At Doorstep of New Development Agenda, Economic and Social Council Explores Ways to Exploit United Nations System in Shift from National to Global Model
The world was in for a period of moderate and uneven economic growth, delegations heard as the Economic and Social Council concluded its meeting on the theme “coherence, coordination and cooperation in the context of financing for development and the post-2015 agenda” while considering its role in that process.
Global growth in 2015, said Thomas Helbling, Chief of the World Economic Studies Division of the International Monetary Fund (IMF), would remain moderate and was projected to increase 3.5 per cent over the previous year and 3.8 per cent in 2016. Prospects across countries and regions were uneven, with improvements expected in advanced economies while emerging markets and developing economies would see lower growth due to weaker prospects in some major emerging markets and oil exporters. In the short-term, the fall in oil prices was positive for importers and negative for exporters.
A new aspect of the economic forecast, he said in his presentation to the Council, was lower growth in emerging economies this year, with a rebound next year, while conditions remained robust for less developed economies. Among key factors supporting higher growth in emerging and developing economies were still-favourable financial conditions, a gradual lifting of structural impediments and recovery in economies affected by geopolitical tensions or domestic strife. The potential for a demographic boost in emerging economies was another element.
Among numerous other factors impacting global growth, he said, were the legacies of the economic crisis, including weak banks and high debt levels, and the United States monetary policy, which would tighten as employment approached the normal rate. The latter would affect emerging economies as the financial markets over the last few years were characterized by low growth in the advanced economies. The expected managed slowdown in China’s economy, which would avert a sharp adjustment later, would give less impetus to other less developed economies.
Policies for advanced economies, he suggested, should promote demand to support recovery and boost public investment and structural reforms to spur potential output. Emerging and developing economies needed to address vulnerabilities, increase potential output and make use of lower oil prices to reform energy subsidies and taxes, among other things.
Responding to questions posed during an interactive discussion, Mr. Helbling said financing for development was indeed a challenge in the uncertain economic context. He noted that overall capital flows had remained relatively strong and would contribute to development, although volatility in private flows continued to pose challenges. So far, conditions in emerging markets and developing economies were better than expected and were expected to continue, reducing vulnerabilities.
Responding to a further question on how the weakness of the dollar affected the United Nations, he said it would place greater pressure on Member States in terms of contributions.
Also today, the Council held a thematic debate on “Follow-up and the way forward: enhancing the role of the Economic and Social Council”, also prompting an interactive dialogue. In that discussion, speakers emphasized the Council’s coordinating and review functions, with Economic and Social Council Vice-President Oh Joon pointing out that the Council had been mandated to serve as a platform to coordinate global, regional and national development activities, and to link the follow-up processes.
In closing remarks, Martin Sajdik (Austria), Council President, stressed its importance in fostering coordination and collaboration. Noting the challenges on the road to the Third International Conference on Financing for Development in Addis Ababa, amid the uneven global economic outlook, he said it was important to create enabling environments for growth, as a strong global economy was fertile ground for development.
Council Vice President María Emma Mejía Vélez opened the thematic debate.
Also speaking today were representatives of Colombia, Guatemala, Croatia, Switzerland and Armenia.
International stakeholders representing the World Bank and civil society also participated.
The Council will next meet at 10 a.m. on Wednesday, 22 April, for a special meeting on international cooperation in tax matters.
Interactive Discussion
The representative of Colombia, noting that the presentation provided room for both optimism and pessimism, wondered whether a credible and workable system of development financing could be devised in that context.
On the slowdown in China, a representative of the World Bank sought details on the scale and reasons.
The representative of Guatemala wanted to know whether the fall in oil prices could be a long-term phenomenon. If so, Latin American and African nations would see low growth over the next decade, as the prices of commodities were tied to that of oil. The representative of Croatia sought elaboration on midterm prospects and potential impact of currency fluctuations. Another question posed was whether there was any way of knowing how long the legacy of the global economic crisis would last.
