General Assembly Session 62 meeting 31

The President

The General Assembly will begin the High-level Dialogue on Financing for Development, convened in accordance with resolution 61/191 of 20 December 2006. The overall theme of the High-level Dialogue is "The Monterrey Consensus: status of implementation and tasks ahead". The High-level Dialogue will consist of plenary and informal meetings as well as six interactive multi-stakeholder round tables. A detailed programme was distributed to delegations this morning.

I would like to sincerely welcome all delegations to the High-level Dialogue on Financing for Development. The Dialogue will begin the intergovernmental follow-up to review the implementation of the 2002 Monterrey Conference and to assess the challenges ahead. Over the next couple of days we shall hold a series of plenary meetings and six multi-stakeholder round tables on the major thematic areas of the Monterrey Consensus. I would encourage all participants to engage in a frank, inclusive and open exchange of views with all stakeholders. By doing so, we can make a substantive contribution to the preparation of the Follow-up Conference in Doha.

In that regard, I would like to commend the important contributions made at yesterday's hearings by civil society and non-governmental organizations, in particular on innovative sources of development finance and trade. The overall message from the hearings was clear: we have reached a critical juncture in the financing for development agenda. Despite the promises made, progress has been slower than expected. While there have been some successes, many of the development finance objectives set in 2002 have not yet been met.

At Monterrey, developing countries acknowledged primary responsibility for their own development. They committed themselves to create sound fiscal, economic and social policies to that end. In return, donors agreed to support them through more and better aid, debt relief and fairer trade and to give them a more equal voice in the international system. The Consensus embodies the mutual responsibilities of developed and developing countries. I would like to briefly outline progress achieved in each of the six areas.

In the area of domestic resource mobilization, macroeconomic and fiscal management has improved in most developing countries, creating higher savings and investment. However, despite increased social expenditures, poverty is still on the rise, especially in Africa.

With regard to private capital flows, a dozen fast-growing, resource-rich countries account for some 70 per cent of the increase in private capital flows to developing countries. More needs to be done to encourage investment in low-income countries.

In the area of international trade, major challenges remain in realizing the Doha Round of multilateral trade negotiations. While international trade has increased, new forms of protectionism have arisen. All countries involved in the Doha Trade Round should aim to forge an open, non-discriminatory and equitable multilateral trading system.

We should congratulate the around two thirds of donor countries which met 2006 targets to increase official development assistance (ODA) levels that they set in Monterrey. However, in 2006 development aid from countries of the Organization for Economic Cooperation and Development fell by 5 per cent. Aid to sub-Saharan Africa, excluding debt relief, remained static. Following current trends, ODA for the period 2006-2010 will fall short of the targets. Improving aid effectiveness and exploring innovative sources of development finance remain priorities.

The Multilateral Debt Relief Initiative has freed up essential resources for investment in public services. However, putting all low-income countries on the path to debt sustainability and poverty reduction remains a major challenge.

Finally, global governance and the international financial architecture need to be more responsive to the profound changes in the global economy, in particular with regard to global imbalances and market transparency. Increasing the voice and participation of developing countries remains a priority on which the legitimacy and credibility of some institutions now depends.

Since its adoption in 2002, the Monterrey Consensus has remained at the heart of the United Nations development debate. In 2005, it was reaffirmed by leaders at the World Summit. That same year at Gleneagles, Group of Eight (G-8) leaders agreed to make progress on trade and to provide $50 billion extra in aid, with $25 billion for Africa, by 2010. They set new targets for access for all to AIDS treatment, free basic education and health care. Again in Heiligendamm in 2007, G-8 leaders recommitted to increased development assistance and announced an additional $60 billion to fight AIDS, malaria and tuberculosis.

If implemented, existing commitments to finance development are enough to achieve the Millennium Development Goals (MDGs), even in Africa. But each side of the partnership must deliver. That is the spirit of the Monterrey Consensus. As developing countries adopt comprehensive national strategies, donors must deliver on commitments to provide additional assistance to enable them to succeed. Unchecked, bad governance and corruption will undermine efforts to provide long-term, predictable finance. However, lack of progress should not be an excuse for additional conditionality or for delaying increases in ODA.

Developing countries need to develop credible long-term investment plans, strengthen good governance and continue to fight corruption to encourage sustainable economic growth and an attractive environment for business. To maintain the credibility of their commitments, donors should accelerate their plans to scale up assistance and issue country-by-country timelines on how will increase aid, so that partner Governments can prepare supporting macroeconomic frameworks.

Time is running out to make the needed practical investments. The focus must now be squarely on implementation. Promises must be urgently translated into practical plans with systematic follow-through by all parties. Developing countries need to know when additional new resources will arrive so that they can begin to plan.

The adoption of the historic Consensus on financing for development laid the foundation for a global partnership for the international community to achieve the Millennium Development Goals. It is in that context that the review of the implementation of the Monterrey Consensus will take place in Doha next year. Success in Doha will very much depend on the consensus we reach during the consultation process at the sixty-second session of the General Assembly.

We can lay the political ground over the next couple of days. We need to judge the progress made so far and assess future challenges, including supporting developing countries to adapt to and mitigate the effects of climate change. We may face huge challenges, but we should take hope from the progress that has been made so far.

