Economic and Social Council Discusses Trends, Perspectives in Funding for Development Cooperation

ECOSOC/6219
12 July 2006

(Reissued as received)

GENEVA, 11 July (UN Information Service) -- The Economic and Social Council this morning discussed the operational activities of the United Nations for international development cooperation, in particular the issue of funding, hearing a number of panellists stressing the need for strengthening South-South cooperation programmes and calling for action to be taken by the organizations of the United Nations system to ensure coherence and effectiveness in their work at the country level to the benefit of recipient countries.

Léo Mérorès, Vice-President of the Economic and Social Council, recalled that this year's operational activities segment coincided with the mid-cycle review of the implementation of General Assembly resolution 59/250 on the triennial comprehensive policy review of operational activities for development of the United Nations system.

José Antonio Ocampo, Under-Secretary-General for Economic and Social Affairs, said the timing of this review was particularly significant. It took place as efforts were underway to establish the Council's biennial Development Cooperation Forum, called for by the 2005 World Summit. Funding of United Nations development cooperation had benefited from the rising trend in overseas development assistance (ODA) since Monterrey.

Luiz Henrique Pereira Fonseca, Director, Brazilian Cooperation Agency, said that within the South-South cooperation programme, Brazil had created a centre in Timor Leste for vocational training and learning. Although there was no figure on the amount of the money involved, it was highly important to transfer knowledge to other countries, under the South-South development cooperation programme. Brazilian technicians repaired old machines in El Salvador under the same spirit.

Bambang Widianto, Deputy Minister of Planning, State Ministry of Planning/National Development Planning Agency, Indonesia, said that for aid to be more effective, the United Nations should examine all the conditions in a country - no one template could be used in a country.

Hyun Cho, Deputy Permanent Representative of the Republic of Korea to the United Nations and former Director General for International Economic Affairs, Ministry of Foreign Affairs and Trade, said developing countries should take advantage of their strength for their economic take-off. The international community needed a comprehensive approach in building a strategy in overall development cooperation. Development policies should not be prioritized to the detriment of human rights and social cohesion.

Bruce Jenks, Assistant Secretary-General and Director, Bureau for Resources and Strategic Partnerships, United Nations Development Programme (UNDP), said that national ownership, coherence, the logic of the Paris Declaration and others showed that there had to be greater simplicity and coherence as to the way assistance was owned and delivered at the country level, and that required a budget to be delivered in a more focused manner.

Jeroen Steeghs, Minister Plenipotentiary, Head, Economic and Social Affairs Section, Permanent Mission of the Netherlands to the United Nations in New York, said the Netherlands was a strong supporter of the United Nations and the fifth largest contributor to the system. Donors could make substantial increases to official development assistance through pledges and commitments. Such assistance should be effectively distributed by national development agencies of each donor country, as done by the Netherlands.

Hannu Kyrolianen, Director-General, Department for Global Affairs, Ministry for Foreign Affairs of Finland, said the European Union was committed to deliver more, better and faster aid in order to achieve the Millennium Development Goals by increasing financial resources to development, by making aid more effective and by improving coordination and complementarity.

Speaking in the interactive dialogue were the representatives of Bangladesh, Finland on behalf of the European Union, Nigeria, Guinea, Guinea-Bissau, the United States of America, South Africa, the United Kingdom, and Haiti.

The Council will continue its debate on operational activities of the United Nations for international development cooperation when it meets in public at 10 a.m. on Wednesday, 12 July to hear the reports of the Executive Boards of the United Nations Development Programme, the United Nations Population Fund, the United Nations Children's Fund and the World Food Programme.

