TWN Info Service on Finance and Development (Dec08/04)
5 December 2008
Third World Network

United Nations: FfD agrees on Reviews and UN summit on financial crisis
Published in SUNS #6604 dated 4 December 2008

Geneva, 3 Dec (TWN*) -- A Follow-up International Conference on Financing for Development (FfD), to Review the Implementation of the Monterrey Consensus (MC), ended at Doha, Qatar on Tuesday, with a call for convening an inclusive international conference under United Nations auspices to review the international financial and monetary architecture.

The conference adopted by consensus a Declaration and an outcome document (A/Conf. 212/L1), and urged that aid commitments be maintained despite the global economic crisis.

The four-day meeting heard from high officials of more than 160 countries, including nearly 40 heads of state or government, with many of them participating in round table discussions on each of the pillars of the Monterrey Consensus - domestic resources for development; international resources for development; international trade; increasing international financial and technical cooperation; external debt and addressing systemic issues.

Welcoming the Doha Declaration after its adoption by consensus, the UN General Assembly President Mr. Miguel d'Escoto Brockman said it "highlighted a new sense of solidarity and goodwill among nations at a time when we can be tempted to withdraw into our narrowly defined self-interests."

Affirming in its entirety the Monterrey Consensus on aid, investment, debt relief and other spurs to poverty relief in poor countries, the outcome document said that the economic slowdown and all other obstacles must not slow down efforts to achieve "people-centred development" in developing countries, particularly those in Africa.

"We express our deep concern that the international community is now challenged by the severe impact on development of multiple, interrelated global crises and challenges, such as increased food insecurity, volatile energy and commodity prices, climate change and a global financial crisis, as well as the lack of results so far in the multilateral trade negotiations and a loss of confidence in the international economic system", the text stated.

Despite those restraints, and because of their impact on developing countries, participants pledged to "devise important measures for the full, effective and timely implementation of the Monterrey Consensus". They affirmed that commitments for an increase in official development assistance made in Monterrey should be maintained despite the crises, including the pledge by many developed countries to devote 0.7 per cent of their gross national product to development aid by 2015.

They voiced encouragement that assistance had increased in real terms by 40 per cent since the Monterrey Conference, but noted that a significant portion of that aid comprised debt relief and humanitarian assistance, and that there had been a decline in assistance following a peak in 2005. They encouraged continuing efforts to increase the quality, as well as the quantity, of assistance, based on the fundamental principles of national ownership, harmonization and management for improved results. In that regard, they called upon donors to "untie" aid and make it predictable to the maximum extent possible, while calling for increased transparency in its use.

In stressing the need for a United Nations summit on world financial structures, participants acknowledged the need for low-income countries to participate in current discussions of the world financial crisis, and said the debate should include a review of the global economic governance structures, "in order to ensure more effective and coordinated management of global issues".

Through the text, the Conference also stressed that foreign direct investment must be funnelled to the sectors that would most advance development, reduce poverty and increase employment opportunity. It also stressed the importance of gender equality for development. Pledging to increase the tax base in developing countries and to combat tax evasion, they acknowledged the need to further promote international cooperation in that area. They requested the Economic and Social Council to examine the strengthening of the UN Committee of Experts on International Cooperation in Tax Matters.

The Conference also agreed to strengthen the follow-up on development financing, including the ongoing review of the fulfilment of commitments and challenges to be overcome, and to consider the need to hold an additional follow-up conference in five years, by 2013.

During the closing session Tuesday afternoon, Sha Zukang, Under-Secretary-General for Economic and Social Affairs, read a statement from United Nations Secretary-General Ban Ki-moon, which said the outcome document represented an "important milestone in the struggle for development" and added "significant value" to the Monterrey consensus. "We now have our marching orders, and the Secretariat of the United Nations will fulfil its responsibilities with utmost dedication," Ban Ki-Moon said.

Ahmed Bin Abdullah Al-Mahmoud, Minister of State for Foreign Affairs of Qatar and Vice-President ex officio of the Conference, read out a joint statement by the State of Qatar and the President of the UN General Assembly titled "Doha Statement to Strengthen the Global Development Partnership for Financing for Development".

In some closing statements, the representatives of Antigua and Barbuda (on behalf of the Group of 77 and China) and France on behalf of the European Union, welcomed the Conference outcome.

On Mobilising Domestic Financial Resources for Development, the outcome document said efforts will be undertaken to make tax systems more pro-poor. The reference to progressive tax systems was deleted in the discussions. The Review promotes international cooperation in tax matters and requests the ECOSOC to examine the strengthening of arrangements, including the UN Committee of Experts on International Cooperation on Tax Matters.