In the past 40 years, life expectancy in the developing world increased by one quarter. In the past 30 years, illiteracy has fallen by half.

In the past 20 years, 400 million people have been lifted out of absolute poverty. Smallpox has been eradicated, and soon maybe polio will too. The debt of over 20 countries, totalling over $81 billion, has been fully cancelled, helping some to provide free health care and build new classrooms. The $4 billion International Finance Facility for Immunization has been established to help save the lives of an additional 5 million children over the next decade.

At the first thematic debate of the General Assembly on partnerships towards achieving the MDGs, held in November 2006, the Islamic Development Bank announced $10 billion of new financing for the Millennium Development Goals. In 2007, the United Arab Emirates announced a $10 billion fund to improve access to and the quality of education in the Muslim world. And recently, an international health partnership among donors, developing countries and United Nations entities has been established.

Some African countries are demonstrating that progress towards the MDGs is possible when strong government leadership and good policies are combined with adequate financial and technical support from the international community. Progress is obviously possible. Above all, we must demonstrate political will. Millions of lives hang in the balance.

Along with the framework of the MDGs, the Monterrey Consensus has helped to strengthen our shared sense of purpose and to harness and combine the energies of the United Nations, other institutions, faith groups, non-governmental organizations, civil society and the private sector. If this -- the greatest anti-poverty partnership in history -- is insufficient to break away from business as usual, many developing countries and campaigners around the world will be left without hope. Global trust will be irredeemably undermined.

In order to avoid that, establish greater trust and renew confidence in the multilateral system, it is critical that we all live up to our promises and commitments. In doing so, we need to move beyond the simplistic division of the world into North and South, which reflects the past more than today's world. We live in a far more complex and integrated global age, with new emerging economic powers and donors as well as private philanthropy in all regions of the world.

It is incumbent upon leaders from all of those groups and stakeholders to demonstrate leadership and concerted action. Otherwise, by 2015, there will be more people struggling in poverty. Millions of people will not realize the basic promises of the Millennium Development Goals in their lives.

Finally, I wish to thank all the Member States represented here, particularly those countries that are represented at a high level in this important meeting. I had hoped and wished that the relevant international institutions would be represented at the highest level, given the high importance attached to this issue of financing for development.

I now give the floor to the Secretary-General, His Excellency Mr. Ban Ki-moon.

The Secretary-General

I am pleased to join the President of the General Assembly in welcoming all participants to this High-level Dialogue.

The International Conference on Financing for Development, held five years ago in Monterrey, marked a turning point in our quest for economic and social progress. At the Conference, developed and developing countries alike came together under United Nations auspices to forge a bold new partnership for development, and they made clear their determination to end poverty once and for all.

In the Monterrey Consensus, developing countries took primary responsibility for their development and for mobilizing domestic resources. Developed countries, in turn, agreed to provide assistance and promote an enabling international environment for development.

The Consensus was a landmark agreement. It reiterated that poor and economically distressed people should be welcomed as partners in the development process. It affirmed the importance of substantially increased and predictable official development assistance (ODA) to achieve development objectives, including the Millennium Development Goals.

Just past the midpoint in the global effort to achieve the Goals by 2015, our scoreboard is uneven. Some regions -- particularly sub-Saharan Africa -- are clearly not on track. That should worry every single one of us. After all, reaching the Goals is not only vital to building better, healthier and more decent lives for millions of people around the world; it is also essential to global peace and security.

Now more than ever, achieving the Millennium Development Goals -- and, indeed, all the internationally agreed development targets -- depends fundamentally on the substance, vitality and credibility of our global partnership. We know we can reach the goals, but only if we share responsibility and honour our commitments.

So far, progress on the Monterrey Consensus has also been mixed. Many developing nations, including many lower- and middle-income countries, have experienced stronger economic growth. After 2002, levels of official development assistance, including new commitments, rose, only to fall off since last year. More importantly, the sustained increases required to meet targets agreed to decades ago and reiterated in 2002 and 2005, have not materialized. Closing this funding gap is essential if we are to alleviate extreme poverty, fight disease and achieve the other development targets. The challenge is even greater now, with the need to mitigate and adapt to climate change while striving to reduce the huge and growing economic divergences.

This can only happen when donors meet their ODA commitment targets and channel more resources through national budgets. At the same time, more effort is required to improve aid effectiveness. The additional financing needs for climate change must also be addressed.

Significant steps have been taken on debt relief. But, here too, much more is needed. Putting all low-income countries on a sustainable path of debt repayment must be a priority, and immediate action is needed to increase the voice and participation of developing countries in international decision-making, particularly in the international financial institutions. This is essential for the legitimacy, credibility and, ultimately, effectiveness of these institutions.

At the national level, implementation poses its own challenges. In many cases, prudent macroeconomic management and increased social spending have not generated the results required to achieve the Millennium Development Goals. National development strategies need to give priority to macroeconomic and other policies that support sustained economic growth and decent employment.

Net international capital flows have actually flowed away from most developing countries over the past decades. Much more must be done to increase stable capital flows to low-income countries and to enhance their development impact.

