DEVELOPED COUNTRIES, FINANCIAL INSTITUTIONS MUST ACT IMMEDIATELY TO RESOLVE PROBLEMS OF EXTERNAL DEBT, SECOND COMMITTTEE TOLD

Fifty-eighth General Assembly

Second Committee

18^th & 19^th Meetings (AM & PM)

DEVELOPED COUNTRIES, FINANCIAL INSTITUTIONS MUST ACT IMMEDIATELY

TO RESOLVE PROBLEMS OF EXTERNAL DEBT, SECOND COMMITTTEE TOLD

They Must Also Take Urgent Measures to Review Their Policies, Speakers Stress

Developed countries and international financial institutions must review their policies and take immediate action to resolve problems of external debt, Pakistan’s representative said today as the Second Committee (Economic and Financial) took up various technology, finance and development questions.

He said debt repayment was increasing absolute poverty in many countries as vast amounts of money went to meet crippling repayments to financial institutions in creditor countries.  The combination of extreme poverty and indebtedness had plunged many low-income countries into a desperate downward spiral and governments that were spending more than half their budgets on debt-servicing could not meet their people’s social needs.  More than 700 million people living in 42 highly-indebted poor countries had no way of improving their lives.

China’s representative, pointing out that the outdated international economic and financial system could no longer keep pace with globalization, emphasized the need to expedite and simplify the debt-relief process.  Since 1996, there had been some progress in implementing the Heavily Indebted Poor Countries (HIPC) debt initiative, but that had slowed with the placing of caps on debt relief.

Zambia’s representative said his country’s external indebtedness had reached an alarming $1.7 billion by December 2002, more than half of it owed to multilateral creditors.  Zambia’s successful performance in implementing the Poverty Reduction Growth Facility (PRGF), an International Monetary Fund (IMF) concession to help low-income countries support country-owned poverty-reduction programmes, would have allowed it to reach the completion point of the HIPC debt initiative by December 2003 as scheduled, but despite having successfully implemented broad macroeconomic policies to stabilize the economy, it had failed to do so. 

Introducing a report on the external debt crisis and development, an official of the United Nations Conference on Trade and Development (UNCTAD) said that 10 countries had completed debt rescheduling with the Paris Club over the past year, eight of which were HIPC members.  The initiative’s main problem appeared to be its export projections, which had been overly optimistic for two thirds of the highly-indebted countries. 

The Committee also heard the presentation of reports on the impact of new biotechnologies, with particular attention to sustainable development, including food security, health and economic productivity, on the transit environment in the landlocked States of Central Asia and their transit developing neighbours; the international financial system and development; and the outcome of the International Ministerial Conference of Landlocked and Transit Developing Countries and Donor Countries and International Financial and Development Institutions on Transit Transport Cooperation.

Introducing the latter report, Anwarul Chowdhury, Under-Secretary-General and High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States, said the Conference had given developing countries the Almaty Programme of Action -- the first United Nations document addressing their special needs.  Outlining priorities for the Programme’s implementation, he said a vital first step was to get the Almaty Declaration and Programme endorsed by the General Assembly  As for actual implementation, his Office was working on an Implementation Plan/Roadmap, which would focus on broad consultations with landlocked and transit developing countri, as well as their development partners. 

Lesotho’s delegate, speaking on behalf of the Southern African Development Community (SADC), said transport infrastructure development was vital if landlocked and transit developing countries were to benefit from the global trading system.  The SADC called on donor countries, financial, trade and development institutions as well as the private sector to support the group’s efforts.

Earlier today, the Committee took up macroeconomic policy questions and the report of the Economic and Social Council, reviewing the report of the Committee on Programme and Coordination for its fortieth session.

In addition, the Committee completed its consideration of the implementation of Agenda 21 and the outcomes of the World Summit on Sustainable Development; United Nations Decade of Education for Sustainable Development; and Further Implementation of the Programme of Action for the Sustainable development of Small Island Developing States.  It also concluded its item on operational activities for development.

Other speakers today included the representatives of Azerbaijan, Indonesia, Malaysia, Libya, Lebanon, Chile, Iran, Guyana (on behalf of the Caribbean Community), Morocco (on behalf of the “Group of 77” developing countries and China), Italy (on behalf of the European Union), Norway, Russian Federation, Venezuela, Jamaica (on behalf of the Caribbean Community), Yemen, Kenya and Belarus.

A representative of the Organization of the Islamic Conference also made a statement, as did a representative of the International Labour Organization (ILO). 

Also speaking were representatives of the Department of Economic and Social Affairs.

The Second Committee will meet again at 10 a.m. tomorrow, Thursday, 23 October, to continue its discussion of macroeconomic policy questions.

Background

The Second Committee (Economic and Financial) met this morning to conclude its consideration of operational activities for development, focusing on economic and technical cooperation among developing countries.  (For background information, see Press Release GA/EF/3049 of 21 October.)  It was also expected to take up macroeconomic policy questions and the report of the Economic and Social Council.

