DELEGATES IN SECOND COMMITTEE SAY DEVELOPING COUNTRIES MUST PLAY GREATER ROLE IN DECISIONS OF INTERNATIONAL FINANCIAL, MONETARY, TRADE INSTITUTIONS

Fifty-eighth General Assembly

Second Committee

21^st Meeting (AM)

DELEGATES IN SECOND COMMITTEE SAY DEVELOPING COUNTRIES MUST PLAY GREATER ROLE

IN DECISIONS OF INTERNATIONAL FINANCIAL, MONETARY, TRADE INSTITUTIONS

Developing countries must have a greater decision-making and norm-setting role in the international financial, monetary and trade institutions, in order to ensure that their needs, particularly debt sustainability, were duly met, Uruguay’s representative told the Second Committee (Economic and Financial) as it concluded its debate on macroeconomic policy questions.

Speaking on behalf of the Common Market of the Southern Cone (MERCOSUR), she said that global financial woes in the past few years had seriously hampered Latin American economies, resulting in a net transfer abroad of resources amounting to $39 billion, or 2.4 per cent of gross domestic product.  The subsequent drop in imports and investments had been compounded by the failure of the recent World Trade Organization (WTO) negotiations at Cancun.  International measures were needed to restore financial stability by reducing excessive volatility in capital flows and strengthening mechanisms for monitoring and evaluation.

Similarly, Guyana’s representative, speaking on behalf of the Caribbean Community (CARICOM), called for greater developing-country participation in global governance and called for more policy coherence among the industrialized nations of the Group of Seven/Group of Eight (G7/G8) to facilitate global economic stability and transparency.  Measures to strengthen the financial systems of developing countries could make the global system more sound, he said.

The Observer for the Holy See, echoed calls for an improved international financial system that would address the lack of credit in developing countries and stabilize trade to ensure the repayment of international debt.  The total external debt of developing countries had risen from $1.5 billion in 1990 to $2.4 billion in 2001, and other countries were also having serious problems coping with their debts.  Adequate concessionary financing and an equitable distribution of the financial burden among the international community were needed to correct imbalances and to help developing countries recover from unsustainable debt caused by natural catastrophes, severe economic shocks and conflicts.

Many delegates spoke of the need to develop infrastructure and measures to facilitate cross-border trade and cooperation among the landlocked developing countries and transit transport developing countries, as called for in the Almaty Programme of Action.  They also discussed the merits of biotechnology in socio-economic development, and the importance of the upcoming World Summit on the Information Society in helping to bridge the digital divide and to make information and communications technology beneficial to all.

Other speakers this morning included the representatives of Kazakhstan, Indonesia, Japan, Uganda, Chile, India, Ethiopia, Tunisia, United States, Ecuador and Nepal.

The Second Committee will meet again at 10 a.m. on Monday 27 October, to take up its agenda item on the United Nations Institute for Training and Research and the United Nations System Staff College.

Background

The Second Committee (Economic and Financial) met this morning to conclude its discussion on macroeconomic policy questions.  (For background see Press Release GA/EF/3049 of 21 October).

Statements

YERZHAN KAZYKHANOV (Kazakhstan) said that an efficient transport transit system was vital for landlocked States in Central Asia, if they were to participate in the international trading system and the world economy.  Transport costs determined competitiveness, since the cost of international transport was often higher than tariffs in external markets.  Transit efficiency was hindered by complicated border crossings, administrative procedures and informal payments.  Moreover, existing transit corridors had been built well before today’s international borders had been drawn and no major additional transit corridors had been built to reflect new political and geographical realities.

He said that the subregional and regional approach had been the main building blocks for the Almaty Programme of Action, and its implementation should be measured by progress at the subregional level.  Central Asia deserved special attention and initiatives aimed at establishing efficient transit transport systems in the subregion should be reviewed in the context of the Programme’s review process.

MOHAMAD OEMAR (Indonesia) said no significant progress had been made to deal with the debts of developing countries.  Debt problems continued to cripple their ability to achieve the millennium targets and existing debt-rescheduling mechanisms, such as the HIPC Initiative were inadequate, providing liquidity but no durable solution.  The international community must explore new initiatives like debt-for-sustainable-development swaps and cancellation of unsustainable debts.  At the same time, it must create a supportive international environment and additional resources for development.

He said the World Summit on the Information Society would provide an opportunity to bridge the digital divide so that developing countries could reap the full benefits of the revolution in information and communication technologies.  Indonesia supported the creation of an information and knowledge-based approach to enable developing countries to achieve the millennium targets and urged other Member States and relevant stakeholders to follow suit.