Gender equality and women's empowerment are essential and it supported its promotion including through empowerment, eliminating gender based discrimination and full and equal access to economic resources.

On Mobilising International Resources for Development: Foreign Direct Investment and Other Private Flows, the Review noted with concern that a significant number of developing countries had not experienced a rise in capital flows and will seek to enhance it. It also states that bilateral investment treaties may promote private flows by increasing legal stability and predictability to investors. The provision of objective, high quality information from all sources, including national agencies, the IMF and World Bank and credit-rating agencies was vital for informed decisions by potential domestic and foreign investors. Efforts will be taken to continue to strengthen modalities, including the country itself, the UN system and relevant multilateral agencies, to enhance and improve the level of objectivity of information regarding a country's economic situation and outlook.

On International Trade as an Engine for Development, the Review reiterates urgent resolve and ongoing efforts to improve the operation of the multilateral trading system to better respond to the needs of developing countries. It calls for the implementation of the WTO Hong Kong Ministerial Declaration, and for countries to urgently re-engage and strive to reach agreement by the end of the year on modalities that lead to a successful and early conclusion of to the WTO's Doha Development Agenda.

Aid for Trade, the Review says, is an important component, and is a complement not a substitute for a successful outcome of the Doha Development Agenda, and commitments should be fully implemented in a timely manner.

On Increasing International Financial and Technical Cooperation for Development, the Review noted with concern the overall decline in Official Development Assistance (ODA) in 2006 and 2007, but was encouraged by countries that have established timetables for fulfilling their longstanding commitments - such as the EU, which has agreed to provide collectively 0.56 percent of GNP for ODA by 2010 and 0.7 by 2015. It welcomed the more than doubling of ODA by the USA. To reach their agreed timetables, donor countries should take all necessary and appropriate measures to raise the rate of the aid disbursements to meet their existing commitments.

On external debt, the Review states that debt service is unsustainable in a number of developing countries. Existing international debt instruments are creditor driven. More efforts are needed through debt resolution mechanisms to guaranteed equivalent treatment of all creditors, just treatment of creditors and debtors and legal predictability.

Preserving long-term debt sustainability is a shared responsibility of lenders and borrowers. The review encouraged the use of the joint IMF/World Bank Sustainability Framework by creditors and debtors. Particular attention should also be paid to keeping the debt sustainability frameworks under review to enhance the effectiveness of monitoring and analysing debt sustainability and consider fundamental changes to debt scenarios, in the face of large exogenous shocks, including natural catastrophes, severe terms of trade shocks or conflicts.

On Systemic Issues, it states that new and highly globalized financial instruments continue to change the nature of risks in the world economy, requiring continuing enhancement of market oversight and regulation."We will implement reforms that will strengthen the regulatory and supervisory frameworks of financial markets as needed," the Review said.

Countries are also to strive to improve key accounting standards, and enhance cooperation amongst regulators to address risk disclosure standards and enhanced transparency standards, and for exercising strong oversight over credit-ratings agencies, consistent with the agreed and strengthened international code of conduct.

The Review recognised the need to address the extent of representation of developing countries in the major standard settings bodies. It welcomed the proposed expansion of the membership of the Financial Stability Forum, and encouraged other bodies to review their membership promptly.

The Review also welcomed the ongoing international discussions on global economic governance structures and acknowledged the need to ensure that all countries are able to effectively participate in the process. This debate should review the international financial and monetary architecture and global economic governance structures to ensure effective and coordinated management of global issues. Such a debate should associate the UN, the World Bank, IMF and the WTO, involve the regional financial institutions and other relevant bodies and should take place in the context of current initiatives.

The Review calls for the UN to hold a conference at the highest level on the world financial and economic crisis and its impact on development. The conference is to be organised by the President of the General Assembly and the modalities are to be defined by March 2009 at (the) latest. Under Other New Challenges and Emerging Issues, the Review reiterates the importance of reaching an agreed outcome at the 15th United Nations Framework Convention on Climate Change (UNFCCC) Conference in Copenhagen in December 2009.

The Review acknowledged the need for a strengthened and more effective intergovernmental inclusive process to carry out the financing for development follow up, and requested the ECOSOC to consider this matter at its 2009 Substantive Session and make recommendations to the General Assembly as early as possible in its 64th Session.

The General Assembly President, Mr Brockmann told the final plenary said that there is a new sense of solidarity between nations - at a time when many have lost confidence in financial institutions and the process of building trust has begun again. The collapse (of the financial institutions) reflects not only an implosion of the Washington Consensus but the exhaustion of the planet and the bankruptcy of greed and arrogance. What was said to be not possible to achieve at the beginning of the meeting, has been achieved, he said.

(* With inputs from Riaz K Tayob at Doha.) +