We also need more inclusive multilateral coordination of macroeconomic policies. This is particularly urgent in the face of the large global imbalances, volatile international capital flows and threats to sustainable development posed by financial turmoil.

Significant challenges remain in realizing the development dimension of the Doha trade negotiations. Concluding the talks quickly, with meaningful and equitable development implications, should be the principal focus of the negotiators. Aid for trade should be made operational.

The Follow-up International Conference on Financing for Development to Review the Implementation of the Monterrey Consensus, to be held in Doha next year, offers a golden opportunity for all stakeholders to consolidate the gains made and to achieve new breakthroughs. It is an opportunity to strengthen the solidarity and partnership between rich and poor countries that was created five years ago in Monterrey.

Let us begin here, at this High-level Dialogue, to rekindle that Monterrey spirit. Let us renew our commitment to free our fellow human beings from the abject and dehumanizing conditions of poverty and inequality. A strong and sustained effort now can mean the difference between the success and failure of our collective endeavour to create a better, more peaceful and more prosperous world for all.

I urge the international community to do its utmost to fulfil the commitments made at Monterrey, so that all countries and all people, especially the poorest, can benefit. And I hope to see fresh ideas on specific actions that could be taken in Doha to deliver fully on the global partnership for development. I look forward to examining appropriate ways to strengthen the implementation of this process.

I wish participants every success in their deliberations.

The President

I thank the Secretary-General for his statement.

I now give the floor to His Excellency Mr. Dalius Cekuolis, President of the Economic and Social Council.

Mr. Cekuolis (President of the Economic and Social Council)

It is indeed a pleasure and an honour for me to participate in the third High-level Dialogue on Financing for Development. As the President of the General Assembly and the Secretary-General have just emphasized, we are meeting at an important juncture. We have passed the midpoint for achieving the Millennium Development Goals (MDGs), and we are about to start preparing for a major review conference on financing for development, to be held in the second half of 2008 in Doha. This Dialogue will be an important occasion to fully utilize the convening power of the United Nations and the capacities of all its partners to advance the United Nations development agenda.

I am pleased to say that the Economic and Social Council has come a long way in the past two years in re-energizing its functions and rejuvenating its mission of promoting social and economic development. There are now three major Council forums that are instrumental for the Monterrey follow-up process: the Council's annual spring meeting with the Bretton Woods institutions, the World Trade Organization and the United Nations Conference on Trade and Development; the Annual Ministerial Review; and the Development Cooperation Forum.

The spring meeting has served as an important reminder that our efforts must be underpinned by a continued commitment by all to a global partnership for development. In the Monterrey Consensus, heads of State or Government encouraged the United Nations and major institutional stakeholders to focus the spring meeting on issues of coherence, coordination and cooperation. The Council also highlighted the importance of the meeting in its latest resolution on financing for development (Economic and Social Council resolution 2007/30), in which it calls for measures to enhance its impact in the follow-up process. Following the suggestions of the Council -- such as focusing the meeting on specific issues and finalizing the preparations well in advance -- will help to ensure that next year's event will be an important stepping stone on the road to Doha.

At the 2005 World Summit, world leaders mandated the Economic and Social Council to strengthen its role in coordinating the implementation of the United Nations development agenda by convening an Annual Ministerial Review and a biennial Development Cooperation Forum.

The Annual Ministerial Review enhances the role of the Council as a central body for United Nations system-wide coordination in the economic, social and related fields. Member States welcomed the first Review as an important forum for assessing the progress made in implementing the internationally agreed development goals, which have emerged from United Nations conferences and summits held since the 1990s at the global, regional and national levels. It was particularly encouraging and illuminating to listen to the national voluntary presentations of several Member States on their progress in implementing national development strategies in order to achieve the internationally agreed development goals and the MDGs by 2015. Future Annual Ministerial Reviews should make recommendations on concrete steps to overcome the obstacles and challenges in realizing those goals.

The official launch of the Development Cooperation Forum brought together a wide array of development partners to engage in a dialogue on strengthening international development cooperation. It was a decisive step forward in the implementation of the global partnership for development and proof of the commitment of Governments to strengthen the coherence and effectiveness of international development cooperation. It also served as an important reminder that all stakeholders -- Governments, United Nations system organizations, civil society, parliaments, the private sector and academia -- have to be accountable to one another.

I am convinced that these two new key functions of the Economic and Social Council, together with the Council's annual spring meeting, will provide an important platform for fostering dialogue and consensus on financing for development among a wide range of stakeholders.

The Monterrey Consensus outlined the comprehensive national and international policy actions required to achieve the internationally agreed development goals. We will be able to follow through with them only if we work together and make full use of all existing forums and mechanisms.

I am confident that I speak for all countries members of the Economic and Social Council when I promise that, for our part, we will do all in our power to advance the implementation of the Monterrey Consensus and to ensure the success of the Follow-up International Conference on Financing for Development, to be held in Doha, Qatar, in the second half of 2008.

