Development funds moving from poor countries to rich ones, Annan says

United Nations Secretary-General Kofi Annan today challenged the General Assembly to face the stark fact that, "even taking all subtlety and nuance into account," developing countries made the sixth consecutive and largest ever transfer of funds to "other countries" in 2002, a sum totalling "almost $200 billion."

"Funds should be moving from developed countries to developing countries, but these numbers tell us the opposite is happening," he told the Assembly, as well as heads of the affiliated international financial institutions, on the second day of its high-level dialogue on financing for development.

"Funds that should be promoting investment and growth in developing countries, or building schools and hospitals, or supporting other steps towards the Millennium Development Goals, are, instead, being transferred abroad."

The Millennium Development Goals, worked out at a UN summit in New York in 2000, collectively aim to halve extreme poverty worldwide by 2015.

If discussion about financing for development is not to ring hollow, the balance sheet must be reversed and the system fixed so that all countries and people, especially the poorest, can benefit, Mr. Annan said.

The wish to fix these problems brought about the meeting in Monterrey, Mexico, last year, which, though "not free of tension and disagreement," did achieve real breakthroughs, he said.

A major breakthrough was the effort made to reverse a troubling and devastating decade of decline, or stagnation, by making new commitments to official development assistance (ODA), he said.

Other Monterrey successes were improving government policy coherence, looking at poor people and poor countries as partners in the development process, and acknowledging the mutual accountability and mutual responsibilities of rich and poor, Mr. Annan said.

Trade tariffs and subsidies have been stifling the ability of poor countries to compete fairly in the international trading system and trade their way out of poverty, he told the Assembly, while too many developing countries have been carrying too much debt.

Too many developing countries have also been excluded from meaningful participation in the decision-making of key international bodies on economic and financial and trade issues, he said.

The Secretary-General said he had called for better, more focused preparation for the annual spring meeting next year of the UN Economic and Social Council (ECOSOC), the Bretton Woods institutions - comprising the World Bank and the International Monetary Fund - and the World Trade Organization (WTO).

Before that meeting, further WTO talks were scheduled for December in Geneva, he said. "We must stay together, stay engaged and make this process work."

Video of high-level meeting