WORLD economic slowdown could SQUEEZE RESOURCES FOR DEVELOPMENT, WARNS

UNDER-SECRETARY-gENERAL AS SECOND COMMITTEE BEGINS GENERAL DEBATE

The current global economic slowdown could depress world gross domestic product and restrict the resources available for development, whether for investment or aid, José Antonio Ocampo, Under-Secretary-General for Economic and Social Affairs, warned in a statement to the Second Committee (Economic and Financial) as it began its general debate today.

With 2005 marking the start of the 10-year countdown to 2015 -- the target date for achieving the Millennium Development Goals -- stable growth in the world economy was vital, he stressed, noting that the factors presently sparking the economic lull included higher oil prices, weak employment recovery in several economies, a setback in the global information and telecommunications sector, and policy tightening to curb overheating.

However, there were some positive economic signs, he noted.  Business investment was growing in most economies, international trade had increased, global inflation was low and the international economic environment was still favourable to developing countries.  Several downside risks and uncertainties had persisted, including twin trade and budget deficits in the United States, the possibility of a further rise in oil prices, and a prolonged weakness in the labour market.

During the subsequent discussion, speakers asked the Under-Secretary-General about the impact of unemployment worldwide and HIV/AIDS on global economic growth.  He said in response that shrinking employment should indeed be a major focus for all industrialized economies, including those of the United States, the European Union and China.  As for HIV/AIDS, the epidemic had had fundamental socio-economic repercussions in Asia and the Caribbean, decimating large swaths of the labour force and pushing up health costs.

Responding to a question on debt relief, he pointed to the current lack of international funding for developing countries, noting that financing for debt relief would pull resources from other needy areas.  However, if debt relief could be fully funded, and other resources made available, sub-Saharan Africa, which showed the biggest potential problems in achieving the Millennium Development Goals by 2015, would benefit greatly.

As delegations made their country statements in the ensuing period, several speakers carried the debt debate further.  Nigeria’s representative, speaking on behalf of the African Group, described the debt crisis as “one of the greatest challenges of this generation”.  The Heavily Indebted Poor Countries (HIPC) Initiative had failed to boost economic prospects or address poverty in beneficiary countries, and increases in official development assistance (ODA) could not meet the enormous costs of external debt.  A mechanism of debt swapping for sustainable development could be one concrete way of meaningfully addressing the problem, he suggested.

International financial institutions also drew attention to the intractable debt crisis.  The representative of the International Monetary Fund (IMF), noting that the HIPC Initiative had recently been extended for two more years, encouraged eligible countries to take the necessary actions to benefit from it and urged full participation by creditor countries.  Lauding the initiative’s extension, the World Bank’s representative welcomed a forward-looking debt sustainability framework aimed at helping low-income countries to manage their borrowing and to avoid amassing unsustainable debt.

Other speakers underscored the importance of a successful and timely outcome to the upcoming Doha trade negotiations, stressing the need to open up markets and eliminate unfair tariffs as well as agricultural subsidies.  The representative of Bangladesh lamented that tariff and non-tariff barriers restricted market access for developing-country products, particularly those threatened with marginalization, contributing to an uneven trading field.  Pakistan’s representative, stressing the need to eliminate unequal subsidies, said that developing countries must lay down policies to sustain rural development.

Delegates also emphasized the need to bridge the democracy deficit in global governance, reform the international financial architecture, and seriously address climate change, natural disasters and international migration.  Developing countries needed a greater role in international decision-making and norm-setting, some speakers noted, as well as inclusive and democratic dialogue among sovereign States on international tax cooperation.

Also speaking today were the representatives of Qatar (on behalf of the Group of 77 and China), Netherlands (on behalf of the European Union), China, Russian Federation, Peru, Viet Nam, United Republic of Tanzania, Lebanon, San Marino, Barbados (on behalf of the Caribbean Community), Burkina Faso, United States, Samoa, Egypt and Colombia.

The Second Committee will meet again at 9 a.m. tomorrow, Tuesday 5 October, to hold its first special event on “Development and Conflict”, featuring a presentation by Paul Collier, Professor of Economics at St. Anthony’s College and Director of the Centre for the Study of African Economies at Oxford University.