YOSHIYUKI MOTOMURA (Japan) noted that the adoption of the Almaty Declaration had been a historic event and the next challenge was to implement the Almaty Programme of Action.  Its Implementation should focus on developing and rehabilitating infrastructure, especially roads, ports and bridges.  It should also attempt to simplify and standardize trade, including customs procedures, to ensure smooth and efficient border crossings.  Regional cooperation would be important in stimulating economies in both landlocked and neighbouring transit countries.

FRANCIS BUTAGIRA (Uganda) said his country was both a landlocked and a transit country, depending on Kenya and Tanzania for sea access, while providing transit facilities to Rwanda, Burundi, the eastern part of the Democratic Republic of the Congo and southern Sudan.  Uganda had partnered with its transit neighbours to build an East African transit transport corridor and to improve water transport safety and communication on Lake Victoria, thus reducing its high transport costs.  Thanks to national and regional efforts to eliminate fiscal and non-fiscal barriers to trade through the Kenyan port of Mombasa, transit traffic through the port had risen 7.3 per cent during the first half of 2003.

But despite such strategic efforts to overcome the obstacles faced by landlocked developing countries and transit transport countries, he said, Uganda and its transit neighbours could not achieve the five priority areas stipulated in the Almaty Programme of Action on their own.  They needed the support of development partners to build an efficient infrastructure network.

SUSANA RIVERO (Uruguay), speaking on behalf of the Common Market of the Southern Cone (MERCOSUR), said that the deterioration in the international financial situation over the past few years had seriously affected her region, leading to a net transfer of resources abroad amounting to $39 billion, or 2.4 per cent of gross domestic product (GDP).  The result had been a sharp drop in imports and investments, compounded by sluggish global trade and a lack of progress in the World Trade Organization (WTO) negotiations. 

She stressed the importance of reversing the situation through national and international measures to restore financial stability by reducing excessive volatility in capital flows and strengthening monitoring and evaluation mechanisms to prevent crises.  Uruguay and the Southern Common Market (MERCOSUR) supported all efforts to reform the international financial system, provided they included greater participation by developing countries in decision-making and establishing norms, as well as making debt more sustainable in low- and middle-income countries. 

CLAUDIO ROJAS (Chile) described the Monterrey Consensus as an analysis of a vision based on the broad participation of various stakeholders, the search for agreements and the value-added aspect of economic development. It also affirmed that the United Nations was the most democratic body in dealing with global development concerns.  The upcoming High-Level Dialogue on Financing for Development would present an excellent opportunity for the international community to push the development agenda forward.

He said that the Almaty Programme of Action, intended to assist landlocked and transit developing countries in achieving the millennium targets, was a key aspect of Latin America’s regional development strategy.  In that regard, Latin American leaders had recently met to forge a plan of action aimed at spurring greater regional economic cooperation, trade and investment.

CELESTINO MIGLIORE, Observer for the Holy See, noted that the total external debt of developing countries had increased from $1.5 billion in 1990 to $2.4 billion in 2001, and other countries were having serious problems coping with their debts.  The recurrent debt crisis had caused an outflow of financial resources over the years, which divested nations of resources that were vital to development.

He said the international community faced two challenges:  the need to resolve outstanding debt, and the need to create a suitable financial system for development.  Adequate concessionary financing was needed, as was an equitable distribution of the financial burden among the international community.  That approach could help developing countries recover from unsustainable debt caused by natural catastrophes, severe economic shocks or conflict.  The international community also needed to create an international financial system that could address the lack of credit in developing countries and stabilize trade to ensure payment of international debts.

A.C. JOSE (India) said that an estimated $50 billion more was needed to achieve the millennium targets on time.  Net private financial flows to developing countries had fallen to $192 billion in 2002, almost half the average annual levels during 1998-2000.  The increased participation of developing countries in international financial, monetary and trade institutions, in decision-making and norm-setting would go a long way in ensuring that their concerns were duly considered.  The United Nations must be allowed to play a key role in the management of global economic integration.

Turning to science and technology for development, he stressed the need for programmes that would capitalize on the rapid technological advances made in agriculture, industry, environment and services for social and economic development.  The advent of biotechnology presented a unique opportunity for both developed and developing countries to achieve sustainable development.  Significant investment was needed to harness biotechnology in the creation of goods, processes and technologies to improve productivity and cost-effectiveness.

AZANAW TADESSE ABREHA (Ethiopia) said the international community had honoured its commitment to address the special needs and problems of landlocked developing countries by adopting the Almaty Declaration and Programme of Action.  It had agreed to forge partnerships to overcome their problems, such as lack of territorial access to the sea and isolation from world markets, which contributed to poverty, inflated transportation costs, reduced trade and marginalization.

