Reforming International Financial System, Mobilizing Development Assistance Focus, as Second Committee Concludes Debate on Macroeconomic Policy
Curbing illicit financial flows, honouring funding commitments, South-South cooperation and reforming the international financial system were vital in meeting development goals and “leaving no one behind”, speakers stressed as the Second Committee (Economic and Financial) concluded its debate today on macroeconomic policy questions.
Algeria’s delegate noted the fall in financial flows to developing countries in 2015, a trend which could continue in 2016. World economic prospects were also worrisome, which could adversely affect developing countries.
South-South cooperation was essential, he said, but was not a substitute for North-South cooperation, which remained irreplaceable in capacity-building as well as technology and know-how transfers. He also noted that developing countries suffered from tax evasion and avoidance as well as illicit financial flows.
El Salvador’s representative stressed the importance of the Addis Ababa Action Agenda, which highlighted the importance of official development assistance (ODA) in achieving the Sustainable Development Goals.
He also urged the United Nations address the world financial and trading system, which favoured developed and punished developing countries. The international economic and financial system must be restructured and based on fairness, sovereign independence and equality of all States.
Panama’s representative, noting that development goals would pressure national budgets, also focused on the need to move forward with commitments of the Addis Ababa Action Agenda to mobilize ODA and other forms of public financing in normal and favourable conditions. Moreover, multilateral development banks should update their policies to support the 2030 Agenda for Sustainable Development.
Nigeria’s representative focused on the importance of remittances, stating that development policies should reduce their transaction costs and make formal channels for them more attractive. Expressing concern at the monopoly enjoyed by money transfer operators, he suggested that post offices, savings and credit cooperatives and microfinance institutions be allowed to provide tailor-made products for rural populations in developing countries.
Sudan’s delegate emphasized that unsustainable foreign debt was closely linked to poverty and stunted development. It had reduced Sudan’s human development indicators and left the country unable to use foreign assistance. The international community must alleviate the debt burden for developing countries to liberate resources for growth and development.
Also speaking were the representatives of Qatar, Venezuela, Papua New Guinea, China, Lao People’s Democratic Republic, Ethiopia, Libya, South Africa, Mexico, and the Holy See. Representatives of the Organisation Internationale de la Francophonie, International Labour Organization (ILO) and Food and Agriculture Organization (FAO) also spoke.
The Second Committee will meet again at 10 a.m. on Monday, 24 October to discuss agriculture development, food security and nutrition.
SHEIKH AHMAD MOHAMED AL-THANI (Qatar), associating himself with the “Group of 77” developing countries and China, said that the Addis Ababa Action Agenda was a main pillar of efforts aimed at strengthening the global partnership for development. The Agenda stressed the need for economic growth and sustainable development through investment in children and youth and providing adequate education and ensuring sufficient opportunities for women and girls. Official development assistance (ODA) was urgently required to address development needs, and it was necessary for countries to fulfil their commitments. Qatar provided assistance in economic and social development, and had hosted the Follow-Up International Conference on Financing for Development in 2008. He highlighted the importance of South-South cooperation based on solidarity and respect for national sovereignty, equality and common beneficial interests. The Arab region faced a number of challenges, greatly affecting the capability of many countries to achieve development goals. Financial assistance, whether public or private, was necessary to help those countries. Trade was also an important engine for economic growth. Developing countries needed trade and investment opportunities, as well as a successful conclusion of the Doha Round of negotiations.
RAFAEL RAMÍREZ (Venezuela), associating himself with the Group of 77 and the Community of Latin American and Caribbean States (CELAC), said that economic and financial policies imposed by financial institutions had adversely affected countries with limited economies. The international community must democratize decision-making mechanisms and take measures to deal with illegitimate and illegal financial transactions. Development programmes must support those nations whose resources had been decimated by economic crisis or natural hazards. Issues that could affect progress in achieving development goals included higher interest rates and persistent unemployment, which was 36 per cent globally among youth. Development financing was increasingly needed to implement the 2030 Agenda for Sustainable Development.