Background

The Second Committee (Economic and Financial) met this morning to begin its general debate for the fifty-ninth session of the General Assembly.

Introductory Remarks

Opening the session, JOSE ANTONIO OCAMPO, Under-Secretary-General for Economic and Social Affairs, noted that global expansion had slowed down during the second quarter of 2004, after strong growth in the second half of 2003.  The World Economic and Social Survey had warned that world economic strength had remained largely cyclical, and that the accelerating phase of global expansion would end in the second half of 2004.  Several factors had contributed to the recent global economic lull, including higher oil prices, weak and unstable employment recovery in several economies, a setback in global information and telecommunications, and the effects of policy tightening in some economies to curb overheating.

Despite the recent slowdown, some resilient economic signs had remained, he said.  Business investment had continued to strengthen in most economies, international trade was still growing, global inflation had remained low and the international economic environment had remained favourable to developing countries.  Indeed, despite the moderate increase in United States interest rates, monetary policies in industrial economies had continued to broadly support economic growth.  Several downside risks and uncertainties had persisted, including twin deficits in the United States, the possibility of a further rise in oil prices, and a prolonged weakness in the labour market.  Economic growth in 2005 would be a quarter or even a half percentage point lower than the predicted 3.5 per cent.

Turning to the impact of the economic slowdown on development goals, he said the $10-per-barrel increase in world oil prices could depress global real gross domestic product (GDP) by one half to one per cent within one to two years.  Second, the slower pace of global expansion meant fewer resources would be available to finance development, whether in the form of investment or aid.  Third, the eventual correction of the large United States external payments deficit would require either a substantial depreciation of the dollar against other major currencies, a slowing of domestic demand growth in the United States below output growth, or a rise of output growth relative to domestic demand growth in the rest of the world.

With 2005 marking the start of the 10-year countdown to 2015 -- the target date for the Millennium Development Goals -- prospects of slower economic growth were not encouraging, he said.  Stable growth in the global economy was crucial to those goals, as was a successful and timely outcome to the Doha Round of trade negotiations.  Eliminating agricultural export subsidies and reducing production subsidies should also remain priorities, and there was an urgent need to reduce tariffs without disproportionately affecting developing countries.  Moreover, aid flows must rise well above current levels, and commitments made at Monterrey must be better aligned with national development strategies and priorities.

Questions and Answers

Responding to a question regarding the lack of employment growth’s impact on world economic recovery, Mr. OCAMPO said weak employment conditions were indeed a weak spot and that employment recovery should be a major focus of attention in all major economies, including the United States, the European Union and China.  Still, there was no unique solution to that problem.  As for the impact of HIV/AIDS on prospects for world economic recovery, the epidemic had had fundamental socio-economic repercussions in Asia and the Caribbean, decimating large swaths of the labour force and pushing up health costs.

Regarding the Triennial Comprehensive Policy Review (TCPR), he noted significant progress by the United Nations working at the core level and with the World Bank at the field level.  Still, greater participation and cooperation with the United Nations resident coordinators was needed among the United Nations specialized agencies, programmes and departments without a field presence.  That would be discussed in the forthcoming meeting of the Commission on Sustainable Development.

Concerning the worrisome state of the world economy, he said there ere no signs of another major crisis on the horizon.  Rather, the key issue had been the difficulty of returning to rapid economic growth.  Prospects for 2004 and 2005 were good and countries that depended on raw materials, mainly in Africa and Latin America, had shown a relatively positive comeback.

In response to a question about the economic impact of the fight against terrorism, Mr. Ocampo said it had eliminated the peace dividend enjoyed by the world economy in the early 1990s.  That trend should be a subject of significant attention and discussion by the Committee.

As for the likelihood of achieving the Millennium Development Goals by the target year of 2014, he said sub-Saharan Africa was the only region indicating potential broad-based problems.  That had been underscored in the Secretary-General’s report on the state of the goals.  Other regions were on track to meet at least some of the goals, notably Northern Africa, Western Asia, Latin America and the Caribbean.