Responding to a number of the questions, Mr. HELBLING said that China’s slowdown contained few surprises, because it was in part induced by policy. Managing growth vulnerabilities of the scale in China was challenging and could bring surprises.
He said it was hard to say where oil prices would settle. However, after decades of high prices, some adjustments had started. Non-oil factors such as production outages and sanctions also affected prices. Energy was only one of the inputs in other commodities, he said, stressing that falling oil prices need not be a drag on developing economies, unless they were also oil producers. The bigger point was to ensure that commodity booms did not harm diversification and put other sectors at a disadvantage.
On currency fluctuations, he said the major concern was that trends could acquire a life of their own. From a historical perspective, the current dollar cycle had remained comparatively modest. There was a risk of further currency alignment in an environment of divergent and uneven growth in developed economies. It was hard to predict how long the crisis legacy would last. It depended on growth, which was a long-term process. Over the next five years, he expected growth to remain modest.
Thematic Debate
Opening the discussion, titled “Follow-up and the way forward: enhancing the role of the Economic and Social Council”, was MARÍA EMMA MEJÍA VÉLEZ (Colombia), Vice-President of the Economic and Social Council. She said the Council’s role was key to moving forward, with its Knowledge Communication and Peer Reviewing process at the core of implementation of the post-2015 agenda. The Council would also play a central role at the Third International Conference on Financing for Development. Noting its tools for follow-up, she drew attention to the role of the High-Level Political Forum on Sustainable Development, adding that any review mechanisms should be based on experiences shared during the voluntary national presentations for the voluntary ministerial review. Its broad policy reviews could point the way forward.
The Council, she said, would also be instrumental in strengthening coherence among agencies and Governments. It could formulate operative links between operational and normative issues of the United Nations system, such as financing and governance, among others. The primary goal was to adapt the United Nations development system to support the new agenda in a strategic manner. In that context, the Council could align functions, improve Government capacity, and focus on organizational aspects in the post-2015 scheme. Further, the cooperation forum could become a platform for mutual accountability.
OH JOON (Republic of Korea), Council Vice-President, said that the world economy faced many pressing challenges as the international community prepared to reach important sustainable development agreements. In that context, the United Nations, in particular the strengthened Economic and Social Council, would have to deliver tangible results. To complete its mandate of promoting the integration of the economic, social and environmental dimensions of sustainable development, the Council had unique assets and would play a central role in the implementation of the post-2015 agenda, for which active engagement, strong alignment of interests and policies, and accountability would be crucial.
Emphasizing the importance of interaction, he said the Council had been mandated to serve as a platform to coordinate global, regional and national development activities and to link together the follow-up and review processes. The body could connect the new development agenda, the operations of the United Nations development system, and financing for development. As such, regular exchanges and the annual special high-level meetings with the World Bank, International Monetary Fund (IMF), World Trade Organization (WTO) and United Nations Conference on Trade and Development (UNCTAD) would remain very useful. The Council, while capitalizing on its strengths and expertise, should serve as a solid platform for sharing values, bringing together stakeholders and setting shared objectives.
Interactive Discussion
An Executive Director of the World Bank said some of the targets and indicators involved in the post-2015 agenda were not easily quantifiable and stressed the need for robust accountability frameworks. Disparities and sensitivities existed in the global and national accountability frameworks. There had been closer collaboration among international institutional stakeholders; regular updates and exchanges would be very helpful.
A representative of civil society stressed the need for vigorous follow-up of the coming commitments to be made in Addis Ababa. Stressing that the annual high-level meetings between the United Nations and the Bretton Woods institutions would not be sufficient in that regard, she called for the establishment of a separate intergovernmental forum that would examine all dimensions.