LAURA ELENA FLORES HERRERA (Panama), associating herself with the Group of 77 and CELAC, said that trade was a means of reducing poverty and could contribute to the achievement of the Sustainable Development Goals. The Goals would put pressure on the national budgets, which would require more effective international support. Accordingly, it was necessary to move forward carrying out the commitments of the Addis Ababa Action Agenda to mobilize ODA as well as South-South cooperation and other forms of public financing in normal and favourable conditions. South-South cooperation increasingly played a complementary role to North-South cooperation without replacing it. Multilateral development banks needed to update their policies to support the 2030 Agenda. Panama was exploring the possibility of issuing social impact bonds to finance the 2030 Agenda.
MAX HUFANEN RAI (Papua New Guinea), associating himself with the Group of 77 and the Alliance of Small Island States, said that international trade directly impacted the capability and capacity to diversify and expand economy and foster nation-building. As a country well-endowed with natural resources, including minerals, oil and natural gas, agricultural and forest products and fisheries, global trade was a catalytic engine for Papua New Guinea’s growth. However, existing barriers, including unfair and inequitable access to markets, remained a real challenge. In that regard, he called for a universal, rules-based, open, transparent, predictable, inclusive, non-discriminatory and equitable multilateral trading system. Papua New Guinea was also undertaking complementary national actions to strengthen and implement sound domestic policies and reforms conducive to realizing the potential of trade for sustainable development. That included sweeping tax reforms conducive to mobilizing resources for financing for development. New and additional financing, outside of existing commitments, were also important.
HUA YE (China), associating herself with the Group of 77, acknowledged progress in economic governance reform as shown by the consensus outcome of the G20 summit hosted by his country. China stood ready to work with all parties towards an innovative, open, inter-connected, inclusive and stable world economy. She pledged that her State would, to the best of its ability, continue to honour commitments on debt relief to help developing countries implement the 2030 Agenda, expressing hope for further international cooperation on the issue. Firmly opposing trade protectionism, she called for strengthening the multilateral system and enhancing the ability of developing countries to benefit from the global value chain. She also called for implementation of the Addis Abba Action Agenda, urging developed countries to make further efforts in debt reduction, fulfil their ODA commitments and better align it with practical needs. Noting that China was the world’s largest developing country, she described its multidimensional assistance to more than 100 others in areas of finance, market access, technology and experience sharing, and pledged to actively continue cooperation in financing for development.
KHIANE PHANSOURIVONG (Lao People’s Democratic Republic), aligning himself with the Group of 77, Association of Southeast Asian Nations (ASEAN) and the Group of Least Developed Countries, said that his country was seized with the important task of mainstreaming the global development frameworks into its national plans, prioritizing inclusive and green growth. As the resources required for that purpose were huge, the implementation of the Addis Abba Action Agenda was critical. At the regional level, his country was actively cooperating with immediate neighbours and all ASEAN partners to develop infrastructure to promote trade, investment and tourism in order to eradicate poverty. ODA had also been an important component; he called for such support to be maintained. He affirmed his country’s commitment to working closely with the international community to fully implement the 2030 Agenda.
JOHN CHIKA EJINAKA (Nigeria), associating himself with the Group of 77, emphasized the impact of remittances on developing countries. Development policies should aim to reduce transaction costs and promote greater financial inclusion and credit provision for small- and medium-sized enterprises while making formal remittance channels more attractive. Expressing concern at the monopoly enjoyed by money transfer operators, he suggested that post offices, savings and credit cooperatives and micro-finance institutions be allowed to provide tailor-made products for rural populations in developing countries. He called on the international community to reform the governance structure of international financial institutions by granting Africa greater representation, based on sovereignty, equality and mutual respect. Illicit financial flows threatened sustainable development, he continued, urging fast-tracking of the Addis Ababa Action Agenda. The United Nations was also urged to keep international tax cooperation and the fight against corruption at the top of its list of priorities.
LEULSEGEDE TADESSE ABEBE (Ethiopia), associating himself with the Group of 77, welcomed the launch of the first meeting of the Forum on Financing for Development, the inauguration of the Global Infrastructure Forum and the multi-stakeholder forum on science, technology and innovation for the Sustainable Development Goals. Those were among the deliverables of the Addis Ababa Action Agenda. International organizations were taking a coordinated approach to strengthen domestic resource mobilization, particularly on tax issues. The Addis Tax Initiative and Tax Inspectors without Borders, both among the concrete results of the Addis Conference, were of crucial importance, as Africa lost $50 billion a year to illicit financial flows. It was imperative to enhance the development impact of foreign direct investment (FDI) on the eradication of poverty. Weak global trade and volatile commodity prices continued to create distress in developing nations, particularly least developing countries, and it was crucial to create a level playing field that promoted their export earnings, diversification and increased participation in the global value chain.