The President

I should now like to turn to some organizational matters pertaining to the conduct of these meetings. As stated in my letter of 19 October 2007 to Member States concerning the list of speakers, I would like to propose that the list of speakers be closed at 1 p.m. May I take it that the Assembly agrees to that proposal?

The President

With respect to the length of statements, as indicated in the note by the Secretary-General (A/62/271), speakers are encouraged to limit their statements to five minutes, on the understanding that this will not preclude the distribution of more extensive texts. In view of the large number of delegations already inscribed on the list of speakers -- there are some 100 speakers so far -- I appeal to speakers to cooperate in that respect.

To assist speakers in managing their time, a light system has been installed at the speaker's rostrum, which functions as follows: a green light will be activated at the start of the speaker's statement, an orange light will be activated 30 seconds before the end of the five minutes, and a red light will be activated when the five minutes have elapsed.

Members will recall that, in the note of the Secretary-General, it was noted that the Assembly would also hear statements by the President of the World Bank, the Managing Director of the International Monetary Fund, the Director-General of the World Trade Organization, the Secretary-General of the United Nations Conference on Trade and Development and the Administrator of the United Nations Development Programme. I would like to inform members that these organizations will now be represented by the following persons: the Vice-President of the World Bank, the Deputy Managing Director of the International Monetary Fund, the Deputy Director-General of the World Trade Organization, the Special Representative of the United Nations Conference on Trade and Development at the United Nations Headquarters, and the Associate Administrator of the United Nations Development Programme.

If there is no objection, and without setting a precedent, may I take it that the General Assembly agrees to hear statements by these representatives?

The President

I now give the floor to Mr. Danny Leipziger, Vice-President and Head of Network, Poverty Reduction and Economic Management of the World Bank.

Mr. Leipziger (World Bank)

It is an honour and a privilege to be here and have the opportunity to speak to the Assembly today. Mr. Zoellick, the President of the World Bank, asked me to convey to the Assembly his strong commitment to the development agenda associated with the Monterrey Consensus. At his inaugural annual meetings speech yesterday, in Washington, he laid out an ambitious World Bank Group agenda based on the concept of an inclusive and sustainable globalization that reaches all, including women, who find themselves in poverty.

In 2002, the International Conference on Financing for Development, held in Monterrey, Mexico, laid out a mutual accountability framework, which included actions for donors and partner countries anchored in the country-based development model.

Five years later, and entering the final stage of the Millennium Development Goals cycle, I commend the United Nations for its ongoing efforts to take stock on where we stand in this important partnership. I would like to focus my comments on three key areas in which the Bank has been involved: debt relief; aid scaling-up around the country-based model; and trade reform.

Concerning debt relief, donors have in large part delivered on their commitments. Most multilateral financial institutions and others have provided debt relief in line with their commitments under the Heavily Indebted Poor Countries Debt Initiative and the Multilateral Debt Relief Initiative. As a result, 32 countries are benefiting from relief totalling over $90 billion in 2006 terms, with the International Development Association (IDA), our soft-loan window, being the single largest provider.

One should note, however, that debt sustainability is not guaranteed by forgiving past debt. It requires not only careful borrowing in the future, but also export diversification and access, growth and the ability to weather economic shocks. High indebtedness is more likely to have been a symptom of weak policies, institutions and governance than a cause of low growth. That is why we have been working closely with the International Monetary Fund on the Debt Sustainability Framework in Low-Income Countries. We asked that there be harmonization among creditors and all donors in terms of responsible lending and responsible borrowing.

It is even more important to strengthen borrowers' capacity to manage their own debt, generate financing needed for development and avoid experiencing repayment difficulties. In that context, we are engaged in the diagnosis of the weaknesses of systems and building debt management strategies.

Turning to the efforts of developing countries in managing aid flows, it is worth noting that developing countries have achieved important progress in building national strategies and improving policy environments leading to higher growth. They have improved the quality of their poverty reduction strategies and their linkages to national processes. They have strengthened their institutional frameworks for public financial sector management, public administration and governance. The quality of their macro and growth policies has also improved, as the recent higher growth rates underscore. Those significant improvements have opened up important opportunities for scaling up a wide range of countries and fragile States.

However, donor countries remain far short in their commitments to improve the quality and quantity of aid. Official development assistance increased, but the majority of the increase since 2004 was driven by debt relief. Actually, official development assistance from Development Assistance Committee countries declined by 5.3 per cent in real terms in 2006, and we expect, unfortunately, a further decline in 2007.

Results on efforts to improve the quality of aid are also mixed.

Central to the Monterrey Consensus was the link between country performance and aid. While, on average, aid flows to better performing countries have increased since 2000, this trend is far from uniform, and some of the better performers have actually seen a decline in aid.

In sum, on the aid front, there are significant opportunities for scaling up, and donors need to demonstrate a clear resolve to accelerate delivery on their commitments. A strong fifteenth replenishment of the IDA -- IDA15 -- will be important in this direction, and that is why the World Bank Group has decided to lead the way by seeking to contribute $3.5 billion to IDA15 out of its own resources.

