There are ample resources in the world, but they are not distributed equitably. When addressing financing for development we also need to discuss how to guarantee a more fair and equitable distribution of wealth between countries and within countries. This is a global challenge.
ODA will continue to be a critical source of financing for development and Norway will continue to allocate 1% og gross domestic income (GNI) to official development assistance. However we need to put this in perspective and in doing so improve development assistance which needs to be used more catalytically in achieving our common goal in reducing poverty.
Increasingly other sources of finance from abroad such as investment and remittances are also taking a greater role. At the same time, domestic resource mobilisation is crucial for economic and social development. ODA and foreign direct investment cannot be a substitute for this. And in order for increased resources to reduce poverty and thus contribute to development, the way they are distributed is of the essence. Mr/Madam Chair, I will address three issues that are important for the broader perspective of future financing for development.
First: The UN system should use its normative base and capacity-building functions to assist developing countries to broaden their tax base, and fight corruption and illicit capital outflows.
Illicit financial flows are fundamentally inhibiting economic development. Recent estimates indicates that illicit financial flows from the south accounts for at least 1300 billion USD. The financial loss to governments is not the only problem. Illicit financial flows also undermine state-building and ultimately democracy, result in non-optimal investments, destabilise financial systems, and facilitate corruption and other crimes. Measures to prevent illegal outflows of capital could release considerable funds for development. Curbing these flows is ultimately a question of political will. Financial transparency is essential. Country-by-country reporting (CCR) can help to unveil multinational companies’ financial operations and give developing countries an opportunity to tax them.
Second: As we agreed in Rio, innovative financing mechanisms can make a positive contribution by mobilising additional resources for development and global public goods. Several governments are discussing different options, among them taxation on financial transactions. The Norwegian Government strongly supports these efforts. A future currency transaction levy is one possible way of increasing funding for development, climate change measures and global public goods. In order to move forward, increased commitments are needed from member states.
Third: Progress is being made in reducing developing countries’ debt burdens. However, the global community needs to attack the debt problem in a more comprehensive, fair, predictable and preventive way. Norway welcomes the discussion on a new international debt workout mechanism that is fairer, more predictable and rules-based – in terms of who assesses debt and how it is assessed. The asymmetry of power between the debtor and the creditors and the ownership of the instruments should be examined. Norway has decided to sign a three-year programme with UNCTAD that will gather stakeholders, discuss and present a proposal for the shape of such a mechanism.
I started out by saying that there are ample resources in the world; the problem is that they are not distributed equitably among countries and within countries. Inequality is increasing and measures to promote inclusive growth and equity are crucial if we are to address the challenges ahead.