NASSER S. Z. ASHAFTT (Libya) stressed that international trade was vital in realizing development goals. It was important to work towards an equitable, multilateral trading system to assist developing countries in accessing markets and take other measures to ensure their competitiveness. Noting that financial institutions were also important for development, he said developing countries needed more representation in those bodies in strengthening their economic growth and eradicating poverty. It was also essential that developing countries honoured their ODA commitments to assist developing countries reach development goals laid down in the 2030 Agenda. The lack of debt sustainability was also hindering those nations in reaching development goals. Another issue were capital outflows from developing to developed countries. Unfortunately, some countries had become havens for illicit flows and shell corporations. The international community should ensure the return of those funds to their countries of origin.
PABLO JOSÉ SORIANO MENA (El Salvador), associating himself with the Group of 77, said that a key job of the United Nations was to deal with the architecture of world financial and trading system which favoured developed countries and punished developing countries. The United Nations had a leadership role in tackling those macroeconomic issues. A key driver to implement the Sustainable Development Goals was development financing, and El Salvador attached great importance to the Addis Ababa Action Agenda which stressed the importance of ODA to achieve the Goals. It was necessary to tackle issues of tax havens, where huge resources for States were hidden. It was necessary to restructure the international economic and financial system based on fairness, sovereign independence, and equality of all States to ensure for present and future generations the enjoyment of social and economic development.
MAHLATSE MMINELE (South Africa), associating himself with the Group of 77, said international public finance remained essential in assisting developing countries to reaching the Sustainable Development Goals. He requested donor countries that had not reached their ODA commitments to do so, and called for increased development support for African countries, least developing countries and small developing island States. He noted the adverse effects of the global financial and economic crisis on development and evidence of the uneven, fragile and slow recovery of the world economy. Developing countries continued to suffer most from the economic crisis and needed international support to escape that quagmire. In addition, he stressed the need for the international community to pay more heed to the impact of illicit financial flows on developing countries and take action to counter it. Those flows had an adverse impact on domestic resource mobilization and the sustainability of public finances, thus derailing growth.
MOURAD MEBARKI (Algeria), associating himself with the Group of 77, highlighted funding and the Addis Ababa Action Agenda. Algeria was concerned by the fall in financial flows to developing countries in 2015, noting that that trend could unfortunately increase in 2016. It was hard to keep silent, he said, when noting the extent of net capital outflows from developing countries in 2015 and 2016. The world economic prospects were worrisome, which could adversely affect developing countries. Algeria recalled that South-South cooperation was not a substitute for North-South cooperation, which remained irreplaceable, particularly in capacity-building, technology transfer and know-how transfers. Developing countries lacked resources and suffered from tax evasion and avoidance and illicit financial flows, which countries could not fight on their own. In order to meet the challenges Algeria was facing, it was putting in place an appropriate strategy to respond to the population’s needs while implementing the Sustainable Development Goals.
SALVADOR DE LARA RANGEL (Mexico), associating himself with CELAC, said adoption of the Addis Ababa Action Agenda was a meaningful step forward on the path that began at the Monterrey Conference on Financing for Development. That conference had established a comprehensive, well-balanced and strategic vision of development with the participation of all relevant partners. He stressed that Monterrey was the first conference organized by the United Nations to tackle financing for development. It represented the recovery of development as a main international topic and was the first time developed countries aligned with developing nations in seeking global resources to bolster development goals. It was hugely important to orchestrate outcomes of the Addis Ababa Action Agenda.
MURTADA HASSAN ABUOBEIDA SHARIF (Sudan), associating himself with the Group of 77 and the Group of Least Developed Countries, said his nation attached great importance to international trade as a catalyst for development. He also underlined the importance of a balanced trade system that was just and included all. The international financing system had gaps which were impeding the opportunities to reach solutions to large problems, and therefore it was necessary to have solutions to those problems to obtain effectiveness, impartiality and coordination. Foreign indebtedness was a great problem, including for Sudan, and was closely linked to the problem of poverty. Foreign indebtedness had reduced Sudan’s human development indicators and left the country unable to use foreign assistance. It was important to alleviate the burden of debt for developing countries to liberate resources for growth and development. Another important issue was the question of unilateral economic sanctions which negatively affected some countries, including Sudan. His country could not import quality seeds and agricultural equipment, and remittances and trade were negatively affected. Sudan looked forward to an appropriate economic system that took into account the needs of developing countries.
