C2: Macroeconomic policy questions and FFD follow-up

10/20/2016 // Statement given by Norway's Minister Counsellor Marianne Loe to the Second Committee on Agenda items 17 and 18: Macroeconomic policy questions and FFD follow-up, 20 October 2016.

Chair,

Last year was a decisive year for global development with closely connected events of great importance. We adopted the 2030 Agenda as a plan of action for people, planet and prosperity, we agreed on an ambitious financing for development agenda in Addis, and we reached the landmark Paris agreement.

The Addis Agenda is our joint plan for financing the ambitious sustainable development goals at a time of slow economic growth and increasing need for humanitarian assistance. The main added value of the Addis Agenda is its comprehensiveness, which should also be a guiding principle for our discussions on macroeconomic policy.

With Addis, we set a path for moving from "billions to trillions". We will not get there if we only focus on traditional forms of development finance. Of course, ODA will continue to be important, and must be mobilized. Indeed, my country continues to allocate a full one percent of GNI to development assistance. But ODA can only get us so far. We must work to unleash new forms and new sources of finance, in volumes that far exceed ODA.

This is especially important given the challenging macro-economic environment where low growth, low interest rates and low inflation represents the new "normal" for most countries. Attracting investments is crucial for economic development, but the competition is tough.

In this context, domestic resource mobilization - spurred by private sector led economic growth - will be decisive. This entails more effective tax collections, broadening the tax base and making tax systems work. Low income countries are especially vulnerable to the harmful effects of tax base erosion and profit-shifting.

Addressing illicit flows of capital is the other side of that same coin. According to some estimates more than 1 trillion USD is lost every year in illicit capital flows in developing countries. That is seven times the volume of development aid. In just a decade, this issue has risen from relative obscurity to become a core development issue, especially at the heels of the Panama Papers. We should not lose this momentum.

Trade is crucial for development. It is worrisome that global growth in trade is lower than the anaemic global economic growth. Global trade must again become an engine of growth. An open, rules-based trading system is good for business. We need to make greater use of trade as a development policy instrument to help integrate the poorest countries into the global economy.

Borrowing is important for financing investment. However, we see signs of debt accumulation and distress in some countries as a result of lower economic activity. The current economic situation makes it all the more important to undertake responsible borrowing and lending. We must safeguard the success of the HIPC initiative in restoring debt sustainability in poorer countries. We should not allow history to repeat itself.

In order to deliver on the SDGs, huge infrastructure financing gaps must be filled, and we need to welcome great initiatives from emerging actors, often in collaboration with multilateral and regional banks.

And last but not least, the need for inclusive growth has become self-evident. Women are half of the world's workforce, and we will not reach our 2030 ambitions without women's economic empowerment and participation. The Addis Agenda got this right. Now we must follow through.

Thank you.


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