Mr. Mohammad JABBARI Representative of the Islamic Republic of Iran
October 16, 1997
In the name of God, the Compassionate, the Merciful
Mr. Chairman,
Allow me first to begin by thanking the Secretary-General for providing the informative reports we have before us.
Serious discussions have taken place on the core issue of the financing of development since the initiative for the convening of an international conference on this major preoccupation of developing countries was launched, and interesting proposals have been made to this effect. It goes without saying that the element of financing constitutes the backbone of development. It was in fact out of cognizance of its detrimental role in achieving sustainable development that the General Assembly decided to discuss both the organizational arrangements relating to and the substantive aspects of this subject.
The Islamic Republic of Iran attaches great importance to this subject matter and is of the view that the Second Committee at its current session could have an in-depth discussion on the issue and examine various modalities for development finance and make recommendations thereon. We also fully support the idea of the convening of an international conference on the financing of development. We believe that in the wake of the major UN conferences on various aspects of development in the 90's, the time has now come to provide necessary resources through national and international channels for their implementation. We should keep our promise and fulfil our commitments.
The report of the Secretary-General entitled "Sources for the Financing of Development" mainly emphasizes, among others, on the vital role of the savings generated domestically and the prospective transfer of the private financial resources from overseas as the sources of finance for development. In this connection, the report suggests that while the developing counties have mainly relied upon their domestically generated savings to finance their investment, net transfers of resources from abroad have on balance averaged less than one percent of their gross domestic product (GDP). On the other hand, although the average saving rates in developing countries as a whole increased over the last decade but it still remains below the average saving rates in 1980. At the same time, developing countries have been able to invest more than their own savings permitted, which indicates the extensive efforts made on their part to mobilize domestic resources for development. Nevertheless, we should not lose sight of the fact that the growth of the gross domestic saving has not embraced all developing regions over the last decade, which can be attributed to the decrease in income. This in turn, contributes to further widening the gap between and among countries. Therefore, the recommendations contained in the report regarding factors affecting saving in developing countries, although necessary in themselves, are certainly not enough to respond to their financial resource needs.
As far as the savings for international transfer is concerned, according to the latest issue of the World Economic and Social Survey, one single developed country has absorbed substantial net resource transfers from other countries. This might also include the existing trend towards the net resource transfer from developing to developed countries which also needs to be arrested and reversed. As a matter of fact, in 1996, there was a net transfer of official resources out of the developing countries as the new inflows of official loans and grants were less than the outflows of interest and principal. Another fact in this regard is that the distribution of private financial flows to individual countries has remained highly uneven. in 1996, over three quarters of the total flows went to 10 countries only. Also, foreign direct investment, constituting only about one-fifth of net private flows, is highly concentrated on raw materials in developing countries.
Moreover, private flows do not respond to the urgent need for development of infrastructure and for improving human development indicators in developing countries requiring significant amounts of resources. Therefore, the private flows should be directed towards responding to development priorities in developing countries while avoiding volatility and its destabilizing consequences. As the Secretary-General has pointed out in his report, the nature, distribution, composition, terms and conditions of these flows should be made consistent with the international community's new consensus on development and appropriate to the needs of the developing countries.
The ODA, as an integral part of international cooperation on concrete issues in the economic, environmental and social fields, is currently at its lowest level ever. Certainly, the consequences are acute, particularly for LDC's. Moreover, in addition to the shift from official to private resources, an increasing proportion of official flows is being directed towards humanitarian assistance undermining the longer-term development purposes. As part of a longer-term solution, the international community needs to develop international policies to create an enabling international environment. To that end, the developing countries should be enabled to effectively participate in the decision making processes on macroeconomic policy issues particularly through the democratization of decision making processes in the Breton Woods Institutions.
To conclude, Mr. Chairman, an international conference on the financing of development could address and consider, among others, the following issues:
Reversing the persistent decline in overall flow of ODA; fulfilling by the year 2000 the internationally agreed target of 0.7 per cent of GNP of developed countries; fulfilling the financial commitments contained in the outcome of the recent major UN conferences; fulfilling the commitments under the International Development Association replenishment; Substantial augmentation of the resources of IMF; debt relief measures including debt for development and environment swap; reducing volatility in private capital flows to developing countries; substantial increment in the resources of regional development banks; improving market access and terms of trade of developing countries; providing adequate support for expanding the resource base for operational activities of the UN system; declining of military expenditures in support of the efforts of developing countries to achieve growth and development; and finally, exploring the possibilities of reallocating resources from developed countries subsidies to the development of developing countries. Of course, this list is not inclusive. Other additional and innovative sources of the financing of development might as well be conceived of.
Thank you, Mr. Chairman.
