Ambassador Ahmad Kamal
March 19, 1998Mr. Chairman,
I would like to convey the Pakistan delegation's appreciation to you and to other members of the Bureau for making thorough preparations for the resumed session of the Second Committee. My delegation is also happy to see our friend, Patrisio Civili, assume his new and important function. We hope that the process initiated at this session will lead to a successful "international consideration" of the issue of the financing of development.
My delegation would like to fully associate itself with the statement made by the Permanent Representative of Indonesia, Ambassador Makarim Wibisono, on behalf of the Group of 77 and China.
Social justice, and economic progress for all, are principle objectives of the UN Charter. The original vision of the United Nations sought security from war and promotion of universal economic and social well being. Unfortunately, the world we see today, is far from being secure and happy. The root cause behind our inability to realize the goal of universal peace is our failure to effectively address the socio-economic factors that lead to strife in the first place. It is distressing to see that while strife and conflicts continue in many parts of the world, the struggle for development appears to be losing the battle.
Marginalization at the international and national level is leaving the deprived and the dilapidated on the sidelines. Three billion people live under two dollars a day. A billion and a quarter live under one dollar a day. One hundred million go hungry every day. Too many are being denied the fruits of success.
Universal prosperity would remain a mirage as long as we do not have the vehicles to cross the desert of poverty and deprivation. The international community should respond to the urgent demands for international cooperation for development. The question of adequate funding for ensuring economic growth in developing countries deserves serious consideration. It will be an investment in our common future.
While the need to make this investment has been widely recognized in the UN conferences held in the last eight years, little has been done to meet those commitments. To the contrary, Official Development Assistance (ODA) has been gradually reduced, making it more difficult to reduce poverty to globally agreed levels. In 1996, overall ODA flows to developing countries and multilateral organizations reached 55 billion dollars, down from 59 billion dollars in 1995. This represents a fall of 16% in real terms since 1992.
If the current rate of decline persists, ODA will vanish by the year 2012. For the poorest countries, to which commercial flows are negligible, ODA remains a vital resource. There is, therefore, an urgent need to reverse the continuing decline in ODA.
Private investment flows have, no doubt, increased dramatically in recent years. However, these flows are accompanied by serious problems relating both to the character and the direction of private investment. The recent crisis in East Asia has shown that the economic growth achieved through private capital flows is fragile. There is an emerging consensus that something needs to be done to better regulate and monitor private capital flows.
Apart from being highly volatile, private investment has a tendency to flow into places where it is least required. Eighty per cent of private investment flows into less than a handful of countries today. Africa receives only 2%. The poorest are thus getting virtually no private investment funds at all.
One of the most serious threats to long term economic growth is the unsustainable level of external debt. It is a major drain on financing for development. High-level of external debt also discourages private investment, as high debt servicing is perceived by investors as a form of "tax" on the future income of the country. According to the World Bank reports, over half of the developing countries face insurmountable debt burdens.
It is encouraging to note that some initiatives have been launched to address the problems of external indebtedness of the poorest countries. Debt vulnerability is, however, not the exclusive feature of the poorest countries. Middle income and lower income developing countries faced with serious external debt problems also require new initiatives to facilitate their development process. We should endeavour to find an effective, equitable, development oriented, and durable solution to the debt problem.
The lack of adequate funds for development is further exacerbated by the propensity of existing institutions to hinder the development efforts of the developing countries. The Asian crisis has brought to the fore some institutional flaws. The international financial system failed once again to foresee the looming financial crisis. The inadequacy of the conventional policy reform packages of the IMF and inappropriate methods of its doing business have also been established more convincingly. Multilateral development banks seem to have lost their sense of direction too.
There is a genuine sense of system malfunction and need for reform. In an era of globalization and unprecedented financial flows, the ability of the Bretton Woods Institutions to effectively manage the world economy has become increasingly strained. The process of reform should enhance the capacity of these institutions to respond to the needs of the developing countries, and it should also lead to more equitable representation of all countries on the boards of multilateral institutions.
In any future reform, close interaction between the Bretton Woods Institutions and the United Nations should be a cornerstone of the financial system. The United Nations provides a democratic forum with a universal membership to deal with economic issues.
In this context, the forthcoming meeting of ECOSOC with representatives of the high-level intergovernmental machinery of the Bretton Woods Institutions may set the pace for future interaction. We shall see.
The UN should also be enabled to move beyond its normative role. We were encouraged by the Secretary General's promised "development dividend", and are waiting to see its size and true significance.
The UN Programmes and Funds also need adequate funds to fulfill their mandates. The hard facts are that while the role of the UN funds and programmes have grown in scope, the core resources of these programmes have declined. This trend has to be reversed.
In the past few years, we have been inundated with new and innovative approaches to finance development. All the proposals are worth considering on their own merits.
We, however, believe that the basic question of addressing the core issues like decline in ODA, external debt, private flows, market access and institutional reforms should remain the prime objective of this undertaking. The Ad Hoc Open-ended Working Group to be established during the 53rd session of UN General Assembly should cover the whole gamut of issues dealing with financing for development. In this context, my delegation fully supports the comprehensive paper presented by the Group of 77 and China to pursue this task.