Before the Committee was the report of the Committee for Programme and Coordination on its forty-third session (9 June to 3 July and 9 July 2003) (document A/58/16, chap. III, sect. C.3), which contains the triennial review of the implementation of recommendations during the Committee’s fortieth session on the in-depth evaluation of global development trends, issues and policies, global approaches to social and microeconomic issues and policies, and the corresponding subprogrammes in the regional commissions.

The Committee felt the importance of the World Economic and Social Survey was not fully evaluated in the triennial review, and recommended that the relevant departments consider further ways of enhancing its role as a reference tool.  Regional commissions should redouble their efforts to establish strong links with regional and national institutions that are end-users of the outputs of the commissions’ work on regional socio-economic analysis to ensure that the findings of such studies could be taken into account at the country and regional levels.

Also before the Committee was the report of the Committee for Programme and Coordination (document A/58/16, chap. II, programme 7) on its forty-third session, which took place from 9 June to 3 July 2003.  According to a section on “proposed revisions to the medium-term plan for the period 2002-2005”, the Committee stressed the need for urgent measures to ensure the implementation of Agenda 21 (United Nations Conference on Environment and Development, Rio de Janeiro, 1992) and the Johannesburg Plan of Implementation (World Summit on Sustainable Development, Johannesburg, 2002).

The Committee further emphasized the need for adequate support for the Commission on Sustainable Development as a high-level United Nations body concerned with sustainable development, considering also its role in implementing Agenda 21 and the Johannesburg Plan.

Also before the Committee was a note by the Secretary-General on proposed revisions to the medium-term plan for the period 2002-2005 in the area of economic and social affairs (document A/58/84), which are to reflect the General Assembly’s review of the outcome of the International Conference on Financing for Development (Monterrey, 2002) and the World Summit on Sustainable Development.

The revisions aim to support follow-up to and implementation of the outcomes of the World Summit, in line with the responsibilities of the Commission on Sustainable Development, and additional mandates emanating from the Johannesburg Plan of Implementation.  They would also support a secretariat for United Nations follow-up to agreements and commitments included in the Monterrey Consensus, which emerged from the International Conference on Financing for Development.

Later today, the Committee had before it a report of the Secretary-General on the impact of new biotechnologies, with particular attention to sustainable development, including food security, health and economic productivity (document A/58/76), which provides information on sectors and countries where biotechnology is significantly contributing to economic productivity and human welfare.

The report identifies steps needed to build biotechnology know-how; addresses the impact of new technologies, particularly concerning sustainable development, food security, health and economic productivity; and proposes transferring such technologies to developing countries and economies in transition, while considering the need to protect intellectual property rights.

Developing countries are home to an estimated 95 per cent of the 840 million malnourished people worldwide, the report states.  With more than half their populations depending on agriculture, agribusiness development would lift many of them out of poverty.  Currently, the biotechnology revolution largely benefits developed countries, with the United States, Canada and Europe accounting for

97 per cent of global biotechnology revenues and 96 per cent of related employment.

The report identifies ways to develop biotechnology and transfer technology, including national biotechnology programmes pooling the resources of industry, government and academia, as well as incubators or facilities to help young firms become strong and independent.  It also suggests creating an integrated framework for biotechnology development, based on policy development, private-sector involvement and training.  Using the biosafety programme of the United Nations Environment Programme’s Global Environment Facility (UNEP-GEF) as a model, such a framework would focus on industry, health and environment and serve as an advisory unit for developing countries on biotechnology innovations, policy and trade.

Also before the Committee was a report of the Secretary-General on the external debt crisis and development (document A/58/290), which analyses capital flows to developing countries and economies in transition in light of the current overall state of the global economy.  It assesses the continuing reserve accumulation and the causes and implications of the net transfer of resources from developing countries, and provides a long-term analysis of private capital flows to those countries.  It also focuses on debt relief under the Heavily Indebted Poor Countries (HIPC) initiative and agreements made at the Paris Club, and comments on recent developments regarding new mechanisms for sovereign debt restructuring.

The report complements the Secretary-General’s report on the High-level Dialogue on Financing for Development (document A/58/216), which recommends expediting a durable solution to the debt problems of developing and transition economies.

Also before the Committee was a note by the Secretary-General transmitting the report of the Secretary-General of the International Telecommunications Union on preparations for the World Summit on the Information Society (document A/58/74-E/2003/58).  It states that, in three meetings, the Preparatory Committee will set the framework for the first phase of the Summit, to take place in Geneva in December, while the second phase is scheduled for November 2005 in Tunis.  Both phases will cost an estimated 6 million Swiss francs, to be funded by the host countries.

