-General’s proposal for devoting $7 billion to $10 billion annually to fight AIDS and other infectious diseases, Mr. Martin said that the amount of money had to be determined by individual countries.  In the discussions over the weekend, an “unequivocal commitment” had emerged to deal with AIDS and all of its consequences.

Asked whether establishing an AIDS fund would lead to establishing funds for such issues as health, education and the environment, Mr. Martin said he did not expect such proliferation.  Funds worked only in the case of a very specific problem.  In ongoing needs to elevate standards, however, funds were not the way to go, and one could better operate within existing mechanisms.

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