Summary: October 3, 2002: Statement by H.E. Ambassador Ellen Margrethe Løj, Permanent Representative of Denmark to the UN on behalf of the European Union. Second Committee: Item 84 - Macroeconomic policy questions (New York)
Mr. Chairman,
I have the honour to speak on behalf of the European Union. The countries of Central and Eastern Europe associated with the European Union - Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, Slovenia and the associated countries - Cyprus, Malta and Turkey align themselves with this statement.
Mr. Chairman,
Today we are addressing the macro-economic-policy questions, issues which are at the heart of sustainable development and of our work here in the Second Committee. The European Union would have wished to have a substantial debate covering all items on the FfD-agenda. We therefore intend to address this agenda item as if it were indeed a policy debate on the FfD-substance. We see the implementation of Monterrey, Rome and Johannesburg as part of a wider process, aiming at achieving the Millennium
Development Goals.
The FfD-process has the potential to continue to create coherence, coordination and cooperation in the international system. We believe that we should organize the work of the Second Committee accordingly and would thus in the future prefer to have a consolidated agenda item, while we enrich our work with panels and expert briefings. We would prefer to have one coherent report from the UN system on the FfD substance in order to enable a focussed discussion. We would welcome the support of the
effective multi-stakeholder secretariat to ensure the continuation and coherence of our process. And we would see a clear advantage in having as the outcome of our deliberations one consolidated and concise resolution focussing on the implementation of the Monterrey Consensus. This resolution would serve as our annual stocktaking on implementation and as the intergovernmental input into the Spring dialogue with the Bretton Woods institutions and the WTO.
Mr Chairman,
The European Union is convinced that the new partnership for development that we laid out in the Monterrey Consensus and reaffirmed in the declaration of the World Food Summit: five years later and in the Johannesburg Plan of Action has to be built through a continuation of the positive process that led us to Monterrey. In order for us to achieve the Millennium Development Goals and lift more people out of poverty, implementation has to be successful.
We all have to deliver on our Monterrey commitments to good governance, including high standards of transparencies and the fight against corruption, democracy, human rights, the rule of law and sound economic policies. The creation of a sound macroeconomic environment and an enabling investment climate, including an appropriate regulatory framework, combined with measures to address the social side of economic reform, is the basis for sustainable development and economic growth.
In Monterrey we reconfirmed the universal recognition that the private sector is a potentially very strong driving force for development. We note with satisfaction that whereas foreign direct investments have slowed down considerably over the past year due to the general global economic situation, investments in developing countries only dropped marginally. Nevertheless it is of concern that the Least Developed Countries are not sufficiently benefiting from the investments. We firmly believe
that a multilaterally agreed framework on investment can help increase investment flows to developing countries, by creating stability, transparency and predictability, as recognised by the WTO Ministers last year in Doha.
Monterrey reaffirmed the importance of trade for development. We fully support the key message that trade can foster growth to help reduce poverty. While trade openness - between developing countries as well as through greater access to developed country markets - would have a substantial impact on the fight against poverty, other steps are also necessary. Trade reform must be part of wider, country-owned poverty reduction strategies based on better domestic policies and supplemented with
additional external support and an enabling international regulatory environment. A key element of this wider strategy is enhanced trade related capacity building to reduce supply side constraints.
The EU is committed to concluding the negotiations of the Doha Development Agenda, which places the interest of developing countries at the heart of the trade agenda, not later than 1 January 2005. We are also committed to providing increased support for trade related assistance. Two weeks ago, The European Commission spelled out its suggestions on the way forward for the EU to deliver on its Doha and Monterrey trade capacity building commitments. We call on the international community at large
to support the development agenda in the WTO in the framework of closer cooperation.