The draft declaration of principles laid down during the Preparatory Committee’s second meeting in February identifies 10 requirements for developing an equitable information society.  These include ensuring universal, ubiquitous and affordable access to information and communication technologies; the right to communicate and access information; multi-stakeholder involvement in information and communications development; and human and institutional capacity-building.  The principles also call for confidence and security in using information communication technologies; the creation of an enabling environment; technology applications benefiting all aspects of daily life; respect for and enjoyment of cultural diversity and multilingualism; the upholding of ethical dimensions; and international and regional cooperation.

Much progress has been made in organizing preparations for the first phase of the Summit, according to the report.  Stakeholders and United Nations agencies could continue to galvanize the support needed for policies and actions that capitalize on opportunities created by the information and communication technologies revolution.  The Summit should serve as a strategic occasion for world leaders to agree on how to use information and communication technologies for development, and to achieve the Millennium Development Goals.

Another note by the Secretary-General transmits the report of the Secretary-General of the United Nations Conference on Trade and Development on the transit environment in the landlocked States in Central Asia and their transit developing neighbours (document A/58/209).

According to the report, the transit environment in those countries has poor infrastructure and several non-physical bottlenecks.  To some extent, the density of existing road and rail networks meets the region's transit transport needs, but infrastructure quality is lacking, mainly due to lack of maintenance.

The report states that the inadequacy of bogie change facilities (to accommodate different rail gauges) at border points between landlocked States and their non-Commonwealth of Independent States (CIS) neighbours, and insufficient cooperation between national railway companies increase bottlenecks on some rail corridors.  Capacity is also reduced by the age and poor quality of the rolling stock for both road and rail transport.  The density of the pipeline network is also inadequate, with pipeline links to Iran, China, the Caucasus and Turkey lacking, and trans-Caspian waterway links to the Caucasus needing improvement.  The efficiency of the transit environment is also hindered by high transport costs, which are generally three times greater in landlocked developing countries than in developed countries, exceeding 50 per cent of the value of imported merchandise.

Transit costs are pushed up considerably by border-crossing formalities and transit fees, which vary from one country to another, the report notes.  In addition, informal payments are charged both at the borders and along the corridors.  According to some studies, unofficial fees paid by a trucker between Kyrgyzstan and Siberia can exceed $1,500.

The report says that the transit environment in the region is helped by economic recovery in landlocked States, positive cooperation between them and their transit neighbours and the region's resolve to open up to international trade.  China, which has a 3,300-kilometre border with the Central Asian landlocked developing countries, increased its share of trade with those countries from 2.4 per cent in 1995 to 4.7 per cent in 2000.

In conclusion, the report notes that transit initiatives under way in the region include efforts by landlocked States and their transit neighbours to improve the infrastructure and reduce the non-physical barriers to transit transport through national laws and increased regional and international cooperation.  However, actions are also needed to further harmonize and simplify transit procedures and documentation, increase the use of information technology to speed up border-crossing procedures, and reduce barriers to trade and transit transport.

The report also points to the weak private sector in the CIS countries, noting that railways, airways, waterways and inland ports in all five Central Asian landlocked developing countries are State-operated.  The private sector is active in road transport, but the companies and operators are mainly foreign (predominantly Russian and Azerbaijani).  The private sector could play a greater role not only in freight operation, but in providing support services for railways, airways and inland water transport subsectors.

Also before the Committee were reports of the Secretary-General on the international financial system and development (document A/58/369), and the outcome of the International Ministerial Conference of Landlocked and Transit Developing Countries and Donor Countries and International Financial and Development Institutions on Transit Transport Cooperation (document A/58/388).

The Committee began today’s meeting by concluding its agenda item on implementation of Agenda 21 and the outcomes of the World Summit on Sustainable Development, the United Nations Decade of Education for Sustainable Development, the environment and sustainable development, and the Programme of Action for the Sustainable Development of Small Island Developing States.

Statements

YASHAR ALIYEV (Azerbaijan), speaking on behalf of GUUAM, (Georgia, Ukraine, Uzbekistan and Republic of Moldova), said that United Nations regional commissions played an important role in advancing the agenda of the Commission for Sustainable Development.  For example, during its ministerial conference last May, the Economic Commission for Europe had adopted for signature several protocols on environmental impact assessments on transboundary commerce and civil liability on transboundary water accidents, among other environmental matters.

The new structures of the United Nations Centre for Human Settlements (UN-HABITAT) would help meet environmental and sustainable development goals, he said.  Greater promotion and development of renewable energy was also necessary.  Noting that all the GUUAM States had become parties to the Kyoto Protocol, he called for greater support for the important work of strengthening capacities in the field of early disaster warning, and in combating desertification.