Speakers also asked about the effects of debt relief, increased non-tariff barriers, and corruption on economic recovery in developing countries.  Drawing attention to Mr. Ocampo’s remarks that higher oil prices constituted the leading uncertainty for future economic outlook, one representative said that that observation could explain the recent economic lull, but not the failed economies that had been failing over the past year.  His statement was too general and somewhat contradictory, she said, especially when one considered that the world was not lacking oil supplies.

Responding, Mr. Ocampo said his statement had focused on short-term conditions in the world economy, and was not meant to include long-term factors, such as corruption and non-tariff barriers.  Many institutions had noted that higher oil prices had weakened global economic recovery.  However, he had made no comment on any real disruption in world oil supplies and did not believe there was any risk of a major recession due to oil prices.

As for debt relief, he pointed to the deficit in international funding for developing countries.  If part of that funding went to debt relief, less would be available for other purposes.  If debt relief was fully funded, and other resources made available, sub-Saharan Africa would be one of the regions to benefit greatly.  Meeting the Millennium Development Goals there would also depend on continent’s ability to grow faster.

JAMAL NASSER AL-BADER (Qatar), speaking on behalf of the “Group of 77” developing countries and China, said that this year’s sluggish economy did not bode well for most developing countries, particularly those in Africa, and could thwart their ability to achieve the Millennium Development Goals.  The Group underscored the importance of the New Partnership for Africa’s Development (NEPAD), and called on development partners to deliver on their commitments to Africa.  Developed countries must also fulfil their promise to channel 0.7 per cent of their gross domestic product (GDP) towards official development assistance (ODA).

External debt continued to drain developing countries’ resources, he continued, noting that their total external debt had increased by almost 3 to 4 per cent.  There was a need for a lasting solution to the debt burden, and for increased financing for the Heavily Indebted Poor Countries (HIPC) Debt Initiative.  Since its inception in 1995, total net ODA transfers had fallen sharply and levels had yet to recover despite a rise in bilateral aid flows after 2001.

KOEN DAVIDSE (Netherlands), speaking on behalf of the European Union, noted that the Committee would review implementation of the Millennium Declaration next year, as well as progress made in the integrated and coordinated follow-up to major United Nations conferences and summits.  The review of such issues as financing for development came at a time when the United Nations must become more effective and efficient in achieving the Millennium Goals and moving the Johannesburg Plan of Implementation forward.  Recommendations to follow up the Monterrey Consensus and the Triennial Comprehensive Policy Review would be vital inputs in achieving that common vision.

The Committee must further improve its working methods, he continued.  The use of interactive debates and panel discussion could lead to more candid and effective interactions on crucial issues.  The Committee should consider ways of making further progress in documentation, with the aim of producing coherent flagship reports on major topics discussed that would have a lasting impact and influence.  The Committee also needed a good working relationship with the Third Committee, especially since its discussion of social issues related closely to the debate on globalization.

ZHANG YISHAN (China) said the current session and forthcoming meetings of the General Assembly should focus on several development areas, including continued efforts to enhance international economic and development cooperation, uphold multilateralism and build development partnerships based on mutual trust, benefit and help.  China called for stronger South-South cooperation and North-South dialogue.  Developing countries should become more competitive through capacity building and cooperation.  Developed countries should accelerate global economic growth and support for developing countries in market access, financing, ODA, technical transfer and debt relief.

The General Assembly should also focus on poverty eradication and explore new financing methods for development, he continued.  Full attention must be paid to trade and expediting the successful conclusion of the Doha development agenda.  Moreover, the Assembly should capitalize on next year’s high-level plenary meeting and comprehensive review of the Millennium Development Goals to further mobilize political will and improve the global management of poverty eradication and sustainable development.  The United Nations should create a fair and reasonable system for evaluating progress in achieving the goals at the national level and for assessing international cooperation and development assistance commitments.

MUNIR AKRAM (Pakistan) noted that economic recovery had been uneven and poverty had increased despite the broad global strategy that was in place.  Implementation of such international agreements as the Doha Round and the Monterrey Consensus was lacking and countries had continued to blame each other for failing to proceed towards the Millennium Development Goals.  The Committee must seek for practical ways to achieve those goals during the present session, using the time between now and the high-level review in 2005 to work out a concrete plan of action to establish a genuine partnership for development and peace.