Document

A note by the Secretary-General (E/2006/60) on the review of trends and perspectives in funding for development cooperation contains a comprehensive triennial review of trends and perspectives in funding for development cooperation. The recent recovery in aid flows has been mainly the result of debt relief for Iraq and Nigeria and emergency aid to the tsunami-affected countries in the Indian Ocean. Meanwhile, most donors have indicated their aid commitments to 2010 (to 2015 by European Union donors); if they deliver on their pledges, further substantial increases in official development assistance (ODA) from donors of the Organization for Economic Cooperation and Development (OECD) will generate around $130 billion (measured at 2004 prices and exchange rates) by 2010, with half of the increase to Africa. The total value of contributions received by the United Nations system for development cooperation activities in 2004 amounted to $12.3 billion, an increase over 2003 of 17.1 per cent in nominal terms which, when account is taken of both inflation and exchange rate movements, translates into a 7.6 per cent increase in real terms. Global funds constitute a growing source of financing for development cooperation. Innovative financing mechanisms are another potential source of financing for development cooperation. Although it would be optimistic to think that those new sources alone would provide the possibility for closing the financing gap to achieve the Millennium Development Goals, they can nonetheless contribute to reducing that gap and more importantly provide continuity in providing the resources necessary for development after 2015.

Statements

LEO MERORES, Vice-President of the Economic and Social Council, recalled that this year's operational activities segment coincided with the mid-cycle review of the implementation of General Assembly resolution 59/250 on the triennial comprehensive policy review of operational activities for development of the United Nations system. The resolution highlighted the importance of strengthening the role and capacity of the United Nations development system to assist developing countries in achieving the internationally-agreed development goals contained in the Millennium Declaration and other major United Nations conferences and summits, and called for a number of actions by the organizations of the United Nations system to ensure coherence and effectiveness in their work at the country level to the benefit of recipient countries. The operational activities segment would comprise three components. The first was the Council's comprehensive review of funding for development cooperation, which was taking place today. The review of funding for development cooperation was not limited to the UN system but would address all forms of development cooperation even though resolution 59/250 dealt almost exclusively with the UN development cooperation activities.

The second component of the segment was the sharing of experiences in relation to UN reform, which aimed to facilitate an exchange of views on the operational activities of the UN system. It was also organized to discharge several mandates, such as the request that the annual reports of the UN development funds and programmes to the Council included a section outlining measures taken in the implementation of the provisions of the triennial comprehensive policy review of operational activities, and a section on the activities and measures undertaken within the designated theme for the high-level meeting of the operational activities segment. The third component of the segment was the Council's general debate on operational activities for development of the UN system: evaluation of the implementation of General Assembly resolution 59/250. In 2005, Member States and other development actors made a series of commitments on the delivery of more than better aid, debt cancellation, reduced conditionality and more coherent policies in support of development. Effective monitoring of those commitments would further ensure successful disbursement and realization of those aid commitments.

JOSE ANTONIO OCAMPO, Under-Secretary-General for Economic and Social Affairs, said the timing of this review was particularly significant. It took place as efforts were underway to establish the Council's biennial Development Cooperation Forum, called for by the 2005 World Summit. On the first day of the high-level segment, the Council had organised an informal ministerial roundtable that provided an opportunity for ministers and high-level Government representatives, as well as other key development actors to engage in an interactive dialogue on the objectives and expectations for the first meeting of the proposed Forum. Although the review of funding went well beyond the flows of official development assistance (ODA), these flows were the most important for the poorest countries of the world. There had also been recent efforts and initiatives to enhance the quality of aid and increase its impact, and in this regard the Paris Declaration on Aid Effectiveness was a landmark, having created a new spirit of international cooperation which would make it easier to continue to raise aid levels and make aid more effective.

Funding of United Nations development cooperation had benefited from the rising trend in ODA since Monterrey, nonetheless, the present modality of funding for United Nations operational activities weakened its capacity to operate effectively. Some initiatives were associated with the dynamism of discussions and actions in the field of innovative sources of financing. In recent years, there had indeed been several opportunities to discuss innovative ways to increase funding for development cooperation. Another positive trend related to the new dynamism of South-South cooperation, which went beyond aid flows and technical assistance, and encompassed many mechanisms of trade integration, investment and technological cooperation. Issues to be covered today included how to ensure that commitments to increase ODA levels were realised; how to improve measures to ensure that poor countries had the capacity to absorb the expected increases in aid flows; how to increase core funding to the United Nations system; and how to further encourage other positive trends including South-South cooperation, innovative sources of financing, and private donations.