DJISMUN KASRI (Indonesia), noting that the international debt of developing countries had more than trebled since the 1998 Buenos Aires Conference, said that by 2000 it had already reached $1.25 trillion, inhibiting economic growth and poverty-reduction.  The developing world urgently needed new debt-management strategies, he said, urging the Special Unit for Technical Cooperation among Developing Countries to work in close cooperation with other United Nations agencies, the Bretton Woods institutions and the United Nations Conference on Trade and Development (UNCTAD) to ensure debt sustainability in the developing world.

Noting that great strides had been made in South-South cooperation, he recalled that during the Asian-African Sub-Regional Organizations Conference last July in Indonesia, Asian and African nations had agreed to a strategic partnership to overcome development problems and promote peace and prosperity.  Regarding triangular cooperation among countries of the South and international organizations, last year Indonesia had teamed with Japan, the Japan International Cooperation Agency and the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) to create joint technical training programmes. 

JOSEPH SALANG GANDUM (Malaysia) affirmed that the success of South-South cooperation required the collective efforts of all development partners and the entire multilateral system.  South-South cooperation was more important than ever in the era of globalization with its unpredictable changes in the economy, including the devastating effects of external factors such as the recent outbreak of SARS or the impasse at the Cancún World Trade Organization (WTO) talks.  South-South cooperation had promoted participation of developing countries in the international economic system, diversified and expanded their development options, and provided them with better opportunities and partnerships while strengthening them, both individually and collectively.

He said that more focused planning and coordination by United Nations agencies would further promote success, as would more cooperation and solidarity among the countries involved.  In addition to subregional and regional cooperation, developing countries had emerged as net providers of technical assistance.  The New Directions Strategy would capitalize on that aspect among developing countries to focus on priority issues to maximize development impact.  The circle of actors in South-South cooperation could be widened to include the private sector and civil society organizations.  Malaysia called for the proclamation of 12 September as the United Nations day for South-South cooperation and for an international decade on the issue to start in 2005.

SHAHID HUSAIN, Observer for the Organization of the Islamic Conference, recalled that the biennium 2001-2002 had offered a stark contrast to the previous decade due to the bursting of the information and technology bubble in combination with the events of 11 September 2001.  The sum effect had been the rapid deceleration of the global economy, which had affected all developing countries.  The fall-out from those and other global events could have been controlled in the developing countries by better South-South trade and production activity.  A lingering attitudinal, institutional, informational and financial set of barriers had prevented it, despite the attention that regional groups had devoted to promoting economic and technical cooperation among developing countries as a necessary adjunct to North-South cooperation.

The Millennium Development Goals could be achieved by drawing on the expertise and resources of the South, he said.  Countries that had recently realized rapid economic and social development could be major providers.  Public awareness of South-South cooperation could be raised by declaring a United Nations day for it, as well as a decade.  The Special Unit for South-South Cooperation was the pillar for intensifying that thrust in a more effectively cooperative direction.

JABER ALI RAMADAN (Libya), noting that there were several international and regional initiatives to support South-South cooperation, said that such cooperation was vital in strengthening the feeling of international solidarity.  Libya welcomed the participation of donors in South-South cooperation as well as the roles played by United Nations bodies, particularly the United Nations Development Programme (UNDP), and stressed the need to increase such programmes.

Libya had participated actively in economic and technical cooperation for the South, he said.  Its banks financed development projects, provided loans and supported poverty eradication in developing countries.  It also supported the activities of the International Development Bank, the Islamic Bank and the Development Bank of Kuwait.

MAJDI RAMADAN (Lebanon) said the increase in technical cooperation among developing countries was due to trends in regional and subregional integration.  However, although many issues were covered, the question of debt and debt sustainability continued to hinder the efforts of developing countries.  Pivotal developing countries as well as donors should assist in that regard.  At the global level, South-South monetary and financial cooperation was an aspect of technical cooperation among developing countries and initiatives in that regard included the Intergovernmental Group of 24, which Lebanon chaired and which promoted strengthened cooperation among members in negotiations with the International Monetary Fund (IMF), the World Bank and other bodies.  The Arab Monetary Fund of the League of Arab States was another.  Among other actions, it had signed a memorandum of understanding with the WTO to provide capacity-building and technical assistance to Arab countries in trade negotiations.

He said technical and other kinds of assistance provided by pivotal developing countries was much needed and valued.  Donor countries within the European Union also played an important role in technical cooperation among developing countries.  An example was the Euro-Mediterranean partnership, which aimed to establish a free trade area by 2010 that would include Lebanon.  However, government-government cooperation was not enough to enhance technical cooperation among developing countries.  New partnerships with civil society institutions and the private sector should be the focus in the future.

CLAUDIO ROJAS (Chile) underscored the importance of technical cooperation in helping developing nations strengthen their economies and meet the millennium targets.  Triangular cooperation was an important complement to South-South partnerships, and Chile urged the international community to promote and participate in such joint efforts among governments and intergovernmental bodies.