The plan should be based on four main pillars, he said, noting that the first and most essential one was good national policies and governance in developing countries.  Even the worst-performing economies could be turned around. The second pillar must be adequate financing for development.  The international community must flesh out and make more practical the consensus reached at Monterrey through foreign grant assistance, public and private sector partnerships, assistance to the poor in raising loans for small businesses, small fees on stock-market transactions and debt write-offs.  The third pillar was a fair international trade regime, a Doha Round that was a genuine development round, he said.  Some gains on agricultural subsidies had been made, but development goals and commitments were still unclear.

Unequal subsidies must be eliminated, and developing countries must develop policies to sustain rural development in a liberalized regime, he said.  Tariff peaks must be eliminated, markets must be opened up, special and preferential treatment must be put into operation, and commodity prices must be stabilized.  The fourth and final pillar must be access to technology, along with relevant research and development.  No nation could keep pace in today’s globalizing world without technology allowing it to fairly compete.

ANDREY DENISOV (Russian Federation) said his country had revitalized its donor capacity and was increasing the international development assistance, providing debt relief to the poorest countries, particularly those in the Commonwealth of Independent States (CIS) whose economies were in transition.  Russia’s proactive stance in preventing and combating corrupt practices, illicit asset transfers and money-laundering had been well received by the Financial Action Task Force (FATF), and it had taken the initiative to set up in FATF-type regional groups in Central Asia to end money-laundering and terrorism financing.

Russia had made sustainable development a top priority and on 30 September had approved ratification of the Kyoto Protocol, he continued, noting that the document had been submitted to the lower house of Parliament for signature.  Moreover, Russia had recently joined the Convention to Combat Desertification and was considering acceding to the Stockholm Convention on Persistent Organic Pollutants and related amendments to the Montreal Protocol on Substances that Deplete the Ozone Layer.  As Chair of the United Nations Forum on Forests, Russia had taken the lead in strengthening constructive framework and the role of the Forum in forestry matters. 

JOSE ANTONIO DOIG (Peru) said that over the past decade the average per capita income of 69 developing countries had either stagnated or reached negative figures, while another 37 nations had seen growth of only 1 per cent.  Social inequality had increased considerably during that period, and the international community must urgently adopt measures to promote a less speculative and more productive financial system.  Innovative financial mechanisms must be set up to enhance democratic governance, do away with poverty and marginalization, and deal with unexpected external situations.

He added that changes must be made in fiscal accountability to expand public and private investments, especially in infrastructures.  The international community must seek mechanisms to increase and expand available resources, and develop financial policies to improve living standards.  Job creation must become a vital priority and the private sector must play a decisive role in boosting employment.  Equitable rules and norms were also needed for migration at the global level.  Peru had called for the convening of a special international conference of developing countries that had considerable migration flows.  The first segment would take place in Lima during the first quarter of next year.

LE LUONG MINH (Viet Nam), stressing the importance of promoting North-South and South-South cooperation, said his country was promoting trade and investment relations with other developing countries in Asia, Africa and Latin America, including tripartite cooperation with the participation of United Nations specialized agencies.  Despite the rash of natural disasters and the SARS and avian flu epidemics, Viet Nam had maintained an average annual economic growth of 7.5 per cent and had cut in half the number of poor households.

Viet Nam had also pursued regional and international integration in the past several years, he continued, noting that it was actively involved in the Asia-Pacific Economic Cooperation (APEC), Asia-Europe Meeting and the Association of South-East Asian Nations (ASEAN).  Moreover, it was negotiating the creation of free-trade zones between ASEAN and China, Japan and the Republic of Korea as well as fostering closer economic ties with the United States, European Union and India.  Viet Nam would host the upcoming Fifth Asia-Europe Summit and the 2006 APEC Summit.  It was also expediting negotiations for accession to the World Trade Organization.