BERNARDITO CLEOPAS AUZA, Permanent Observer of the Holy See, said that reinvigorating the multilateral trading system — while reforming it as necessary — was critical to achieving the goals set out in the 2030 Agenda. For many of the least developed countries, trade in primary commodity exports was an important source of foreign exchange earnings. Recent data, however, highlighted the vulnerability of those countries to downturns in commodity prices and the consequent impacts on their anti-poverty and economic equality programmes. Transfer of technology, industrial diversification and the reinforcement of local and regional markets remained necessary to avoid the “commodities export trap”, he said in that regard, adding that ensuring a stable, effective and inclusive international financial system was critical to leaving no country behind. Maintaining debt sustainability would also be crucial, he said, stressing that the spirit of General Assembly resolution 69/319 on Basic Principles on Sovereign Debt Restructuring Processes — which obligated the international community to ensure that external financing of governments never became an unbearable weight for the populations of countries or a hindrance for development projects — must be borne in mind as part of the 2030 Agenda.
PATRICIA HERDT, International Organization of La Francophonie, said her group included territories on all continents with very different levels of development. Some were members of the G8 and G20, while others were least developed countries. La Francophonie enacted a holistic approach and had been active in putting forward proposals for bridging development gaps, mobilizing resources and creating innovative financing mechanisms. The organization organized regular conferences of its member States, and had a network of low-income Francophone countries which shared knowhow and experience and advocated at international bodies. Those countries agreed that there was a necessity to improve policies and capacities on taxation matters, particularly when it came to auditing large companies and revising tax and investment treaties and improve progressive taxation. They also agreed on the necessity of avoiding over-indebtedness. The organization hoped that discussions at the United Nations would continue on debt relief mechanisms that would be broader and more impartial than the existing ones. The group also sought to create a space for economic cooperation and trade between its members by supporting trade strategies through Francophone Ministers of Trade. Those were implemented through partnerships with the International Monetary Fund (IMF), World Bank, World Trade Organization (WTO), United Nations, United Nations Conference on Trade and Development (UNCTAD) and African development banks.
GRIET CATTAERT, International Labour Organization (ILO), said global economic growth was slowing, which would have a direct impact on the labour markets with rising inequality, vulnerable employment and poor job quality. Vulnerable employment accounted for over 46 per cent of total employment globally, and informal employment exceeded 50 per cent in half of the countries with comparable data. Sustainable Development Goal 8 articulated sustained, inclusive and sustainable economic growth and full and productive employment as two sides of the same coin. Achieving full and productive employment would yield significant social dividends while contributing to strengthening the global economy. Policy focus on quantity and quality of jobs and tackling income inequality could be supported by: prioritizing macroeconomic policies that promoted job creation and supported demand and investment; strengthening labour market institutions such as labour ministries and trade unions; introducing well-designed social protection systems; financial reform efforts to ensure that banks channel resources into the real economy; and harnessing the potential of trade and investment by implementing policies to maximize the benefits of trade and FDI in terms of quantity and quality of jobs.
CARLA MUCAVI, Director, Food and Agriculture Organization (FAO) Liaison in New York, said the relationship between international trade, food security and sustainable development were stronger and more important than ever. Agricultural trade could help ensure the availability of food and contribute to price stability and cover local shortfalls in certain foods. While international food costs had fallen since their peak in 2011, prices were expected to remain higher than the lower levels registered up until 2005, according to a 10-year outlook report issued by the Organisation for Economic Co-operation and Development (OECD) and FAO in July. Geopolitical and climate-related weather uncertainties also were likely to exacerbate episodes of food price spikes in the future and potentially disrupt trade flows, she said. Yet trade held the potential to help ensure the global market remained a reliable source of food, especially for low-income food-deficit countries. The FAO stressed the importance of supporting family farming and a rules-based multilateral trade system that was fair and without distortions to achieve global food security and sustainable agriculture development.