Ladies and Gentlemen,
It gives me a great honour to address this Ministerial Meeting on enhancing the mobilization of financial resources for LDCs’ development. I would like to seize this opportunity to express my deep appreciation to the Government and the people of Portugal for their warm welcome and generous hospitality extended to me and to my colleagues since we arrived in this beautiful city of Lisbon. I am fully confident that the deliberations of the meeting will lead to a successful outcome.
As you all may be aware, the fourth UN Conference on LDCs is scheduled to take place in Istanbul, Turkey from 30 May to 3 June 2011 at the highest level. The preparations for the Conference are in full swing. A series of well-focused pre-Conference events are being organized by my office, in collaboration with other UN agencies and international organizations, to facilitate intergovernmental preparations for the Conference.
The Lisbon Meeting assumes a special significance as it addresses one of the key priorities for LDCs. We are expecting that your deliberations would generate concrete ideas and recommendations on deliverables in the area of financial resources mobilization for LDCs. The outcome of this Meeting will feed into the draft outcome document of the Fourth UN Conference on LDCs.
Lack of financial resources is a fundamental cause for a country to be an LDC. The national and regional review meetings as well as other pre-Conference events held so far have indicated that finance is the life-blood of any programme of action for LDCs and its effective implementation. The mobilization of financial resources is directly interconnected with other priority issues for LDCs.
Mobilization of financial resources can make significant contributions, among others, to accelerated economic growth, sustainable development, poverty eradication, full employment and gender equity. With a view to attaining these objectives, LDCs in their national review reports and regional review outcomes, have identified certain priority areas of action and partnership commitments. These include, inter alia, building infrastructure and a critical mass of productive capacity, fostering agricultural revolution and food security, promoting universal access to essential services, leapfrogging into green economy, promoting good governance at national and international levels including conflict resolution and peace building. Accumulation and mobilization of adequate financial resources and their effective allocation hold the key to successful materialization of these objectives. It is therefore important to come up with substantive, measurable and ambitious targets and commitments for the mobilization of financial resources for LDCs from all possible sources.
Domestic resources are sine qua non for self-sustained economic growth and development. Mobilizing domestic resources requires greater domestic savings and investment, higher export earnings, and improved private capital flows, including foreign direct investment. In order to achieve this, LDCs as well as their development partners must adopt a comprehensive approach that optimizes the synergies between domestic resource mobilization, aid, trade, private capital inflows and debt relief.
ODA can play a catalytic role in building infrastructure; improving health and education; fostering gender equality; preserving the environment; eradicating poverty, as well as promoting trading capacities in LDCs. Total ODA to LDCs, in nominal terms, has tripled since the adoption of the Brussels Programme of Action. Nine DAC countries have already fulfilled their Brussels commitment. If all DAC countries provide 0.20 percent of their GNI as ODA to LDCs, it will generate additional US$ 42.5 billion for LDCs.
The Paris Declaration on Aid Effectiveness and the Accra Agenda for Action highlight a number of principles and commitments that are aimed at increasing the development effectiveness of aid. These need to be implemented by all stakeholders. The allocation of ODA should be based on the actual needs of the country and to be provided as direct budgetary support.
The debt problem of the LDCs, especially debt-servicing, is often exacerbated by factors beyond their control. Debt servicing often crowds out much needed public expenditure in productive and social sectors. This affects the long-term productivity of their economies and their abilities to be debt-free. Despite international efforts to address the debt problem, including through Heavily Indebted Poor Countries (HIPC) Initiative, Multilateral Debt Relief Initiative (MDRI) and Paris Club initiatives, debt sustainability and indebtedness remain serious challenges for many LDCs. It is therefore important to consider some more robust measures to address the debt problem of LDCs.
FDI is especially important for its potential to transfer knowledge and technology, create jobs, boost overall productivity, enhance competitiveness and entrepreneurship, and thus foster the transition of LDCs economies. Despite many efforts, LDCs could attract only less than 2 per cent of total world investment. LDCs and the donor countries should implement comprehensive strategies to build necessary infrastructure, regulatory frameworks as well as human and institutional capacities, which can augment investment flows to LDCs. The development partners can also adopt an investment preference regime, through tax exemptions, as well as investment and credit risk guarantees, in order to encourage their corporations to invest in infrastructure and productive capacity building in LDCs.
Innovative sources of finance can play a major role to meet the short-fall of resources in LDCs. We acknowledge that a number of initiatives have been operationalized or are at an advanced stage towards implementation, which have high potentials. A recent study shows that a coordinated 0.005 per cent tax on the transaction of all major currencies could raise at least US$33 billion every year.
Remittance flows to LDCs have increased from US$6.1 billion in 2000 to US$23 billion in 2008. Though remittances are a purely private flow, its productive use can yield significant results. In order to foster this approach, co-development schemes could be explored. Small scale projects supported by ODA could be implemented in LDCs, where remittances could be invested with attractive and guaranteed dividends. This can incentivize productive investment of remittances.
South-South Cooperation has emerged as a vital force in the world economic landscape and its agenda has expanded significantly. The potentials of South–South cooperation for trade, investment and development assistance should be fully harnessed as a real complement to, and not a substitute for, North–South cooperation.
LDCs are hugely underrepresented in the decision making process of the Bretton Woods Institutions (BWIs). Since LDCs are home to the majority of the total global poor, their voice needs to heard and concerns need to be addressed in all international financial and economic decision making processes.
The least developed countries are especially vulnerable to various kinds of internal and external shocks. At the same time, LDCs do not have effective shock absorbing systems. Special funds for LDCs need to be created to meet their development needs and to enable them to respond to various kinds of shocks.
The General Assembly resolution 63/227 of 10 March 2009 has mandated the Member States to mobilize additional international support measures and action in favour of LDCs, and, to formulate and adopt a renewed partnership between LDCs and their development partners. We therefore expect that a new generation of international support measures would be forthcoming for LDCs from the international community. The level of vision and commitment will determine whether the international community will come up with a true development decade for LDCs which represents a quantum-leap to get out of their structural, economic and environmental vulnerabilities as well as to ensure structural transformation and sustainable development.
In conclusion, I call upon all the honorable delegates to engage actively and constructively in the Policy Dialogue sessions and I wish this Meeting a success.
I thank you all.