AUGUSTINE MAHIGA (United Republic of Tanzania) said many developing countries in Africa had demonstrated remarkable political initiative in combating corruption and developing good democratic governance, free-market entrepreneurship and fiscal reforms.  However, those bold measures had not been adequately reciprocated by their developed partners in the spirit of the Millennium Declaration and the Monterrey Consensus.  Countries that had not yet met their pledge to meet the 0.7 per cent ODA target were urged to speed up their time frame for full disbursements.

He said the economies of most developing countries, particularly the least developed ones, depended largely on agricultural subsidies.  The efforts of developing countries to make agriculture the backbone of their economies had been constrained by the continued deterioration of commodity prices in the world market place.  The related issue of farm subsidies had been raised repeatedly and should remain central to the world trade negotiations agenda.  It was vitally important that the Doha trade negotiations advanced in a democratic, transparent and open manner in creating an equitable trading system that was beneficial to all.

MAJDI RAMADAN (Lebanon) expressed concern over the slowdown in global economic growth in the second half of 2004 and its negative impact on developing countries’ sustained development efforts.  While the recent rise in ODA was encouraging, current levels still fell short of long-agreed commitments to enable countries to achieve the Millennium Development Goals.  External financing conditions for Lebanon and many other developing countries had improved, but that was due to domestic economic conditions and low-interest rates in international financial markets.

Trade liberalization could generate a large share of the resources needed for financing development, thus pushing the development process forward, he continued, welcoming the latest agreement on agriculture as a first step in the trade liberalization process.  Moreover, Lebanon welcomed the forthcoming debate on the Triennial Comprehensive Policy Review (TCPR), which could facilitate a predictable, adequate flow of resources to fund operational activities.  Migration was of paramount importance to the development process, and the Committee should continue discussing the need for an international migration conference.  In 2003, migrants’ remittances had surpassed the developing countries’ total ODA.

JIBRIN CHINADE (Nigeria), speaking on behalf of the African Group, stressed that lasting peace and sustainable development must be viewed as inseparable.  Achieving durable peace at home and abroad was a prerequisite for realizing the lofty objectives of the New Partnership for Africa’s Development (NEPAD).  In achieving those objectives, the continent would not compromise on good economic, corporate, social and political governance.  It would protect human rights and fundamental freedoms, and reform and strengthen its institutions.  Most governments were giving increasing prominence to the Millennium Development Goals and other development objectives in development planning and budgetary allocations.

However, he added, Africa’s best efforts would come to naught unless the commitments of Monterrey and the World Summit on Sustainable Development were fulfilled.  Developed countries, in particular, must deliver on their ODA commitments, and place development above all other considerations in interacting with developing countries.

Resolving the debt crisis was one of the greatest challenges of the current generation, and the Heavily Indebted Poor Countries (HIPC) Debt Initiative had failed to strengthen economic prospects and address poverty in its beneficiary countries, he said.  Stressing that increases in ODA could not alleviate the enormous cost of servicing external debt, he called for a speedy resolution of the lingering debt crisis.  Exploring and implementing the mechanism of debt swap for sustainable development would be one concrete way of meaningfully addressing the problem.  It was vital to bring convergence and coherence into international development policies, as well as in the international financial system.

DANIELE BODINI (San Marino) said that the least developed and developing countries needed greater and

more timely assistance.  The governments of less privileged countries should be responsible for distributing their resources at home in a fair and equitable way.  However, only when better governance and true democracy was achieved in recipient countries would developed ones speed up assistance.

He said the vast majority of developed countries were deeply concerned by world poverty, and believed in speeding up the process to increase financial and technical assistance, although their low-key behaviour could sometimes be misunderstood as an unwillingness to help.  However, developed countries were facing serious problems at home, including the depletion of retirement funds and the alarming increase in health care costs.