Allow me to now turn to the global trade system, my third theme. The global trade system needs to be development-friendly. On this front, bringing the Doha Round to a successful conclusion remains the key goal. We believe that this is possible. There is a negotiating package on the table that would bring significant benefits to all involved, but unless key players show flexibility in adjusting their demands, this goal will not be achieved in the near future. Industrialized countries have a particular responsibility in leading the way in this process, and the costs of failure should not be underestimated.

Regardless of the outcome of the Doha negotiations, substantial increases in what is called "aid for trade" to help poor countries to harness global markets for growth and poverty reduction should remain a high priority.

I would like to conclude by identifying three additional areas for action that can make a difference in promoting the implementation of the Monterrey Consensus.

First, we need to work together to identify innovative sources of development finance, drawing more on the private sector and other forms of development assistance. There is much scope for collaboration with and learning from emerging donors, private foundations and others.

Secondly, we will need to ramp up support for Poverty Reduction Strategy implementation and build strong resources and results frameworks around which donors can align to support viable country-led growth strategies. Efforts such as the Results and Resources Partnerships can help in this effort.

Thirdly, we need to strengthen the development focus around global and regional public goods to ensure that increased finance is integrated into national growth and development strategies, leading to poverty reduction and a strong development impact. In that context, allow me to echo the words of the Secretary-General and say that time is a-wasting and further action is needed.

I would like to confirm once again the commitment of the World Bank to the implementation of the Monterrey Consensus.

The President

I now give the floor to Mr. Murilo Portugal, Deputy Managing Director of the International Monetary Fund.

Mr. Portugal (International Monetary Fund)

It is a pleasure to have the opportunity to address this meeting on this most important topic of financing for development. The International Monetary Fund (IMF) is a committed partner in the international community's efforts help developing countries reduce poverty and reach the Millennium Development Goals (MDGs). We give high priority to effective collaboration with the donor community, and gatherings like this are essential to fostering such collaboration.

I would like to share our assessment of recent events in financing for development with the Assembly. I will also speak about how the IMF is improving its support to developing countries.

Allow me to begin by touching on the economic outlook for the developing world. Many developing countries have seen remarkable improvements in macroeconomic performance in the past few years. The positive growth trends in the developing world are broad-based, affecting all major regions. Sub-Saharan Africa, in particular, is experiencing its strongest growth and lowest inflation in over 30 years. Growth there should reach more than 6 per cent this year. In developing Asia, growth is expected to reach almost 10 per cent this year.

Developing countries have weathered the recent financial turmoil very well. This has been a phenomenon mainly of industrial countries. Some emerging market economies that are more integrated within financial markets or have high external vulnerabilities have felt some ripple effects of that turbulence, but the impacts have been much more muted than in previous episodes of financial turbulence.

Overall, the outlook for the developing world is favourable, although the risks are clearly on the down side. Our positive view is largely driven by the fact that developing countries are now in a better position than they were a decade ago, having reaped the benefits of the economic reforms and improved macroeconomic policies that they are pursuing. Governments have strengthened their public financial management and tax administrations; trade regimes are more open; and progress is being made to improve the investment climate. The need to fight weak governance and corruption is receiving more attention than ever before. Many developing countries are pursuing sustainable macroeconomic policies. The double- and even triple-digit inflation rates that we saw in the 1980s and 1990s seem well behind us, with average inflation rates down by almost one half since 1999 to an average of five-and-a-half per cent last year. In addition, many countries have been able to build considerable foreign exchange reserves and are better prepared to weather unexpected shocks.

There is also reason for some optimism about the impact of these developments on poverty reduction. The 2007 Global Monitoring Report, a joint product that we have with the World Bank, shows progress in reducing poverty across all regions. South and East Asia and Latin America seem to be on track to meet the income Millennium Development Goal by 2015, while emerging Europe, Central Asia, the Middle East and North Africa have largely eliminated extreme poverty. But the picture is different in sub-Saharan Africa where, regrettably, only a handful of countries are positioned to meet the income poverty goal, despite the considerable progress that they have also made. Of course, these average numbers can conceal differences in performance and vulnerabilities across countries, so it is important that the international community remains vigilant in every region.

While it is fair to say that many developing countries have improved their macroeconomic and social policies, thus living up to their side of the understandings reached at Monterrey five years ago, there is a clear need for the donor community to adhere more closely to the commitments made then, as well as at Gleneagles in 2005. Developing countries need more financial assistance. Official development assistance (ODA) has grown in real terms over the past decade, but much of that growth reflects exceptional debt relief operations. Total ODA actually declined in real terms last year, compared to 2005. As a result, fulfilling the commitments made at Gleneagles to double aid for Africa by 2010 will require a very rapid acceleration in aid disbursements, well above what is currently envisaged for the G-7.

Some positive signs are emerging, however, as several donor countries are making efforts to raise their aid budgets. In this regard, I welcome the recent commitment by the European Union to reach the overall aid target of 0.7 per cent of gross national income by 2015. In addition, the donor community is more aware of the need to improve the quality of aid and to put into practice the objectives of the 2005 Paris Declaration on Aid Effectiveness.

