Participants in UN forum highlight crucial role of development financing

Countries rich and poor continued their discussion of finance for development during the second day of a high-level dialogue organized by the General Assembly, focusing on an anti-poverty partnership sealed five years ago in Monterrey, Mexico.

At this week’s meeting, governments are assessing progress in implementing the landmark agreement reached in 2002 known as the Monterrey Consensus, in which developing countries took primary responsibility for mobilizing domestic resources and developed countries agreed to promote an environment conducive to this effort.

The six major areas addressed by the Consensus are 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.

Participants in today’s session, which includes ministers and central bank governors, as well as representatives of governments, business and civil society, highlighted the crucial role played by official development assistance (ODA) in the efforts of countries to lift themselves out of poverty and achieve their development targets.

Speaking on behalf of African States, Jean-Marie Ehouzou of Benin said assistance flows to developing countries should be stable, predictable and capable of stimulate financing of investments, especially in infrastructure. Also, development assistance would be more effective if it was in line with national priorities and harmonized between donors and recipients.

While agreeing that donors needed to do more to improve the effectiveness of aid, United States delegate Alejandro Wolff felt many countries had not done enough to foster domestic resource mobilization or attract private capital flow.

“Private sector flows will only go to areas that will be able to attract them,” said Pakistan’s State Minister for Economic Affairs Hina Rabbani Khar at one of the event’s round tables. “Goodwill is not enough,” she said, adding that human resource development was a key element to attract private investment.

Lennart Båge, President of the International Fund for Agricultural Development (IFAD), pointed out that annual remittances from the world’s 150 million migrant workers amounted to $301 billion per year – three times the amount of ODA. For 45 countries, this represented more than 10 per cent of their gross domestic product. One third of such remittances went to rural areas, often representing the main source of financial resources.

Canada’s delegate John McNee called for an integrated approach mobilizing all possible sources of financing, including trade liberalization, ODA, debt relief, and mobilization of domestic resources. “We must remember that a favourable national environment is indispensable for development financing,” he said. “Such an environment would permit to attract, retain and utilize wisely all sources of financing.”

The outcome of the dialogue, expected to conclude tomorrow, will provide the basis for next year’s Review Conference on Financing for Development, to be held in Doha, Qatar.