62nd Session of the General Assembly
Agenda Items (52) Macroeconomic Policy Questions and (53) Follow up and Implementation of the outcome of the International Conference on Financing for Development
Statement by Ms. Vanessa Gomes, Adviser
on behalf of the European Union
New York, October, 15, 2007
I have the honour of speaking on behalf of the European Union.
The Candidate Countries Turkey, Croatia* and the Former Yugoslav Republic of Macedonia*, the Countries of the Stabilisation and Association Process and potential candidates Albania, Bosnia and Herzegovina, Montenegro, Serbia, as well as Ukraine, the Republic of Moldova, Armenia, and Georgia align themselves with this declaration.
In this statement, the European Union will be making general remarks on the themes covered by agenda items 54 (a), (b) and (c), as well as 55 (a), namely the items on Macroeconomic policy questions and on the Follow-up to the implementation of the outcome of the International Conference on Financing for Development.
As the General Assembly’s High Level Dialogue on Financing for Development will be taking place just next week on 23 and 24 October, the EU will address the full range of issues covered by the FFD agenda in a detailed manner during our intervention to be delivered on that occasion. We will also be addressing the theme of trade in a more substantive manner during the Second Committee debate on 25 October. We take this opportunity, however, to introduce the Union’s views and perspectives on the broad agenda on financing for development as defined by the Monterrey Consensus.
The EU looks forward to the upcoming High Level Dialogue and to the follow-up international conference on financing for development to be held in Doha in the second half of 2008. Much remains to be done in the run up to the Doha conference. In this regard, the EU will continue to actively and constructively engage in the preparatory process led by the Permanent Representatives of Egypt and Norway. In this phase of preparations, the EU will work with others to define the modalities of the conference, including dates, format, participation and possible outcome. The EU is satisfied that the agenda of the Doha conference has been broadly set by GA resolution 61/191.
In the run up to the conference, and bearing in mind that we are mandated to make full use of the existing institutional arrangements for the review of the implementation of the Monterrey Consensus, the EU recognizes that this session’s HLD and the Special High Level meeting of the ECOSOC with the BWIs, WTO and UNCTAD are important parts of this process. Other meetings being held outside the context of the United Nations family will also be in a position to contribute to the follow-up conference. The High-Level Forum on Aid Effectiveness taking place in Accra, Ghana in September 2008 is a good example of such a meeting.
The EU reiterates its commitment to the implementation of the Monterrey Consensus as it considers it the foundation for the global partnership within which the international community should work to achieve the Millennium Development Goals (MDGs), the internationally agreed development goals (IADGs) and to promote sustainable development. It is only through a truly concerted spirit of partnership and joint participation that the goals and objectives of the Consensus can be achieved. This collaboration is not limited to the more traditional actors in development financing, donors and recipients, but includes all actors that have the potential to leverage development financing including emerging donors, the private sector, Non-governmental Organizations and Foundations.
Turning now to the agenda at hand, the EU continues to support an integrated and balanced treatment of the six thematic areas that fall under the Monterrey Consensus, reflecting a broad-based development approach that includes sound macroeconomic policies aimed at sustaining high rates of economic growth, full employment, poverty eradication, price stability and sustainable fiscal and external balances. These commitments integrate social concerns in economic policies in order to extend the benefits of growth to all, in particular the poorest.
As agreed in Monterrey, and reaffirmed in the World Summit Outcome, every country has the primary responsibility for its own development and the role of good governance, sound national policies and development strategies cannot be overemphasized in the achievement of sustainable development. Effective and sustainable domestic resource mobilization in developing countries, including through the strengthening of the national tax base and the effective use of national resources are crucial factors for growth and equitable development. Both are essential and most effective within a framework of democratic governance, sound macroeconomic policies and transparency.
Foreign direct investment is an important complement to domestic investments. In order to ensure continued and strengthened flows of sustainable foreign direct investment, efforts need to continue to be made to achieve transparent, stable and predictable investment climate. Public investments in basic infrastructure, the development of human capital and of institutional capacity are all relevant for sustained economic growth. The EU also welcomes public-private partnerships and other mechanisms that promote foreign direct investment, and in this regard, encourages good corporate governance and citizenship.
Increased and more effective Aid for Trade is needed to support developing countries, in particular LDCs, to be better integrated into the world economy and to use trade as an engine of growth and poverty reduction in the context of sustainable development. The EU is actively participating in the Aid for Trade discussion and is hoping to conclude a Joint European Aid for Trade Strategy by the end of 2007. The EU is collectively committed to raise its overall Trade Related Assistance to €2 billion annually by 2010. The EPA negotiations currently being finalised with our ACP partners are a tangible example of our commitment to linking trade, economic integration and development together.