Chile was active in triangular arrangements in several areas, particularly agriculture, he said.  For example, Chilean and Norwegian agriculture experts were working with the Food and Agricultural Organization (FAO) on Afghanistan’s post-war reconstruction.  Also, under an FAO-sponsored South-South programme in Central America, Chile was providing technical assistance to farmers in Honduras and Guatemala seeking to market their agriculture products.  In addition, Chilean agriculturalists were helping Iraq rebuild its agriculture sector.  Iraq should become part of the General System of Preferences that gave favoured trading status to developing countries.

MEHDI MIRAFZAL (Iran) said that declaring an international decade for South-South cooperation should provide immediate opportunities to initiate a more action-oriented agenda for South-South cooperation.  In that respect, the High- level Conference on South-South cooperation to be held at Marrakesh would be an opportune occasion not only for advancing such an objective, but also for enhancing the programme of action of the Havana South Summit.

He stressed that stronger support and enhanced donor contributions to the funds allocated for South-South cooperation were also vital.

Iran hoped that the much-emphasized negative approach of developed partners towards participation in pledging conferences did not imply their unwillingness to contribute.

GARFIELD BARNWELL (Guyana), speaking on behalf of the Caribbean Community (CARICOM), said the grouping viewed South-South cooperation as a critical aspect of creating an equitable and inclusive global system for development cooperation.  The Secretary-General’s report on South-South technical and economic cooperation, which highlighted the developing countries’ efforts to expedite such cooperation, particularly through interregional and triangular arrangements, was encouraging.

He recalled that during its recent regional preparatory meeting to review the Programme of Action for Sustainable Development of Small Island Developing States, CARICOM had underscored the value of and its commitment to best-practice sharing.  CARICOM members also supported the Secretary-General’s proposal to declare an annual United Nations day for South-South cooperation and an international decade on South-South cooperation.

The Committee then took up its item on macroeconomic policy questions.

JOANNE DISANO, Director, Division for Sustainable Development in the Department of Economic and Social Affairs, concurred with the recommendations contained in the report of the Committee on Programme and Coordination since they reflected the Johannesburg Plan and the eleventh session of the Commission on Sustainable Development.  The proposed revision to subprogramme 4, which focused on the analysis of implementation as well as lessons learned, amply reflected the Commission’s programme of work.

OSCAR DE ROJAS, Executive Coordinator, Financing for Development Office, said the Financing for Development Programme would appear for the first time in the new budget, as mandated by the Monterrey Conference itself.  The Committee for Programme and Coordination appeared satisfied with the medium-term plan proposal, apart from a few minor editorial changes.

IAN KINNIBURGH, Director, Development Policy and Planning Office in the Department of Economic and Social Affairs, said the recommendations made were under review in the context of the Secretary-General’s reform, particularly those concerning changes in the publications programme and within the framework of the Secretariat’s Executive Committee for Economic and Social Affairs (EC-ESA).  The World Economic and Social Survey continued to be among the United Nations best-selling publications, if not the top seller.  Efforts were continuing to strengthen the working relationships among EC-ESA entities, particularly between the regional commissions and the Department.

Introduction of Reports

ANWARUL CHOWDHURY, Under-Secretary-General and High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States, introduced the report on outcome of the International Ministerial Conference of Landlocked and Transit Developing Countries and Donor Countries and International Financial and Development Institutions on Transit Transport Cooperation (document A/58/388).

He said the Conference had given developing countries the Almaty Programme of Action, the first such United Nations document addressing their special needs.  The Programme outlined specific actions to be carried out by landlocked and transit developing countries with the support of their development partners.  Those actions would be implemented in five priority areas:  transit policy issues, infrastructure development and maintenance, international trade and trade facilitation, international support measures, and implementation and review.

Outlining priorities for the Programme’s implementation, he said a vital first step was to get the Almaty Declaration and Programme endorsed by the General Assembly.  As for actual implementation, his Office was working on an Implementation Plan/Roadmap, which would focus on broad consultations with landlocked and transit developing countries, and their development partners.  The World Bank and other development banks would be crucial for funding and technical assistance, and subregional meetings should be held to identify specific activities at that level.  Another priority was international trade.  Landlocked and transit developing countries should redouble efforts to obtain market access for agricultural and non-agricultural goods.

BARRY HERMAN, Chief, Policy Analysis and Development Branch, Financing for Development Office in the Department of Economic and Social Affairs, introduced the Secretary-General’s report on the international financial system and development (document A/58/369).  The report raised three major policy concerns, namely global macroeconomic oversight, tools to combat financial crisis, and effective and fair multilateral governance. 

He said existing international policy mechanisms had thus far not been able to correct major and persisting global financial imbalances, notably net financial transfers from developing and transition economies, totalling $200 billion in 2002.  New official financing innovations were needed to help countries more effectively manage financial crisis.  Developing and transition countries needed a greater role in decision-making in multilateral financial institutions.  Rebalancing governance structures could also improve the quality and implementation of decisions made as more countries would actively participate. 

