Financing for Development
Norway's statement in the Second Committee on 13 October 2005, delivered by H.E. Mona Juul, Deputy Permanent Representative to the United Nations:
At the September Summit we universally endorsed the Millennium Development Goals and reaffirmed the Monterrey Consensus as central to achieve them.
- The Summit further reaffirmed that the Monterrey Consesus is a carefully balanced partnership - between national and international responsibilities and between the private and the public sectors. It further stressed that good governance and sound economic policies at the national level are preconditions for mobilizing resources, both domestically and from abroad.
- In order to reach the MDGs by 2015, Norway believes the UN has an important role to play in monitoring and reporting on developing and developed countries’ progress and compliance, including on MDG 8.
- In the run-up to the Summit impressive new commitments were made in the area of increased ODA and debt cancellation. I will focus mainly on debt relief in the remainder of my statement, but first of all, allow me to point out that in order to achieve the MDGs, we must make faster progress in increasing aid budgets and raising ODA towards the UN target of 0.7 per cent of gross national income.
- Norway welcomes the renewed, firm and time-bound commitments by many developed countries to reach this target. We urge those donors that have not yet done so, to make concrete pledges towards this target.
- Norway has been a strong supporter of debt relief and the HIPC initiative. But it has become increasingly obvious that we need to go beyond the HIPC initiative if debt sustainability is to be achieved.
- We need a debt relief proposal that can reduce the debt burden now. This is why Norway supported the G8 initiative for multilateral debt cancellation at the annual meeting of the World Bank. The fact that the global fight against poverty is now at the top of the G8 agenda is very promising.
- We must ensure that IDA has robust financial capacity and viability, otherwise we risk undermining its role in helping developing countries reach the MDGs. We must ensure full donor compensation to the IDA for lost reflows due to debt relief. This compensation must come in addition to donors’ regular contributions to the IDA. Without the dollar-for-dollar compensation to IDA and AfDF promised by the G8, the proposal will undermine multilateral development co-operation and will not bring in additional resources.
- Let me remind this Committee that the IDA was promised full compensation for the cost of HIPC. But IDA 14 ended up with a gap of around 50 million dollars, money that is desperately needed for reaching the MDGs. On a purely exceptional basis, Norway has decided to pick up this bill. IDA, and the poor countries, should not be punished because of broken promises.
- We will hold the G8 countries accountable to their promises of full compensation. We want to stress the need for compensation before 2015, or binding commitments.
We advocate debt reduction for middle-income countries with obvious repayment problems. We support the Evian-approach of the Paris Club in which countries other than HIPC can get debt relief based on debt sustainability criterion. However, this type of debt relief must not take place at the expense of the poorest countries, and assurances that the freed resources will foster development are just as important as in the poorest countries.
- We fully support the G8´s emphasis on good governance, accountability and transparency for securing the full benefit of debt cancellation. Further debt relief should not mean conditionality beyond what is required under the HIPC initiative and existing IDA arrangements.
- Another possibility for debt relief for non-HIPCs, is multilaterally co-ordinated debt swaps under which bilateral creditors join forces in swapping claims for local currency to finance mutually agreed developing efforts that are consistent with the debtor countries’ own policies. In the era of harmonization, we believe creditors should work together, and align their policies with the debtor country.
- We need to secure prudent lending and borrowing in the future. The Framework for Debt Sustainability in Low-Income Countries put forward by the World Bank and the IMF provides a useful point of departure for this discussion.
- Supplementary to any lending architecture would be more systematic international co-operation to improve debt management in the poorest countries. Norway has supported the Debt Management and Financial System Analysis Programme of UNCTAD for many years. The recent evaluation illustrates the importance and good performance of DMFAS. But DMFAS needs more predictable financial support. We should look into how DMFAS can be ensured more core funding from UNCTAD.
- The issue of debt-work out mechanisms is also an important part of debt sustainability considerations that merits further discussion. Norway supported, also financially, the multi-stakeholder consultations on sovereign debt for sustained development that we were briefed on by DESA yesterday.
- Debt relief should provide additional resources. Norway does not use its ODA-budget to finance bilateral debt relief. We need a broader approach to make sure everyone brings in new money in response to new promises. Recycling will not do.
Before I close, Mr. Chairman, let me briefly make two points on the larger UN reform agenda:
- First of all, it is crucial for success that UN reform at the national level is fully embraced by the developing countries themselves, in particular in order to promote harmonization efforts. Developing countries have a lot to gain from the full implementation of the Paris Declaration on aid effectiveness. Increased predictability of aid, stronger national ownership as well as mutual accountability are key principles of the Declaration. By ensuring that international public funds are used effectively and efficiently, we stand a better chance to mobilize resources, especially untied resources, that are necessary to achieve the MDGs.
- While better coordination and harmonization at the country level is important, we also have a joint responsibility to improve coherence at the global level - between the intergovernmental organizations.
- I would therefore take this opportunity again to strongly urge the United Nations, the Bretton Woods Institutions and the WTO to follow the successful recipe from Monterrey. Such improved coherence at the global level is ultimately up to us, the member states, as owners of each of these organizations.
Thank you, Mr Chairman