TWN Info Service on Finance and Development (Apr12/03)
9 April 2012
Third World Network

UN General Assembly's latest resolution on financing for development

New York, 9 April (Bhumika Muchhala) – The General Assembly adopted a key resolution on development and finance issues, titled “Following up to the International Conference on Financing for Development” (A/RES/66/191), on 22 February 2012. The resolution was negotiated in November and December 2011 by UN member states in the Second Committee of the General Assembly, which focuses on financial, economic and global development issues.

A key decision of the resolution was to consider a follow-up financing for development conference by 2013, with informal consultations to be held with governments in 2012, with a goal of taking a final decision in early 2013.

The resolution also requested the President of the Economic and Social Council (ECOSOC) to organize a special event on innovative mechanisms of financing for development with the participation of relevant stakeholders during the substantive session of ECOSOC in July 2012.

The FFD resolution “considers that innovative mechanisms of financing can make a positive contribution towards assisting developing countries in mobilizing additional resources for financing for development on a voluntary basis and that such financing should supplement and not be a substitute for traditional sources of financing.” A sustained discussion among member states will also be carried out to evaluate findings on this topic in the Secretary General’s reports on innovative financing mechanisms.

The resolution also reaffirmed that the role of national policies and development strategies cannot be overemphasized for the achievement of sustainable development.

Member states recognize that national efforts should be complemented by supportive global programmes, measures and policies aimed at expanding the development opportunities of developing countries, while taking into account national conditions and ensuring respect for national ownership, strategies and sovereignty.

The resolution emphasized that debt sustainability is essential for underpinning growth, and effective debt management is essential to achieve national development goals, including the Millennium Development Goals.

“Sovereign debt crises tend to be costly and disruptive, including for employment and productive investments, and tend to be followed by cuts in public spending, including on health and education, affecting, in particular, the poor and vulnerable,” according to the resolution

It also stressed that the ongoing financial and economic crisis adds new impetus to ongoing international discussions on the reform of the international financial system and architecture. This includes a focus on the mandate, scope, governance, responsiveness and development orientation of the international financial institutions.

During the negotiations for this FFD resolution, developing countries reaffirmed the importance of broadening and strengthening the participation of developing countries in international economic decision-making and norm-setting.

The resolution thus “takes note of recent important decisions on the reform of the governance structures, quotas and voting rights of the Bretton Woods Institutions, better reflecting current realities and enhancing the voice and participation of developing countries, and reiterates the importance of the reform of the governance of those institutions for delivering more effective, credible, accountable and legitimate institutions.”

Another area that developing country delegates underscored during the negotiations was the impact of the financial crisis on social spending and social sectors, including health, education and social security. They posed the question of how to finance social needs in the current policy trend of fiscal adjustment and continuing commodity price volatility.

The resolution repeated calls for the “mobilization of domestic and international resources for social development” as an important part of “the commitments made at the World Summit for Social Development, held in Copenhagen from 6 to 12 March 1995.” To act on this focus on social development, the Commission for Social Development was tasked with carrying out a special event in early 2012.

The General Assembly recognized that the mobilization of financial resources for development is “central to the global partnership for development, including in support of the achievement of the internationally agreed development goals, including the Millennium Development Goals.”

Member states recalled earlier resolutions to “enhance and strengthen domestic resource mobilization and fiscal space, including, where appropriate, through modernized tax systems, more efficient tax collection, the broadening of the tax base and the effective combating of tax evasion and capital flight.”

The resolution reaffirms the importance of implementing measures to curtail illicit financial flows at all levels, enhancing disclosure practices and promoting transparency in financial information, and “in this regard notes that strengthening national and multinational efforts to address this issue is crucial, including through support and technical assistance to developing countries to enhance their capacities.”

Better regulation of financial markets and the need for more effective government involvement to ensure the safeguarding of public interest was emphasized by the resolution.

Repeated calls were made for the importance of “investment in human capital, inter alia, in health and education, through inclusive social policies, in accordance with national strategies and priorities.” The FFD resolution recognized human development as a key priority, stating that “human resources are the most precious and valuable asset that countries possess, and that the realization of full and productive employment and decent work for all is essential.”

The FFD resolution further called for the implementation of the Nairobi outcome document of the High-level United Nations Conference on South-South Cooperation, held in Nairobi in December 2009. Strengthening and supporting South-South cooperation was stressed, with developing country delegates underscoring that “South-South cooperation is not a substitute for, but rather a complement to, North-South cooperation.”

The role of regional commissions in the financing for development follow-up process was reaffirmed, including the role of the specialized agencies of the United Nations system, which have an important role to play in advancing development and protecting development gains. As such, the resolution calls for an intensification of the engagement of both regional commissions and UN specialized agencies in the financing for development deliberations, including through the “provision of technical advice and analyses to be made available to Member States.”+