HARRIS GLECKMAN, Chief, UNCTAD New York Liaison Office, introduced reports on the impact of new biotechnologies, with particular attention to sustainable development, including food security, health and economic productivity (document A/58/76); on the transit environment in the landlocked States of Central Asia and their transit developing neighbours (document A/58/209); and on the external debt crisis and development (document A/58/290).

He said the report on new biotechnologies highlighted their impact on developing countries, especially with respect to food security, health and productivity, and identified measures required to strengthen indigenous capacities in biotechnologies.  He also outlined the activities of the Commission on Science and Technology for Development, particularly its efforts in the transfer of information and communication technologies.

Turning to the report on external debt, he said net inflows and outflows had remained negative in 2002 for the fourth consecutive year, despite increases in private capital flows.  Ten countries had completed debt rescheduling with the Paris Club over the past year, of which eight were members of the Heavily Indebted Poor Countries (HIPC) initiative.  That initiative’s main problem appeared to be its export projections, which had been over-optimistic for two thirds of the highly-indebted countries.  In that regard, HIPC ministers had stressed the need for cheap and automatic support from international financial institutions to ensure that external shocks did not cut into funding for poverty-reduction

Statements

ABDELLAH BENMELLOUK (Morocco), speaking on behalf of the Group of 77 and China, said that macroeconomic factors, coupled with the inadequate flow of financing needed for growth promotion, had led to the current economic sluggishness.  Official development assistance (ODA) had grown 5 per cent in real terms last year, to $57 billion, or 0.23 per cent of the gross domestic product (GDP) of donor countries.  That was far from the targets set and from the needs of the least developed countries in particular.  The ODA must be increased, notably for Africa.  Developed nations also had a responsibility to honour commitments made at Johannesburg and Monterrey to make policies consistent and conducive to achieving the millennium targets.

He expressed support for recent efforts by the IMF and the World Bank to pinpoint ways to expand and improve the involvement of developing countries in decision-making.  Such institutional reforms were necessary in order to enable developing countries to successfully manage financial crises in future.  Regarding heavy external debt loads, 28 of the 40 countries considered for the IMF’s and World Bank’s debt-alleviation programme had reached the decision point, and only eight had reached the implementation point.  Greater efforts for debt relief nations were needed.  The Group of 77 and China supported the proposal to create a United Nations advisory group of experts on debt alleviation.

ANTONIO BERNARDINI (Italy), speaking on behalf of the European Union and acceding as well as associated States, noted that a main aim of the Almaty Programme of Action was to increase the share of landlocked least developed countries in world trade.  The Doha Development Agenda could bring trade gains for them, with new WTO commitments considerably easing border and transit procedures now hampering their export potential.  It could also lead to improved transport services, which were crucial in moving their products rapidly to market.  The European Union was willing to move forward in the WTO, if other members were ready to show the real commitment and flexibility needed to achieve results reflecting the interests of all parties.

He said the European Union paid special attention to the plight of the least developed countries, which should be the primary beneficiaries of poverty-reduction strategies.  The participatory approach adopted in the framework of the poverty reduction strategy processes was vital in fostering the adoption of a pro-poor strategy.  In some cases, however, consultations had proven ineffective or of limited impact due to the recognized weakness of civil society in many of the least developed countries.  The participatory approach should be reinforced for all members of civil society, particularly the poor, women and minorities.

JOHAN LØVALD (Norway) said that while the Secretary-General’s report was a useful basis for discussion, it was slightly off-centre.  Most of the delay in implementing the HIPC initiative was attributable not to insufficient progress in streamlining the IMF and World Bank conditionality, but rather to preparing comprehensive and credible poverty reduction strategies with national ownership.  The HIPC simply took more time than anticipated, he said, adding that it did not mean failure and should prove a productive investment in future development gains.  Sacrificing quality for speed would be a tremendous disservice to the poor.

He said that HIPC treatment of conflict-ridden countries must presuppose a cessation of hostilities and the formation of legitimate governments.  While the Secretary-General’s call for flexible treatment of post-conflict countries was agreeable, the merits of a special trust fund for that purpose were questionable since all such operations to date had been fully funded on an ad hoc basis by interested donor countries.  Achieving long-term debt sustainability should be the guiding principle with HIPC, non-HIPC and middle-income countries as well.  Flexible instruments such as debt-for-development swaps should be used instead of traditional, stand-alone bilateral arrangements.

LIU HUA (China) said the international economic and financial system was outdated and could no longer keep pace with globalization, as evidenced by the growth in poverty, frequent economic crises and greater financial risks.  The United Nations must actively promote system reform to give developing countries a greater role in decision-making, help them improve their crisis management and guide them towards democracy and transparency. 