LUIZ HENRIQUE PEREIRA FONSECA, Director, Brazilian Cooperation Agency, said he wished to highlight the South-South experience with regard to Brazil, which had been very crucial in terms of solidarity and cooperation. Within the South-South cooperation programme, Brazil had created a centre in Timor Leste for vocational training and learning. Although there was no figure on the amount of the money involved, it was highly important to transfer knowledge to other countries, under the South-South development cooperation programme. When he was his country's Ambassador to El Salvador, Brazil had provided economic solutions to the problems faced by that country. Brazilian technicians went to El Salvador to assist in repairing old machines implanted in that country. Although Brazil was not that rich, it was able to provide practical aid to other countries, under its commitments to help other poor countries. Brazil stressed the need of two-way cooperation among the South.

BAMBANG WIDIANTO, Deputy Minister of Planning, State Ministry of Planning/National Development Planning Agency, Indonesia, said in order to improve aid effectiveness, two things needed to be done. First, the size of the United Nations needed to be examined, second the size of countries requiring aid needed to be examined. The first important thing that came from the Paris Declaration was that ownership was very important for aid effectiveness. For aid to be more effective, the United Nations should examine all the conditions in a country - no one template could be used in a country. Ownership meant that the planning document required improved overview. The objectives of the Government borrowing strategy should be to use foreign loans efficiently and effectively in order to get optimum results for people's welfare, and to provide general guidelines/policies for all ministries and local Government agencies in relation to foreign loan activities.

In Indonesia previously, planning guidelines were set by the State, but today the base for planning was the vision of the President set when campaigning, and this was a completely different situation. Some of the targets were more ambitious than the Millennium Development Goals, and many of these would be achieved. All duplication of efforts should be avoided, and donor activities rationalised, with simplified procedures, to save money and ensure alignment with country needs and procedures. The internalisation of the Millennium Development Goals into document planning made it easier to measure progress, and the United Nations should help in making success more easily measurable.

HYUN CHO, Deputy Permanent Representative of the Republic of Korea to the United Nations and former Director General for International Economic Affairs, Ministry of Foreign Affairs and Trade, said on his way to Geneva, he had been reading a book entitled "The White Man's Burden", in which the author described the burdens of the developing countries and criticized all those involved in the developing efforts of those countries and failed to bring them out of poverty. He argued that the international community should make poverty history. With regard to donor countries, the speaker asked why they gave away their countries' tax- payers money. It was believed that it was only as national pride that they gave away the money in the form of official development aid. It was also in the interest of obtaining raw materials from the developing countries. If they were pursuing their enlightened national interests, they should allocate more resources to their development agencies rather than spend them in building capacities of developing countries. Revenues should generate further development programmes in the countries.

Developing countries sometimes looked at some donations with suspicion. The South-South cooperation and the New Partnership for Africa's Development could be cited as good examples for the purpose of monitoring good governance in matters of assistance. Developing countries should take advantage of their strength for their economic take-off. Foreign aid should be used to raise the production of each developing country. The international community needed a comprehensive approach in building a strategy in overall development cooperation. Development policies should not be prioritized to the detriment of human rights and social cohesion.