Mr. Chairman,
While domestic action and reform is the key to achieving the Millennium Development Goals, many countries - and especially the least developed countries - will fail to achieve these goals without increased development assistance. The European Union already provides the highest level of official development assistance to developing countries. And we will increase our combined development assistance towards the 0.7 % target and urge other donors to follow our lead. The EU has committed to
collectively reaching an average of 0.39% by 2006. In view of this goal, all the European Union Member States will in any case strive to reach, within their respective budget allocation processes, at least 0.33% ODA/GNI by 2006. A significant increase in overall ODA must be accompanied by greater effectiveness and accountability in ODA financed programmes as well as greater harmonisation of donor policies.
Developed countries may also contribute to development financing by assessing alternative financing instruments. In this context we reconfirm our readiness to assess the relevance of SDR allocations based on the IMF's Articles of Agreement, which stipulate that considerations of a general allocation of SDRs requires taking into account the global need for liquidity at the international level. We will study, in the appropriate fora, the results of the analysis requested by the Secretary General
on possible innovative sources of finance.
After Monterrey, EU countries were fully involved in the discussions that took place in the International Development Association (IDA) of the World Bank on increasing its grant authority. IDA should work collaboratively with the UN agencies or other bilateral grant donors as well as with partner countries in the PRSP framework. IDA grants should only be used where IDA has a comparative advantage and for operations that have a particularly high development impact.
For the European Union, working towards solving debt problems or finding solutions to questions related to the international financial system are shared national and international responsibilities. Funds received, including funds raised through debt relief, should be properly and effectively managed. The European Union recognizes that the burden of debt servicing can be a significant obstacle to addressing development concerns. Concessional debt relief must be reserved for severely indebted
low-income countries. We welcome the major progress made so far in the context of the enhanced HIPC initiative. 26 countries are already benefiting from this initiative of which 6 countries have now reached the completion point with the irrevocable stock of debt reduction.
We consider it important that HIPC's that have already qualified for debt relief continue their efforts to use freed resources effectively, to strengthen productivity and growth, and to invest in poverty reduction. We stress the need for capacity building in the area of debt management and to integrate sustainable debt strategies in macro economic policies. We call on eligible countries to take the necessary political and economic steps that would enable them to benefit from the HIPC
initiative. All creditor and donor countries are urged to contribute their share to securing the necessary financing of the enhanced HIPC initiative, to secure an equitable burden sharing, and the financing of the uncovered costs of the multilateral Development Banks.
There is a need for more work on the issue of debt sustainability bearing in mind the discussion on achieving the MDGs in both Monterrey and Johannesburg. The EU will pursue efforts to restore debt sustainability in the context of the enhanced HIPC initiative so that the heavily indebted poor countries can pursue growth and development unconstrained by unsustainable debt dynamics.
Donor coordination is also crucial to ensure that countries can effectively utilise HIPC resources and should be pursued within the framework of the PRSP of each country.
We acknowledge the problems of debt sustainability of some non-HIPC low-income countries, in particular those facing exceptional circumstances.
Mr. Chairman,
The European Union is in favour of working towards coherence and a participatory process at the global level. This can be achieved through reform of the International Financial System to combat negative aspects of globalisation, strengthen the voice of developing countries in international economic decision-making, and, while respecting their respective mandates, enhancing the cooperation among the UN, International Financial Institutions and the WTO. At the same time, this is contingent on a
strengthening of efforts at national level to enhance coordination and coherence among all relevant ministries, institutions and policies.
In the last few years, significant progress has been made to further strengthen the functioning of the international financial system. Against this background - and in light of the recent crisis in Latin America - the EU encourages further steps to enhance the stability and the transparency of the international financial system, including through enhanced crisis prevention, a stronger framework for financial crises resolution, and further efforts to tackle financial abuses.
International organisations, notably the IMF and the World Bank, should continue to play an important role in strengthening the international financial system. We welcome their ownership of the Monterrey Consensus and their will to implement it, so clearly expressed by both institutions last weekend in Washington.
Mr. Chairman,
The European Union looks forward to staying engaged in the follow-up to the Monterrey Conference. We will address FfD-follow up later in this Committee. And let me end by stressing how much we appreciate the involvement of all the major stakeholders, including civil society and the business sector in this endeavour.
Thank you for your attention.
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