Emphasizing the need to mobilize international and domestic resources, and to pool official and private capital, she said ODA was essential for developing countries, particularly in the fields of environmental protection, poverty alleviation and social development.  The ODA commitments must be honoured and recipient and donor countries alike should enjoy equal and constructive partnerships.

The debt relief process must be expedited and simplified, she said, noting, however, that since 1996 there had been some progress in implementing the HIPC initiative.  But the process had slowed while caps had been placed on debt relief.  China had signed debt relief agreements worth $1.05 billion with 31 African countries, accounting for about 60 per cent of those countries’ accumulated mature debts.  China urged respect for the ownership and decision-making power of developing countries.

YURIY ISAKOV (Russian Federation) said that ensuring the stability of the international financial system, including by increasing the flow of financial resources to developing countries and those with economies in transition, was a key factor in pursuing sustainable development goals.  The oversight function of the Bretton Woods institutions was the most important instrument of crisis prevention and recent crises had revealed that the vulnerability of emerging markets stemmed from excessive levels of internal or foreign debt, previously considered safe.  An analysis of individual country-debt sustainability was particularly important for both debt tracking and programme activities.

For the HIPC, he said, debt relief within the framework of the IMF/World Bank initiative was the most important source of mobilizing resources.  All creditors of the poorest countries, both bilateral and commercial, must participate in implementing the debt initiative.  The Russian Federation had rendered comprehensive assistance in that area.  Efforts should cover debt-for-sustainable-development, the so-called ecological swaps and innovative schemes involving middle-income countries.  Of particular concern was the poor implementation by many HIPC initiative countries of agreed-upon economic reform programmes.  The remainder of the prolonged initiative period should be devoted to developing approaches for meeting requirements.

LEBOHANG MOLEKO (Lesotho), speaking on behalf of the Southern African Development Community (SADC), said the most pressing transport problems of landlocked developing States were due to their lack of territorial access to the sea, high transport costs, and remoteness and isolation from world markets.  Those were among the factors that perpetuated extreme poverty in Southern Africa.  Transport infrastructure development was imperative for landlocked and transit developing countries to benefit from the global trading system.

Pointing out that the Almaty Programme emphasized implementation at the national, subregional, regional and international levels, he said that SADC had set up a directorate of infrastructure and services to deal with transport and communication concerns and a protocol on transport, communications and meteorology to spur cooperation among its members in infrastructure and services.  It was also pursuing the development of regional transport corridors.  However, SADC’s efforts alone could not solve high transit and transportation costs, and the grouping called on donor countries, financial, trade and development institutions as well as the private sector to support its efforts. 

JULIA LÓPEZ CAMACARO (Venezuela) said external debt continued to be a major drag on the economies of developing countries, turning them into net exporters of capital and inhibiting their ability to effect real socio-economic change.  Despite negative economic growth since the end of 2002, however, Venezuela had honoured its external debt-servicing commitments and taken steps to increase its international reserves, reducing its risk level by 112 basic points.  Last September it had issued $700 million in bonds and 10 days ago $850 million on international markets, which had resulted in an 8 per cent drop in interest rates as compared with the first quarter of 2003.  It was hoped that those steps would enable the economy to grow 5 per cent to 6 per cent in 2003, and turn Venezuela from a financial borrower into a lender.

She urged the IMF and the World Bank to restructure their lending requirements, taking into account each country’s specific needs.  Maintaining the current inflexible lending system would continue to impede developing countries’ ability to achieve the millennium targets.  Giving developing countries a greater role in multilateral financial institutions could make the system more operative. 

SHEILA SEALY MONTEITH (Jamaica), speaking on behalf of the Caribbean Community (CARICOM), said that the key priorities of the Caribbean countries, wishing to improve their economies and enrich their people’s lives, included improving health and the environment through the increased use of renewable, environment-friendly energy resources, enhanced agricultural production, trade and industry.  Science and technology could play a key role in meeting many of those goals and several regional initiatives had been carried out to pool resources and expertise in building scientific and technological infrastructure to support long-term development.

To further harness the potential of new developments in science and technology, she said, the region must strengthen national innovations to link it with the global knowledge society.  Most Caribbean countries would also need to increase overall research and development, and international support in that area would be vital.  Jamaica and CARICOM looked forward to continued partnerships both with governments and the private sector outside the region.

SYED NEVEED QAMAR (Pakistan), citing the Secretary-General’s report, noted that the total external debt of developing countries in 2002 was close to $2.4 trillion, or 39.1 per cent of their gross national income, while total debt at the end of 1996 was $1.8 trillion.  The amounts, as well as the increase in debt, had been astronomical.  The combination of extreme poverty and extreme indebtedness had plunged many low-income countries into a desperate downward spiral.  Governments could not meet the social needs of their people when they spent more than half their budgets on debt-servicing and when more than

700 million people living in 42 highly indebted poor countries had no way of improving their lives. 

