The future of development financing is under discussion at a High-Level United Nations event in New York that has attracted the participation of ministers, central bank governors, government delegates and representatives of business and civil society, meeting to advance a 2002 agreement made in Monterrey, Mexico.
“Progress in implementing the Monterrey Consensus has been mixed,” Secretary-General Ban Ki-moon told the General Assembly High-Level Dialogue on Financing for Development, which opened today, referring to the understanding which emerged from the Mexico conference based on developing countries taking primary responsibility for mobilizing domestic resources and developed countries agreeing to promote an environment conducive to this effort.
Many developing and low-income countries had experienced stronger economic growth, he said, and official development assistance (ODA) had improved, but the “sustained increase” in assistance needed to meet the targets agreed in Monterrey has not materialized.
“Closing the funding gap is essential if we are to alleviate extreme poverty, fight diseases and achieve the other development targets,” Mr. Ban said.
The Secretary-General called on developing countries to adopt policies that support sustained economic growth and job creation. Developed countries must increase capital flows, especially to low-income countries, Mr. Ban argued.
He called for a swift, development-oriented conclusion to the Doha trade negotiations, a sustainable path of debt repayment for low-income countries and greater participation by developing countries in international financial institutions.
“If implemented, existing commitments to finance development are enough to achieve the Millennium Development Goals, even in Africa,” said General Assembly President Srgjan Kerim, who is chairing the meeting.
“But each side of the partnership must deliver,” he said. “As developing countries adopt comprehensive national strategies, then donors must deliver on commitments to provide additional assistance to enable them to succeed.”
Mr. Kerim called for moving beyond the “simplistic division” of the world into North and South. “We live in a far more complex and integrated global age, with new emerging economic powers and donors as well as private philanthropy in all regions of the world.”
The General Assembly President added that the Monterrey Consensus combined the energies of governments, international institutions, faith groups, civil society and the private sector. Mr. Kerim stated that: “If this – the greatest anti-poverty partnership in history – is insufficient to break from ‘business as usual’ many developing countries and campaigners around the world will be left without hope. Global trust will be irredeemably undermined.”
On behalf of the group of least developed countries, Bangladesh’s Mirza Md. Azizul Islam said they could not “effectively gain from trade” due to “a wide array” of harmful subsidies, non-tariff-restrictions and artificial standards imposed by importing countries. He called on such countries to provide “duty-free and quota-free market access” for all products from least developed countries.
“Monterrey suffers from a serious implementation deficit,” said Pakistan’s Minister for Economic Affairs Hina Rabbani Khar, on behalf of the Group of 77 developing countries and China. Official development assistance in 2006 had dipped to 0.3 per cent of gross domestic product, down from 0.36 in 2005. Developing countries had little ability to influence financial trends, despite their importance for growth and development.
Perversely, to guard against the volatility of financial flows, developing countries had accumulated large reserves that were transferred back to the deficit country, she said. This had helped to enlarge the net financial outflow from developing to developed countries, which had gone from $533 billion in 2005 to $662 billion in 2006.
The two-day meeting is addressing the six major areas of the Monterrey Consensus: mobilizing domestic financial resources, mobilizing international resources, international trade, international cooperation for development, external debt, and the coherence of the international monetary, financial and trading systems.
The outcome of the current meeting will provide the basis for next year’s Review Conference on Financing for Development, to be held in Doha, Qatar.
In a related development, Barbara Adams of the UN Development Fund for Women (UNIFEM) emphasized the importance of promoting gender equality when tackling the problems associated with financing for development.
“It’s got to be economic growth plus; it’s not policies only to stimulate economic growth,” she said. Policies must be supported at the international level. “Just generating more resources without looking at the actual flows of how those flows help the society to develop can’t work,” she told a press briefing held at UN Headquarters in conjunction with the General Assembly meeting.
She emphasized the need for policies that support gender equality, especially at the macroeconomic level, where decisions are made that “determine and drive how resources are gathered and how resources are allocated within societies.”