CHRISTOPHER HACKETT (Barbados), speaking on behalf of the Caribbean Community (CARICOM), said that achieving the Millennium Development Goals and bridging the democracy deficit in global governance, which was essential to fostering sustainable development and social justice, deserved top priority on the Committee’s agenda.  Fairer trade and finance policies, reform of the international financial architecture, and global frameworks to address climate change, natural disasters and international migration were also important.  Developing countries needed a greater role in international decision-making and norm-setting, and CARICOM calling for a more open, inclusive and democratic dialogue among sovereign States on international tax cooperation.  There was also an urgent need to more comprehensively address the debt burden of middle-income developing countries, particularly since the international community’s focus on their per capita incomes often masked the impact of debt on their populations.

While CARICOM was assisting Grenada, Haiti, Jamaica and other Caribbean islands devastated by the recent cycle of hurricanes, greater international recovery aid was urgently needed, he continued, noting that it would cost at least $2 billion to rebuild Grenada’s destroyed infrastructure, resources far beyond CARICOM’s means.  The Community reiterated its Flash Appeal at the United Nations last Friday, for resources to cover relief and recovery.  It also called on Member States who were non-signatories to the Kyoto Protocol to follow the Russian Federation’s lead and ratify the treaty.  While small island developing States (SIDS) emitted less greenhouse gases and other ozone-depleting substances than any other region, they were more adversely affected by global climate change than any other region.

MICHEL KAFANDO (Burkina Faso) said that globalization and trade liberalization had aggravated social and economic disparities among nations.  Poverty continued to become more acute in developing countries, where nearly a quarter of the world’s population lived on less than a dollar a day.  Foreign direct investment (FDI) was absent in many poor countries, ODA was insufficient, and a shortage of services and drinking water meant that one third of humanity lived for only 40 years.  Debt must be alleviated, ODA increased, and FDI spread more equitably so that all could benefit from globalization. 

IFTEKHAR AHMED CHOWDHURY (Bangladesh) said the world needed an international environment that was conducive to development, a transparent and more participatory international financial architecture and a predictable flow of financial resources to developing countries.  Innovative financial mechanisms were vital in supporting the efforts of developing countries to eradicate poverty, achieve growth, and attain sustainable development.

After the setback to trade negotiations at Cancun, he continued, a more courageous set of actions was needed, as well as significant compromise.  Agreements must be fully implemented, and the capacities of developing countries built up to broaden their export bases.  Tariff and non-tariff barriers restricted market access for developing-country products, particularly those threatened with marginalization.  They contributed to an uneven trading field and must be eliminated, to make trade more development-friendly.

SICHAN SIV (United States) said that like last year, he would refrain from making a statement during the general debate.  The Committee’s steps to reform, streamline and make its work more relevant had been reflected in this year’s programme of work.  More could and should be done to further that process.  The United States would focus on important questions under specific agenda items, as concentrating time and energy in that manner would facilitate a more productive discussion.

EDUARDO DORYAN, Special Representative of the World Bank to the United Nations, said that Bank President James Wolfensohn had recently expressed his concern that while $900 dollars were being spent on military expenditures, there was an annual shortfall of $50 billion to meet the Millennium Development Goals.  Finance ministers had gathered last Saturday for the World Bank’s 2004 Development Committee meeting in Washington, D.C., to discuss aid effectiveness and financing methods, strengthening the foundations for growth and private sector development, debt sustainability, and participation by developing and transition countries.

During that meeting, he said ministers had welcomed progress to date on the Poverty Reduction Strategy Process and called for a closer focus on World Bank and International Monetary Fund (IMF) efforts to streamline their aggregate conditionality.  The Bank should also review its policy and practices on conditionality and report on at its fall 2005 meeting.  Stepped up and more timely financial assistance to countries committed to sound policies was critical, particularly in sub-Saharan Africa.

Moreover, debt sustainability was essential to growth, he said, welcoming the recent decision under the Heavily Indebted Poor Countries (HIPC) Debt Initiative to extend the sunset clause.  The World Bank welcomed a forward-looking debt sustainability framework aimed at helping low-income countries to manage their borrowing and avoid amassing unsustainable debt, while pursuing the Millennium Development Goals.  There was need for joint World Bank-IMF debt sustainability analyses (DSAs) based on a clear division of labour to provide developing countries and their development partners with clear and coherent analysis and guidance.