Another representative of civil society said the Economic and Social Council-Bretton Woods dialogue had been established in Monterrey to build coherence. However, the deliberations over the past two days were insufficient in terms of contributing to the creation of a time-bound framework. Greater coherence could have been achieved through smaller round tables that facilitated meaningful exchanges among all stakeholders. Future sessions could have more focused discussions on key themes, including panels of experts and specific working groups. Furthermore, future meetings should be held before the Spring Meetings of the Bretton Woods institutions to generate greater relevance and credibility.
The representative of Switzerland, stressing the need for a strong accountability framework, said the issue of financing for development was an integral part of the post-2015 agenda. As such, follow-up of the Addis Ababa conference must be part of that process. The Council and the High-Level Political Forum should play a complementary role as the United Nations proceeded to monitor implementation of the new agenda.
Another World Bank Executive Director pointed out that resources were being lost because of a lack of competition in the markets. That gave rise to high prices and low quality and affected the poor and most vulnerable people. While discussing the “billions to trillions” dimensions of development financing, it was important not to lose sight of the need to ensure the most effective and efficient use of existing resources.
The representative of Armenia said that the High-Level Political Forum was well-positioned to provide a solid platform for review. Noting also the voluntary nature of the ministerial review, she suggested looking at incentives to encourage participation. National statistical agencies should play a central role during review, she said, drawing attention for the need to build their capacity to do so. She also suggested it might be helpful to have a preliminary process for Member States leading up to the Forum in July, given its importance to the process.
A representative of civil society said that financing for development was a primary building block. He called for a commission to be established by the Third International Conference on Financing for Development and said that multi-stakeholder meetings should also be followed up. Working groups and other multilateral structures could keep the dialogue moving forward, the results of which had been included in the zero draft document. Working groups and others could continue to make contributions. Accountability mechanisms for the private sector must be part of the Addis Ababa outcome, based on a set of clear principles for private-sector behaviour in connection with sustainable development. He also noted the need for a definition of illicit financial flows.
Another World Bank Executive Director said the focus must be on implementation, while avoiding increased bureaucracy. What mattered was getting things done.
Responding to comments from the floor, Mr. OH said it was not surprising that the remarks emphasized the need for effective follow-up of financing for development and the sustainable development goals. That highlighted the prevailing view that clear agreements and targets on both agendas in the months ahead would emerge.
He agreed with the need for an evidence-based approach, good indicators, and a strong accountability framework at the global, regional and national levels. Establishing a peer review process might be helpful in that regard. From experience, he believed that a smaller setting helped to foster more productive results. The suggestion from civil society in that regard for future meetings was helpful. It was important to find ways of ensuring better coordination between the Council and the High-Level Political Forum.
Ms. MEJÍA VÉLEZ said the comments from the floor were enriching and provided valuable guidance on the way forward. Deliberations on the precise ways of following up financing for development and the post-2015 development agenda were ongoing and would crystallize in the months ahead. On accountability, the priority must be on creating a process inclusive of all stakeholders.
Cooperation with the Economic Commission for Latin America and the Caribbean had allowed Governments there to work at the national and regional levels to find the best way of implementing and following up the sustainable development agenda.
Closing Remarks
MARTIN SAJDIK (Austria), Economic and Social Council President, said the deliberations over the past two days illustrated the importance of the Council in fostering coordination and collaboration, as well as the strong sense of shared purpose. The event brought together all key players involved in deliberations on the post-2015 agenda and its means of implementation. The road to Addis Ababa was challenging amid the uneven global economic outlook, and it was thus important to create enabling environments for growth, as a strong global economy was fertile ground for development. A package of ambitious structural reforms must be put in place in many areas, including for labour markets, social sectors, infrastructure and energy.
He said that the Addis Ababa Conference was about implementation, which meant tapping into all sources of development finance — public, private, domestic and international. The discussions recognized the role of the private sector, the need for coherence and consistency of the trading system, the importance of national realities and the prerogatives of national Governments, along with a strengthened role for the United Nations in global economic governance and international cooperation in tax matters. Tackling the challenges ahead was not possible without the engagement of all relevant stakeholders, he said, stressing the Council’s readiness to play its part.