A successful conclusion of the Doha Round trade negotiations depends on developed and developing countries alike. The Doha negotiations have made more progress than people realize. We have reached a point where the cost of not reaching an agreement is far greater than the residual cost of not closing it. We all have a shared interest in a global deal on trade, one that reinforces openness on a multilateral basis, through the application of strengthened trade rules and that keeps the international trading system running, with the fast-emerging economies anchored firmly inside. The EU considers that adjustment costs from trade liberalisation are usually small compared with the overall gains from more liberalized trade. Trade policy should be viewed as supporting national policies that will promote structural adjustment by the efficient allocation of labour and capital. In this sense, we must pay particular attention to Small and Medium Enterprises (SME) in order to promote a better adaptation to globalization challenges.
On the basis of the principle of shared responsibility and partnership, and as a provider of over half of the world’s aid, the EU has committed to increase Official Development Assistance (ODA), both in quantitative and qualitative terms, in line with the Paris Declaration on Aid Harmonization and Increasing Aid Effectiveness, in order to support the achievement of the MDGs. We have collectively surpassed our 2005 ODA target of 0,39% of gross national income and remain committed to reach the target of 0,7% of gross national income by 2015, with an intermediate collective target of 0.56% by 2010.
In order to move forward with the implementation of the Paris Declaration the EU is promoting improved complementarity among donors. We have agreed on guiding principles on complementarity and division of labour and are implementing them in the programming of our assistance in collaboration with all donors.
In regard to developing innovative sources of financing, the value of which was recognized at the 2005 World Summit, various initiatives are being implemented, with EU member states continuing to play a leading role. These types of initiatives are implemented with a view to mobilize predictable and increased stable sources of financing. The EU welcomes innovative sources of financing introduced and supported on a voluntary basis by some member states, especially the health initiatives already under way such as the International Financial Facility for Immunization and UNITAID, as well as the Advanced Market Commitments for the development of new vaccines, or those that are envisaged such as the International Finance Facility. Some others still support a levy on foreign exchange transactions. Innovative financing mechanisms and solutions should also be further explored to finance environmental activities, particularly climate change related activities in developing countries, including those related to the carbon market. Initiatives for innovative financing, as well as the role of other providers of technical and financial cooperation, including “new and emerging donors”, should be seen in accordance with the principles for aid effectiveness established in the Paris Declaration.
While the EU recognizes that remittances are private resources that should not be a substitute for ODA, their potential development impact should not be underestimated or ignored. There continues to be a need to address and promote conditions for cheaper and safer transfers of remittances in both source and recipient countries and to facilitate the impact on the development of recipient countries through the creation of an enabling policy environment.
Innovative sources of financing are not the only emerging issues that should capture our attention. The landscape of international cooperation for development has evolved since Monterrey and we should identify the new and emerging issues that will be important for our discussions in the context of financing for development that should be further explored in the run up to and at the Doha conference.
Debt relief can play a role in liberating resources that can be directed toward activities consistent with attaining sustainable growth and development. In this context, and since 2005, EU member states have committed additional resources to significant efforts in debt relief. Last year we witnessed important progress in deepening debt relief to the poorest countries through the implementation of the Multilateral Debt Relief Initiative (MDRI) by the African Development Fund, IDA and IMF. The ongoing HIPC initiative also saw substantial progress in its ultimate goal of reducing debt burdens to sustainable levels. This debt cancellation will free up national resources for priority development related purposes. Indeed, the external debt position of developing countries has improved in the last few years and this progress should be recognized. The importance of avoiding the accumulation of new unsustainable debts should also be recognized. In this context the EU encourages responsible borrowing and lending and the use of the Debt Sustainability Framework by all borrowers and lenders.
The EU welcomes the consultations by the IMF to address global imbalances, supporting policies to reduce them while sustaining economic growth. This will be done through exchange rate policies and domestic economic policies that foster domestic stability as unstable domestic conditions can cause severe disturbances to external stability. Consequently, the EU continues to support the efforts underway in governance reform at the World Bank and IMF including giving developing countries a stronger voice in decision-making. We believe the two main goals are to ensure that the distribution of quotas adequately reflects the member countries’ economic weight and role in the global economy and financial system and their ability to contribute financially, as well as strengthening the voice of low income countries in the IMF. The EU remains committed to ensuring the effective participation of developing countries and countries with economies in transition in the International Financial Institutions. We recognize that governance reforms are essential to the continued effectiveness and credibility of those institutions.
In conclusion, the European Union looks forward to the important considerations to be held in the context of the plenary of the GA and in the Second Committee on financing for development this year. There are many important issues that the General Assembly must decide upon in the coming months. To this end, we look forward to engaging with all delegations in an open, constructive and transparent manner so that the “Spirit of Monterrey” can be given new life in the run up to the Doha conference.
* Croatia and the Former Yugoslav Republic of Macedonia continue to be part of the Stabilisation and Association Process.