The HIPC initiative had been launched in 1996 to provide debt relief to more than 40 highly indebted countries, mostly in Africa, he said.  But the HIPC covered only a fraction of the unsustainable debt of developing countries, making them endure a long list of conditions before they were eligible for relief.  At the same time, relief provided under the initiative had been too little and too slow.  After seven years, only eight countries had been able to reach the completion point.  Debt repayment was increasing absolute poverty in poor countries as vast sums of money, which could improve living standards through education, healthcare and employment, were used to meet crippling repayments to financial institutions in the creditor countries.  Developed nations and international financial institutions must review their policies for debt relief, and act immediately to provide global, comprehensive and durable solutions to external debt so that developing countries could use their meagre resources for social development. 

AHMED AL-HADDAD (Yemen) said that despite the efforts of the HIPC initiative, high levels of external debt continued to impede developing countries’ ability to achieve poverty reduction and sustainable development.  Many countries in the developing world continued to grapple with falling international prices for their exports and the lack of a realistic integrated strategy to deal with financial instability and crisis.  The HIPC process must be expedited and the World Bank and the IMF must reform financing and lending procedures and conditions, taking into account the specific circumstances of individual countries.

Yemen also attached great importance to the World Summit on the Information Society, he said.  The event would enable developing countries to face the challenges posed by the digital divide between the North and South.  Its draft declaration and programme of work should focus on bridging that gap and help to achieve the millennium targets.  Regarding the upcoming High-level Dialogue on Financing for Development, he expressed hope that the international community would seize the opportunity to reform the global financial structure, adopting fair and sound policies for both developed and developing countries.

ABEL KENYORU (Kenya) said that unsustainable debt and debt-servicing had been exacerbated by the decline in the 1990s of ODA, the net transfer of financial resources from developing countries, which had hit a record $192 billion in 2002, and the fall in international prices for agriculture commodities, the principal source of revenue for many developing countries.  An equitable multilateral trading system based on enhanced market access for developing-country exports could significantly correct the debt problem.

While the HIPC initiative had addressed poverty alleviation and development constraints somewhat, it lacked the necessary resources to be fully effective.  Since the publication of the Secretary-General’s most recent report on the external debt situation in developing countries, only two more had reached the completion point qualifying them for debt relief.  Kenya called for greater resources to support HIPC and for a new framework for other highly indebted poor countries.

ULADZIMIR GERUS (Belarus) stressed the need for the international community to improve the international financial system and to increase its transparency and effectiveness.  The IMF, the World Bank and other multilateral financial institutions must seek pragmatic and innovative ways to increase the participation of developing and transition countries in international decision-making.  They should also support the efforts of those countries to increase their access to and use of information and communication technologies.

All States were interested in creating a better international financial system, he said, and they must focus their efforts in that direction.  Belarus hoped the upcoming High-level Dialogue on Financing for Development would increase the focus on the necessary reform of international finance.

BERNARD MPUNDU (Zambia) said that since the 1970s, high external debt levels had forced developing countries to divert scarce resources meant for socio-economic development into debt-servicing payments.  It was time to resolve that problem in a sustainable way and enable the developing world to sink its funds into programmes aimed at achieving the Millennium Development Goals, particularly the halving of extreme poverty by 2015.  Zambia’s external indebtedness had reached an alarming $1.7 billion by December 2002, more than half of which was owed to multilateral creditors.  Unfavourable trade performance had further exacerbated the problem.

He said his country was implementing the Poverty Reduction Growth Facility (PRGF), an IMF concession for low-income countries to support country-owned poverty-reduction programmes involving governments, civil society and development partners.  Zambia’s successful PRGF performance would have allowed it to reach the completion point of the HIPC initiative by December 2003 as scheduled, but despite having successfully implemented broad macroeconomic policies to stabilize the economy, it had failed to do so.  In that light, Zambia fully supported the Monterrey Consensus calling for full HIPC financing and implementation.

JOHN LANGMORE, representative of the International Labour Organization (ILO) to the United Nations and Director of its New York Liaison Office, said an annual economic growth rate per capita of 2 per cent would be needed to halve unemployment and the number of the world’s working poor by 2010.  Some regions would need a 3 per cent to 6 per cent rate to achieve that goal.  All countries had recognized the need to give employment growth a central place in national economic and social strategy.  Yet, many poverty reduction strategy papers of many developing countries did not include employment among their macroeconomic policy goals, nor did international financial institutions encourage them to do so.  Some felt that the inclusion of employment growth would jeopardize the chances of their papers winning approval by the World Bank and the IMF.

He said that poor access to credit and high interest rates also constrained employment growth, while financial market liberalization had resulted in financial crisis with enormous human, social and economic costs.  Jobs had been lost and poverty had increased, he said, calling for increased external concessional finance for infrastructure and services in order to reduce poverty through employment growth.

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