The Fund welcomes the emergence of a variety of players in the donor community, in particular, non-Development Assistance Committee (DAC) bilateral donors, global funds and private foundations. The non-DAC donors can make a real difference to the development effort, as their own experience allows them to bring a fresh perspective to it. Global funds and private foundations have access to non-traditional funding sources and are playing increasingly important roles; three per cent of ODA is now channelled through global funds, and donations from private foundations are estimated at between $10 billion and $25 billion a year. The initial experience with innovative financing mechanisms, such as the International Finance Facility for Immunization and the airline ticket tax, has also been positive.

The increase in the number and variety of donors highlights the importance of effective donor coordination to ensure that aid is well harmonized and aligned with country priorities. It is also important to increase the predictability of aid and, to the extent that countries are able to plan the timing and the size of aid flows, they can maximize their development impact and minimize or eliminate any unintended macroeconomic consequences.

Allow me to say a few words about the role of the IMF in helping countries to achieve the Millennium Development Goals. We have taken a careful look at our macroeconomic and fiscal policy advice to low-income countries to see how best to make use of aid when it is scaled up. I wish to highlight four major conclusions of this review.

First, the Fund must continue to help countries create and maintain a sound macroeconomic environment in which they can use aid fully and well. This involves the careful coordination of fiscal, monetary and exchange rate policies. But Fund-supported programmes will be designed from now on to support the full spending and absorption of aid and to allow a more even distribution of expenditures over time so that unpredictable aid shortfalls do not interrupt development expenditures.

Secondly, it is important that countries and their partners plan ahead. Medium-term fiscal and debt frameworks are critical to making maximum use of aid resources; the Fund, together with other donors, will work to strengthen countries' capacities to develop such medium-term frameworks.

Thirdly, over the medium term, countries should strengthen their own revenue efforts so as to become less dependent on aid. Key policies in this area are broadening the tax base and strengthening revenue administrations. Here, too, the Fund is providing technical assistance to member countries to enhance domestic resource mobilization.

Fourthly, improving the efficiency of aid-financed spending programmes will require a further strengthening of fiscal institutions, including public financial management systems. We have stepped up our technical assistance to low-income countries to help them make progress in these areas. We are also intensifying our efforts to improve our collaboration with donors. In this regard, I welcome the Secretary-General's recent initiative to establish an Africa Steering Group to speed up the implementation of the Millennium Development Goals. I was pleased to participate in the first meeting in September, and we look forward to making a practical contribution to the work of the Steering Group. The IMF, together with the DAC secretariat, is going to coordinate the work of the thematic group on aid predictability.

We realize that to be effective in our endeavours to assist countries to reach the MDGs, the IMF must remain a credible partner in the eyes of all its members, especially the developing countries. Therefore, I am happy to say that progress is being made on the quota and voice reforms in the IMF. There is now a broad recognition among our members that these reforms should lead to an increase in the voting share for developing countries as a whole, and that was reaffirmed by the International Monetary and Financial Committee in its meeting just last Saturday in Washington.

Let me finish by saying that we consider that there are grounds for optimism about the prospects for reducing poverty in the coming years, thanks to the progress that has been made by many developing countries in reforming their economies and by donors in aligning and harmonizing their assistance. But it is also clear that the Millennium Development Goals cannot be reached without significant increases in donor financial assistance. Therefore we now sound our call to the international community to make the fulfilment of its commitments to increase aid become a reality.

The President

I now give the floor to Ms. Sendanyoye-Rugwabiza, Deputy Director-General of the World Trade Organization.

Ms. Sendanyoye-Rugwabiza (World Trade Organization)

First of all, let me restate how important it is for the World Trade Organization (WTO) and our Director-General, Mr. Pascal Lamy, to be associated with this discussion.

Progress is being made on the Millennium Development Goals (MDGs), in which the Monterrey process has played a crucial role. But some regions, notably Africa, are certainly lagging behind, particularly with regard to some goals. The Millennium Summit vision can still be realized, but greater political resolve is needed for that to happen. We need to follow up on Monterrey and renew our engagement in the areas and objectives where progress is still lacking. Next year's follow-up Conference on Financing for Development in Qatar should be a milestone in the process.

I would like to focus on trade. My starting point will be the Secretary-General's report prepared for our meeting today. The Secretary-General is right in pointing out that trade has continued to grow and has helped to alleviate poverty in many regions around the world. Unfortunately, however, we have to admit that the opportunities and results afforded by trade are not shared by all. The importance of trade as a driver of growth is clear and a successful conclusion of the Doha Development Round is the major contribution that World Trade Organization can make to global efforts for poverty alleviation and development. This is where the WTO contribution to financing for development can be found.

So our challenge today and for years to come is to make sure that the new opportunities that will hopefully result from the Doha Development Agenda -- whether we are speaking of duty-free and quota-free access to developed and developing country markets for the least developed countries or sharp reductions in agriculture subsidies in developed countries, whether we are speaking of cotton or the elimination of export subsidies, the disciplines on fishery subsidies or the new rules on facilitating trade -- will translate into trade realities, both for the least developed countries and many developing countries.

The Secretary-General is also right when he warns against the pressure of protectionism. Today, I am pleased to report that negotiations started to move ahead again last July, when the negotiating groups in agriculture and industrial products put texts on the table through their Chairs. These texts have helped our members to realize that what has been achieved during the past six years and what is on the table today is quite substantial. They have certainly realized that what remains to be done is worth some additional effort and political push.