ALI’IOAIGA FETURI ELISAIA (Samoa), speaking on behalf of the Pacific Islands Forum Group, said that the development impact of natural disasters, such as the recent hurricanes in the Caribbean, extended well beyond the storms’ immediate aftermath.  Such storms set back in a matter of hours the hard-earned development achievements of many years.  They could wipe out an entire year of agricultural production, damage productive lands and hamper the development of many more.  Critical funding earmarked for social or infrastructural investment must be redirected to meet emergency and medium-term rehabilitation requirements.  Moreover, potential investors must think twice before investing in cyclone-prone countries.

He said that climate change, climate variability and sea-level rise continued to pose enormous threats to the Pacific Island Forum countries.  In their August 2003 statement, Forum leaders had noted that members were taking concrete steps to mitigate climate change and meet their Kyoto targets.  They had called for urgent action to reduce greenhouse gas emissions, and delivered a clear signal that further commitments must be made in the future by all major emitters.

REINHARD MUNZBERG, International Monetary Fund (IMF), reviewed the highlights of a meeting of the Fund’s International Monetary and Financial Committee over the past weekend.  Among other observations, the Committee had welcomed the recent strong growth in most low-income countries, but was concerned that growth remained inadequate to achieve the Millennium Development Goals.  The key challenge for those countries was to press ahead with efforts to further strengthen institutions and governance, and build on the macroeconomic stabilization that had been achieved.  The international community must support those efforts with more open markets for those countries’ exports, increased and better coordinated aid and technical assistance, further debt relief, and sound policy advice.

Noting the need for an open, inclusive, multilateral trading system as central to global growth and economic development, especially for developing countries, he said the Doha round offered a unique opportunity for substantial progress toward that objective.  The IMF urged all parties to work towards concrete advances in liberalizing trade, strengthening multilateral trade rules, and reducing trade-distorting subsidies, notably in agriculture.

Welcoming progress in providing debt relief under the Heavily Indebted Poor Countries (HIPC) Debt Initiative, which had been extended for two more years, he encouraged eligible countries to take the necessary actions to benefit from the Initiative, and urged full creditor participation.  The Committee supported the IMF’s and World Bank’s work on a single framework to assist efforts by low-income countries to achieve and maintain robust debt sustainability while pursuing their development aims.

TAREK ADEL (Egypt), endorsing the statements by the Group of 77 and China and the African Union, noted that sustainable development and poverty eradication were a joint responsibility based on international cooperation and the principles of the United Nations Charter.  Domestic development reforms must be accompanied by steps to rectify the imbalances in the international economic and financial system structure.  That, coupled with progress in the World Trade Organization negotiations, would be necessary for developing countries to achieve the Millennium Development Goals.

Development assistance, debt relief and foreign direct investment played an important role in the development process, as did technical assistance to bridge the knowledge gap between North and South, he said.  Egypt was keen on furthering the New Partnership for Africa’s Development (NEPAD), South-South cooperation and African reform at the national level.  The North must do its part to foster poverty eradication and sustainable development throughout Africa and other developing regions.  Member Stats must meet their commitments to earmark 0.7 per cent of GDP for official development assistance.

MARIA ANGELA HOLGUIN CUELLAR (Colombia) said the growing disparity in the living standards and economic progress of developing and industrialized nations was negatively impacting the least developed and middle-income countries.  Per capita income was only one indicator of development.  Various other factors -- such as protectionism, subsidies, debt and service costs, natural disasters, illegal drug trafficking and organized crime -- impeded economic growth in middle-income countries and in some cases caused increases in hunger and poverty.  More than half the world’s population, 80 per cent of the world’s poor surviving on less than two dollars a day, lived in middle-income countries.  Among them were 35 million children suffering from malnutrition.  The shortfall in international development aid to those nations was worrying and there was an urgent need for technical assistance and technology transfer to strengthen their national capacities.

She called for a fair and equitable international trading system and for developed countries to abolish protectionist measures in order to facilitate access for exports from developing countries.  The international financial system must also be reformed to make decision-making more open, democratic and transparent.  Middle-income countries required a favourable international investment climate in order to compete in world markets and create the necessary conditions for socio-economic progress.

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