Finance Ministers Agree on

Commonwealth News and Information Service
October 3, 2002

Commonwealth finance ministers have adopted a Commonwealth Action Plan for delivering the 'Monterrey Consensus', the set of agreements arising from the United Nations Conference on Financing for Development in Monterrey, Mexico, in March 2002. The finance ministers, who met in London from 24 to 26 September 2002, welcomed the agreements reached in Monterrey (and confirmed at the Johannesburg World Summit on Sustainable Development in August-September 2002), and noted their importance for Commonwealth countries.

The Action Plan includes a number of commitments made by member governments, including a general commitment to create a world with less division between rich and poor, and to ensure that the benefits of new technologies are available to all countries.

In particular, Commonwealth developing countries commit themselves to:

- devise and implement national development and poverty reduction strategies - the process should be transparent and involve wide consultations to ensure broad public support;
- develop and use appropriate measures and systems to monitor progress, focus expenditure more effectively and achieve a sustainable revenue base;
- reform and strengthen public expenditure and financial management processes so that spending is directed at key development priorities; and
- develop policy frameworks that encourage domestic and foreign private sector investment, and take action to promote domestic saving and investment.

Advanced and high-income countries of the Commonwealth commit themselves to:

- extend the benefits of trade liberalisation for all by further opening their markets exports from developing countries and reducing trade-distorting subsidies;
- implement increases in official development assistance (ODA) volumes and make further progress towards meeting the UN target of 0.7 per cent of GNP 0.15 per cent for aid to least developed countries);
- encourage and support the New Partnership for Africa's Development as a means to secure poverty reduction and growth in Africa; and
- work globally to win support for higher aid volumes from other countries.

Commonwealth donors further commit themselves to a nine-point framework for enhanced aid effectiveness, including focusing aid where it will do most good, delivering aid more flexibly and with greater long-term predictability, and helping countries build the institutional capacity needed to make effective use of aid.

The framework calls for donors to work towards the untying of all development assistance, and to recognise in their aid programmes the special vulnerabilities and needs of small developing states.

Recognising that by forging consensus across its membership, Commonwealth countries can have more influence and impact in global forums than acting separately, the Action Plan includes a commitment for all Commonwealth countries to work together in international institutions and forums. Specific goals include:

- building a consensus with the World Bank, International Monetary Fund (IMF), UN and other international agencies in support of the new global framework for enhanced aid effectiveness, with donor support co-ordinated and aligned behind priorities set out in country-driven development and poverty reduction strategies;
- seeking to ensure that on exit from the HIPC (heavily indebted poor countries) debt relief process no country is left with an unsustainable burden of debt;
- encouraging developing countries and international institutions to treat education and health as priority sectors;
- supporting action to counter money laundering and the financing of terrorism;
- helping small developing countries strengthen their advocacy in relevant forums;
- supporting the strengthening of governance in global economic and financial institutions; and
- supporting the development of new, creative and economically sound mechanisms for attracting private investment to the least developed and small vulnerable developing countries.

The Action Plan calls on the Commonwealth Secretariat to assist in the implementation of the Plan's objectives and commitments, building on its areas of comparative advantage, and within its mandate and financial resources.

Specific areas of activity include reforming the management of public financial resources; strengthening capacity for trade policy formulation, negotiation and implementation; facilitating dialogue between governments, the private sector and civil society; and building on the Secretariat's co-operation with the Commonwealth Foundation and engagement with civil society begun in the recent consultations on 'delivering the Monterrey Consensus'.

In addition to adopting the Action Plan, the finance ministers also reviewed the world economic situation, discussed issues raised at the annual meetings of the World Bank and IMF, and discussed Commonwealth development co-operation. They supported the ongoing efforts of the Secretariat in working towards gender equality in economic policy-making through the gender responsive budget initiative, and agreed to make progress within their respective budget-setting processes.

More Information on Financing for Development
More Information on the Financing for Development Summit

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