We have regained a good level of momentum in our work, and the challenge now is to accelerate that momentum in the days and weeks ahead, so that the necessary compromises can be reached. However, now more than ever, time is running out. Now is the time for political leaders to rise above the many doubts and difficulties and to truly focus on the broader picture. The challenge now is about leadership, about compromise, about countries recognizing their common interest in success and the collective costs of failure.

Finally, I would like to say a word about Aid for Trade. The WTO Aid for Trade programme is not linked directly to the negotiations. But there can be no doubt that for many of our members, in particular the least developed countries and many low-income countries, this programme is of enormous significance for their ability to expand their share and volume of world trade and to become more effectively integrated into the multilateral trading system.

Last month, in cooperation with the regional development banks, the World Bank and many other partners, including United Nations agencies and private sector organizations, WTO organized three regional meetings on Aid for Trade in Lima, Manila and Dar es Salaam. I believe these meetings have helped us raise awareness of the need to reinvest in the growth and trade agenda, and of the need for the development community to refocus on the growth agenda, if we are to sustain our poverty reduction effort.

I wish now to mention the key messages that resulted from the three meetings. First, it is important that trade ministers work more closely with finance and development ministers, if we are to succeed in attracting additional and more effective aid for trade. It is also clear that it is impossible to overstate the importance of a focused and sustained commitment to trade-led growth as a priority for development. Further, developing countries, especially the low-income countries whose trade capacity deficit is the largest, must agree on the two or three national priorities that they believe will impact most on their trade growth. It was also quite clear that not only does the private sector have a vital role to play but also Aid for Trade strategies will succeed only if they are driven by on-the-ground business experience and needs. And last but not least, consistent with the subject of this meeting, it was observed that predictability and accessibility of concessional financing is crucial.

The next step now is to build on the progress made and, accordingly, we are planning to have the first annual global review in the WTO General Council on 20 and 21 November, so that we can move to operational aspects, including through conducting a quantitative and qualitative evaluation in the true spirit of mutual accountability of our shared commitment to growth, poverty reduction and development.

Your support in this process is crucial, both within your capitals but also within the multilateral processes, to ensure that the Doha Development Agenda and Aid for Trade can and will deliver for the least developed countries and the developing countries.

The President

I now give the floor to Mr. Cheick Sidi Diarra, Special Representative of the United Nations Conference on Trade and Development at the United Nations Headquarters.

Mr. Diarra (United Nations Conference on Trade and Development)

It is a great pleasure and a privilege for me to speak today on behalf of Mr. Supachai Panitchpakdi, Secretary-General of the United Nations Conference on Trade and Development (UNCTAD), at this High-level Dialogue on Financing for Development. The full text of Mr. Panitchpakdi's statement is available in this Hall. I would like in particular to stress UNCTAD's participation, as one of the main stakeholders in financing for development, and I would like to analyse the challenges that face us in attaining the goals contained in the Monterrey Consensus.

The six priority areas identified in the Consensus have been the subject of active research and analysis on the part of UNCTAD, which has developed programmes for technical cooperation and consensus-building. For UNCTAD, this is a natural, essential commitment. In fact, for more than 40 years, UNCTAD has been a point of convergence within the United Nations system when it comes to dealing with problems relating to trade and development, as well as investment and finance, which are all questions that go to the very heart of the Monterrey Consensus.

The Twelfth United Nations Conference on Trade and Development, which will take place in Accra from 20 to 25 April 2008, will discuss the opportunities and challenges of globalization and its predictable effects on development. We all expect that the outcome of that conference will provide fruitful ground for the follow-up conference on financing for development that will take place in Doha in December 2008. These two crucial conferences should remind all institutional stakeholders and all Member States of the importance of their commitment to the United Nations mission to promote development.

Mr. Diarra (United Nations Conference on Trade and Development)

The Monterrey Consensus highlighted the role of internal conditions for mobilizing resources, both public and private, in order to sustain adequate levels of productive investment. Indeed, harnessing domestic financial resources is important for accelerating economic growth, as well as reducing dependence on official development assistance (ODA) and associated conditionality's, thereby increasing ownership of the development process.

It should be emphasized that the development of domestic financial sectors requires active Government intervention, especially in poor countries. For example, UNCTAD has found that private savings in African countries are rarely held in the form of assets that can be easily transformed into productive investments, mostly because of the weakness of financial sectors. Effective channelling of such resources to productive investments is an essential element in domestic resource mobilization.

As shown in UNCTAD's World Investment Report 2007, foreign direct investment (FDI) inflows to developing economies last year reached a record high of $379 billion. FDI flows were at their highest level in Africa and throughout much of Asia. However, the share of least developed countries (LDCs) in total FDI to developing countries remained low, at around 2.5 per cent, in 2006. At the same time, FDI remained highly concentrated, with the top 12 recipients absorbing 70 per cent of the total inflows to developing countries.