Noting that the main task ahead was to speedily and effectively implement the Almaty Programme, he stressed the role of international, regional and subregional organizations in carrying out that task.  Ethiopia called on all relevant United Nations bodies, including the United Nations Conference on Trade and Development (UNCTAD), as well as regional economic commissions, the World Bank, the WTO, the World Customs Organization and other international organizations to participate fully in implementing the Programme.

FADHEL AYARI (Tunisia) said that investment in science and technology was essential for achieving the Millennium Development Goals.  Only through greater access to knowledge and technology could developing countries improve their competitiveness and participation in world markets and the global economy.  Information and communication technologies played a crucial role in development, economic growth and poverty alleviation.

Still, the digital divide continued to grow, enlarging the gap between rich and poor, he said.  The upcoming World Summit on the Information Society in Geneva in December and Tunis in 2005 would be an historic event that would bring together all stakeholders and ensure that information and communication technologies were given a central role in sustainable development.  It offered world leaders an exceptional opportunity to create an integrated information society based on the principles of equality, justice, peace and democracy.  Such a society must open doors for the underprivileged and marginalized, and ensure gender equality in access and training.

GARFIELD BARNWELL (Guyana), speaking on behalf of the Caribbean Community (CARICOM), said the group’s members accepted the idea that measures to strengthen developing-country financial systems could render the global system somewhat more sound.  However, they could not compensate for turbulence in the Organization for Economic Cooperation and Development (OECD) economies.  Developing countries had been calling for policy coherence among the G7/G8 nations to facilitate global economic stability and transparency, as well as effective global governance through greater developing-country participation in an equitable and just system.

Regarding the external debt crisis, he said dialogue and actions were needed to bring the debt burden of HIPCs into line with their capacity to pay, and to create desirable conditions for those countries to grow economically.  Serious consideration should be given to external debt and commodity dependence, which constrained economic growth and development in many HIPCs.  Depressed international commodity prices over the past two decades had undermined efforts by many developing countries to reform domestic policy, restructure debt and mobilize external resources.  Those problems required immediate attention by the international community.

BENJAMIN GILMAN (United States) said that individuals, private organizations, and governments had become increasingly dependent on networked information systems, which controlled power, water, financial structures and other vital systems.  Ensuring the integrity, availability and reliability of those systems was the topic of the United States draft resolution on “Cybersecurity and the protection of critical information infrastructures”.  The goal of that text was to encourage governments to combat terrorists, criminals and pranksters, who placed their nations’ infrastructures at risk.

He said the keys to prosperity in the information society were education, individual creativity and an environment of economic and political freedom.  Harnessing the power of the information society required the active participation of all stakeholders –- governments, international and regional organizations, the private sector and civil society.  Also, the biotechnology field offered enormous potential benefits to developing countries.  Research was underway in private companies, international research institutions and leading universities to produce disease-resistant bananas, cassava, potatoes, cowpeas and rice.  Biotechnology also helped fight disease by developing and improving medicines.

LUIS GALLEGOS CHIRIBOGA (Ecuador) stressed the importance of debt restructuring, noting that last year the ratio of his country’s debt to its gross domestic product had been 94.2 per cent, while the debt-to-export ratio had risen to 325.8 per cent.  Ecuador’s case was not an exception.  Despite repeated attempts at negotiation, many developing countries, including medium-income nations, had untenable debt levels that impeded socio-economic development and political progress.  That made it increasingly necessary for creditors and debtors alike to find a durable solution to the debt problem.

Debt renegotiation must ensure long-term debt sustainability, he continued.  The concept of “capacity to pay,” whereby a debtor’s budgeting needs for social development were taken into account, could play a role in the renegotiation process.  The International Monetary Fund (IMF) must tailor its lending terms to the socio-economic, political and job-creation needs of each debtor nation.  Ecuador called for the creation and promotion of innovative financial mechanisms, such as debt-for-development swaps.

MURARI RAJ SHARMA (Nepal) said that regional and global efforts to mainstream landlocked developing countries and help their people had been woefully insufficient and the Almaty Programme of Action was a welcome step, unique in recognizing their special needs.  The challenge now was to translate the Programme of Action into concrete activities that would bring real benefits to the people and economies of landlocked countries.  On the one hand, landlocked developing countries needed policies to reduce poverty, foster development and upgrade capacities.  But others must assist them in gaining access to the sea and world markets.  Nepal called on the international community to support and sustain efforts to overcome the trade and transit problems of landlocked developing countries.

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