BRUCE JENKS, Assistant Secretary-General and Director, Bureau for Resources and Strategic Partnerships, United Nations Development Programme, said with regards to the funding issue, which was discussed every year, and was somewhat susceptible to politically-correct remarks, the issue appeared to be intractable in a very real sense. This was said in a spirit of impartiality, as there were real, legitimate tensions, and these should be discussed more often, and if they were easy to resolve, they would not still be present. One of the core tensions was that between the reality of the multiplicity of sources of funding on one side, and the desire for unity and coherence of delivery on the other side. On the financial sourcing side, it seemed that everything was increasing in complexity, with increasing pressure from donor countries to be able to demonstrate results and impacts with regards to very specific goals, and this was transmitted in the form of considerable multiplication of thematic types of funding, and the establishment of specific types of funds. This pressure should be understood and respected, or there would be a problem of sustainability of the financial base.

On the other side, national ownership, coherence, the logic of the Paris Declaration and others showed that there had to be greater simplicity and coherence as to the way assistance was owned and delivered at the country level, and that required a budget to be delivered in a more focused manner. This fundamental tension did not create an irresolvable tension, but the methods for solving it were not something to which sufficient attention had been given. Another set of tensions was within the United Nations system, and the issue of core funding versus non-core funding, and the issue of the way the funding came in, with the pressure for coherence of spending at the country level. The reality of funding was that each needed to be able to demonstrate why a particular fund needed to be funded, whilst showing what the contribution of the United Nations system was. A third tension related to problems of attribution, and the lack of attribution of results.

JEROEN STEEGHS, Minister Plenipotentiary, Head, Economic and Social Affairs Section, Permanent Mission of the Netherlands to the United Nations in New York, said the Netherlands was a strong supporter of the United Nations and a contributor to the system. Donors could make a substantial increase to official development aid (ODA) through pledges and commitments. Such assistance should be effectively distributed by national development agencies of each donor country, as done by the Netherlands. Although the financial contributions to the UN system had increased, it was not sufficient. The United Nations did not receive its fair share of the assistance it required. It should win the full confidence of the donor countries. The United Nations needed financial contributions to sustain its operational activities. In order to achieve its goals in development and other cooperation, the United Nations should be able to obtain funds, through national commitments and other organizations. The Netherlands had made a number of pledges to a number of UN organizations.

The Netherlands had attempted to improve national performances in some developing countries through its increased overseas assistance. With regard to aid effectiveness, the Secretary-General had stressed the need to harmonize development cooperation and aid. There should be a dialogue at the national level between donors and recipient countries. South-South cooperation should also be pursued and further development among the developing countries.

HANNU KYROLIANEN, Director-General, Department for Global Affairs, Ministry for Foreign Affairs of Finland, said the European Union was committed to deliver more, better and faster aid in order to achieve the Millennium Development Goals by increasing financial resources for development, by making aid more effective and by improving coordination and complementarity. It was crucial that all United Nations Member States in a position to do so lived up to internationally agreed levels of official development assistance (ODA), both in quantitative and qualitative terms, and efforts had already been made in that regard. Domestic and external resources could only be mobilised - and external assistance could only be effective - in an appropriate domestic environment. Good governance, a transparent and accountable public financial management system, the fight against corruption, full integration of the Millennium Development Goals into country-owned plans and a stable and predictable investment climate were all vital for mobilisation and effective use of both domestic and external resources.

While ODA flows were expected to grow consistently, a significant proportion of the increase seemed related to debt relief operations. Securing an increased and predictable funding base for the operational activities for development by the United Nations organizations was crucial. Core resources constituted the bedrock of the operational activities of the United Nations. The imbalance between core and non-core resources could undermine the functions of the Funds and Programmes. Most reports agreed that traditional ODA was crucial but not sufficient to meet the challenges of the Millennium Development Goals. Improving the quality and effectiveness of aid was an important parallel with the increase of quantity of aid. The choice of aid modalities was also important for aid effectiveness, a key issue being what kind of complementarity between them worked in each country. Global initiatives and funds could be powerful instruments for launching new political measures or reinforcing existing ones where their scope was insufficient.