FDI remains the largest component of external flows to developing countries as a group. But, in the case of the LDCs, official development assistance accounts for a greater proportion of external finance than FDI. The challenge is to ensure that ODA and FDI complement each other, for example in the context of improving infrastructure services. Another important trend is the continued increase of FDI from the South, which represents an increasingly important source of finance for development. Meanwhile, the growing role in the South's sovereign wealth funds engaging in outward FDI creates a whole new set of strategic assets for financing development.

Along with other stakeholders, UNCTAD is committed to upholding the United Nations Millennium Declaration and its goal of an open, equitable, non-discriminatory and predictable multilateral trading and financial system. UNCTAD's mission entails promoting trade as an effective instrument for the beneficial integration of developing countries into the international trading system. In recent years, international trade has made important contributions to economic growth in developing countries and has the potential for an even bigger impact.

The emergence of some developing countries as regional or global locomotives of trade and growth, along with a sustained expansion in South-South trade, is shaping what is now referred to as a new geography of international trade. These global trends, however, conceal many disparities within and among countries, especially LDCs, landlocked developing countries and small vulnerable economies, where poverty is endemic and participation in international trade is weak.

Priority areas to be addressed in the coming period include redressing asymmetries in the multilateral trading system through delivery of the Doha Development Agenda of the Doha Round negotiations; ensuring development coherence between the multilateral trading system and the proliferation of regional trade agreements; and sustaining and widening the dynamism in the new growth poles in the South.

Official development assistance is an essential complement to other sources of financing for development and embodies both a developmental and moral imperative that should not escape us. It is disappointing to note that in 2006, ODA from countries members of the Development Assistance Committee declined for the first time since 1997 to 0.30 per cent of gross national income, well below the universally endorsed target of 0.7 per cent.

Increasing South-South development finance cooperation raises important issues of international coordination, but it also widens the field of ODA sources and offers an opportunity for developing country borrowers and aid recipients to benefit from different development paradigms and less invasive conditionality's. To further improve the global financial and aid architecture, new players should have greater voice in the decision-making process of the international financial institutions. That would help to redress their exclusion from the system of debt rescheduling and set the scene for their active involvement in the relevant development cooperation forums.

As shown in the recent report of the Secretary-General to the General Assembly on the external debt crisis and development, the nominal value of the total external debt of developing countries increased in 2006 but decreased as a share of their gross national product. Debt-relief initiatives and favourable external conditions facilitated that reduction in developing countries' sovereign external debt with official and private creditors.

UNCTAD's research highlights the fact that the composition of the long-term debt of developing countries increasingly features bond debt and domestic public debt as more developing countries gain access to global capital markets. That poses new challenges for policymakers in developing countries, as well as for the international financial community, which needs to continue working on appropriate mechanisms for efficient and orderly bond-debt rescheduling.

Of persistent concern is the fact that the goal of additionality of debt relief has not been achieved. Nominal ODA less debt forgiveness remains at levels similar to those of the early 1990s and real ODA less debt forgiveness is well below the levels of 10 years ago. It is essential to reconsider the modalities and eligibility criteria for debt relief in a manner that ensures additionality and separates future debt relief for low-income countries from more critical ODA requirements.

Meanwhile, concerns also remain with regard to the debt sustainability framework for middle- and low-income countries. Until a more comprehensive system is developed, it is best that debt sustainability for development purposes be assessed on a case-by-case basis.

Finally, let me touch upon two aspects of the important systemic question, which, if not coherently addressed, will render the task of financing development through the channels I outlined earlier even more elusive.

The first pertains to the new situation in which the accumulation of reserves and reserve net capital flow means that the developing world is effectively lending to the advanced economies. That accumulation of reserves is seen by some observers as evidence of mercantilist policies, but concerned countries perceive that strategy to be driven by the need to self-protect against future currency and financial crises or to be able to deal with a possible banking crisis. In this sense, their strategy offers them double protection. First, in keeping exchange rates slightly undervalued and more competitive, these countries are able to avoid sudden jumps in their exchange rate, while overvalued exchange rates are difficult and often impossible to defend. Moreover, a slightly undervalued currency is consistent with lower, pro-growth domestic interest rates. Secondly, by accumulating ample reserves, they are ready to deal with possible market turbulence.

Furthermore, countries with a weak banking system may want to accumulate reserves to deal with a possible banking crisis. The fact that those strategies are favoured over the use of the protection mechanisms provided by the international financial institutions points to possible weaknesses in the international financial architecture.

Meanwhile, in the wake of the financial crises of the late 1990s, several developing countries found the post-crisis adjustment policy packages proposed by the international financial community to be intrusive in the sphere of governance and often ineffective. Such countries have since adopted pre-emptive policies aimed at minimizing the need for reliance on international bailouts in the case of future crises. That is partly driven by the perception that the major advanced economies are not fully committed to policies aimed at guaranteeing global financial stability. Such a situation risks marginalizing essential international financial institutions and leading to the adoption of second-best policies. That highlights the need for a truly cooperative global monetary system and a reform of the international financial institutions that would increase ownership of the policy prescriptions they advocate.

The President

I call on Mr. Ad Melkert, Associate Administrator of the United Nations Development Programme.

Mr. Melkert (United Nations Development Programme)

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