Interactive Dialogue

In the interactive dialogue, delegates raised issues and posed questions on such topics as funding commitments to the Paris Declaration on aid effectiveness; the United Nations funding system; the needs of the poorest countries and the least-developed countries in order for them to meet the Millennium Development Goals; multi-funding frameworks for increasing core resources; how to measure forms of assistance and the contribution made to South-South cooperation, which was a useful framework for global cooperation; the challenges of developing using national ideas but relying on international support; to what extent was there need for more coherence and greater cooperation on the global level; the importance of planning and national space; issues linked to market access; issues linked to national ownership and whether there was an alignment with national programmes; that development aid was not boosted by philanthropy which was not the motivation; the need for increased planning at the national level for the use of aid; issues linked to rewarding countries that performed well; the means for determining the true needs of a country; the need to not shy away from innovative sources of funding; the lack of confidence by donors as to Governments arrangements for spending core resources; issues related to good governance; and issues linked to South-South cooperation.

Speaking in the interactive dialogue were the representatives of Bangladesh, Finland on behalf of the European Union, Nigeria, Guinea, Guinea-Bissau, the United States, South Africa, the United Kingdom, and Haiti.

LUIS HENRIQUE PEREIRA FONESECA, Director, Brazilian Cooperation Agency, said cooperation should be supplemented by solidarity and the South-South cooperation would enable the exchange of experience. It was rather a give-and-take process. Brazil was not considered as a donor country that distributed financial resources but it gave knowledge and experience to others.

BAMBANG WIDIANTO, Deputy Minister of Planning, State Ministry of Planning/National Development Planning Agency, Indonesia, said that criteria should not necessarily be the poorest, as effectiveness of aid also depended on the programme. In Indonesia, on the domestic reserve for development, there were some examples of this, including a public-private relationship for infrastructure. There were also some programmes on community development in which rural communities received money from the private sector. On policy coherence, in the past, the budget was allocated based on sectoral departments, but with the new system, this was allocated on the basis of ideology, such as for poverty-alleviation programmes. Predictability was very important, and so were conditionalities, and this was why it was important in development planning documents to include the policy framework.

HYUN CHO, Deputy Permanent Representative of the Republic of Korea to the United Nations in New York and former Director-General for International Economic Affairs, said that every case of negotiations should strike a balance. Trade was mutually beneficial to all, and the negotiations going on in Geneva should be achieved for the benefit of all parties. If a country had particular natural resources, the orientation of national production should be designed taking into consideration those resources. Also, developing countries should move from their mind-set of dependency.

JEROEN STEEGHS, Minister Plenipotentiary, Head, Economic and Social Affairs Section, Permanent Mission of the Netherlands to the United Nations in New York, said resource meetings were a timely initiative in the scaling-up of development aid, and the fact that poverty-reduction strategies based on the Millennium Development Goals had to be evaluated. There were in many countries initiatives that were similar in the context of the Paris Declaration. On the responsibility of the donor for pledges and commitments, donors might want to impose conditions for providing support, and there were certain conditions that should be met before going in that direction. Another issue was the criticism of the UNDAF and CCA process, and the role of the United Nations at country level, and the United Nations was universal and neutral, but should not be impartial in these processes and should spell out clearly how a process should go. There was a critical role for the United Nations to play in the relationship and play the role for both recipient and donor countries, and there were international standards which should be kept up.

HANNU KYROLIANEN, Director-General, Department for Global Affairs, Ministry for Foreign Affairs of Finland, said there should be policy coherence by the donor countries towards international cooperation. Brain-draining issues should be taken into consideration within the context of economic cooperation with the developing countries.

JOSE ANTONIO OCAMPO, Under-Secretary-General for Economic and Social Affairs, said various issues had been raised, including a focus on United Nations coherence, and the relationship between core and non-core issues. Another had been the need for more to be done in South-South cooperation. Many other issues had been raised, and the first discussion of the issue of development funding had brought attention to the fact that it was a very diverse world, with different forms of cooperation, and the debate on these issues should continue, as they were critical not just for the United Nations but for the international system.

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