For information only - not an official document.
Under embargo until 12 noon New York time,
30 January 2001 29 January 2001
30 January 2001


Reforms Are Pressed for in Crisis Prevention, Global Tax Loopholes,
Market Access and National Financial and Legal Infrastructures


NEW YORK, 30 January (UN Headquarters) -- A comprehensive assessment of how the world's development financing needs can be met -- prepared by the United Nations in consultation with the leading international trade, financial and development agencies -- was released today in New York.

Secretary-General Kofi Annan's stated concern is that globally endorsed plans to reduce the sway of poverty, ignorance and disease will be frustrated unless resources -- both market-led investment and public funds -- are available in sufficient amount and deployed where most needed.

On this basis, his report addresses a broad range of problems, including recurring foreign debt and currency crises, fallen levels of foreign aid, volatile international commodity prices, restrictions on access to developed country markets in sensitive products (like textiles and agriculture), weak financial systems, global tax-dodging, inadequate access to financial services by the poor and women, and gaps in economic governance at national and global levels.

The report recommends new norms for international cooperation and new mechanisms to foster implementation through greater public dialogue at national and international levels. It recommends new ways to handle debt in crisis situations, strengthen cooperation on tax matters, improve the effectiveness of aid, design appropriate financial regulations for developed and developing countries. The report preaches tough measures to strengthen financial and legal institutions, fight corruption and improve transparency, in advanced economies as well as in developing countries seeking greater access to financial markets and development aid. It also asserts that in the context of sound macro-economic policies, introduction of national controls on capital flows may be a valid and responsible measure, especially during periods of volatility.

"This document is at the leading edge of a breakthrough process, in which the global community has decided to utilize the United Nations as a forum for discussing one of the most critical and hotly contested arenas of international relations – economic and financial affairs," said UN Under-Secretary-General Nitin Desai at the 30 January launch in New York.

The Secretary-General's report is being put before a preparatory committee established by the General Assembly for a global meeting of policy makers on "Financing for Development" (FfD) early in 2002. The FfD Preparatory Committee meets from 12 to 23 February and from 30 April to 11 May at the United Nations in New York. In addition, the 15-nation Bureau of the Committee will meet with the Executive Boards of the International Monetary Fund and World Bank and with the Trade and Development Committee of the World Trade Organization. Those institutions are expected to participate as well in the UN deliberations to an unprecedented degree.

The six chapters of the report shadow the six components of the agenda mandated by the UN General Assembly for the FfD discussions: domestic financial resources, international private flows, trade, international development cooperation, debt and systemic issues (including financial architecture reform, governance and the role of the UN itself).

The General Assembly called for the full involvement in the FfD process of the business community and civil society organizations, as well as the IMF, World Bank and the WTO. Other international organizations have assisted in the process, including the regional development banks, the Organization for Economic Cooperation and Development and the Financial Stability Forum. Although the recommendations and conclusions of the report are offered strictly on the responsibility of the UN Secretariat, the above-mentioned institutions were closely consulted in the report’s preparation. Input in particular was provided by the UN Conference on Trade and Development, the UN Development Programme and the five UN regional commissions, which organized consultations of governments and other stakeholders in Addis Ababa, Ethiopia; Beirut, Lebanon; Bogota, Colombia; Geneva, Switzerland; and Jakarta, Indonesia.

Global environment supportive of development

According to the report, "the central question of global governance that needs to be asked is, whether there is room for improving the existing arrangements for norm setting and policy coordination, thereby raising the standards of effectiveness, equity, accountability, transparency, participation and voice. The answer to this question is yes. The preceding must have been very much in the minds of world leaders who, in their Millennium Declaration, resolved to create an environment supportive of development at both the national and international levels and asserted that development objectives depend on ‘good governance within each country and good governance at the international level’" (paragraph 134)

Among the recommendations of the Report of the Secretary-General to the Preparatory Committee for the High-level International Intergovernmental Event on Financing for Development:

"While traditional macroeconomic instruments remain crucial . . . supplemental instruments need to be developed to deal with fluctuations in fiscal balances and foreign exchange reserves and greater risk of instability that have been accentuated by the increasing speed of globalization. These instruments could include fiscal stabilization funds which neutralize fortuitous increases in revenues or foreign exchange earnings."(para 23)

"All Countries should support the development of well-functioning financial markets by establishing a transparent and efficient overall legal framework; fostering good corporate governance, accounting, and auditing practices in private and public entities; and fostering a competitive environment to facilitate efficiency and innovation in financial services." (para 37)

"All countries should facilitate access to financial services for the poor and vulnerable by fostering a wide range of financial intermediaries which target small savers and small borrowers. Countries should also seek to improve women’s access to mainstream sources of financing, including by strengthening their rights to pledge collateral". (para 41)

"Member states should consider the convening of ad hoc global hearings to discuss the issues surrounding international investment agreements. Such a dialogue should involve governments, the private sector and civil society." (para 51)

"Particular attention should be given to the full integration of textiles and clothing into the WTO; the reduction of barriers to trade in agricultural products; the removal of tariff peaks and escalation affecting the export products of developing countries; and the expansion, where appropriate, of GSP schemes." (para 70)

"All developed countries should immediately provide duty-free, quota-free market access to all non-arms exports of Least Developed Countries and Highly Indebted Poor Countries and consider doing the same for other developing countries." (para 71)

"The relevant international organizations should urgently formulate measures to help developing countries to deal with commodity price risks, including the possible establishment of a new global facility to facilitate developing country access to commodity price risk management and structured commodity finance mechanisms and to assist in the development of regional and national commodity exchanges."(para 77)

"A campaign for the Millennium Development Goals should be established. The campaign would have a limited life span of five years. Its mandate would be to consolidate information on each stage and on resource availability to fuel this progress." (para 91)

"Bilateral and multilateral creditors should pursue debt relief vigorously and expeditiously, including steps to provide significant and immediate debt relief to the poorest countries. Steps should also be considered to provide, in exceptional situations and where appropriate, for a moratorium or even for debt cancellations." (para 118)

"A mechanism for the simultaneous, fair and full treatment of all of a country's foreign debt obligations, along with the provision of required new funds by the international community or other creditors [should be considered]. Use of such a mechanism, which could be invoked under specified conditions by a country already cooperating with the IMF and other international financial institutions, would bring together committees representing bank creditors, bondholders, the Paris Club and other bilateral official creditors, as appropriate, plus the debtor government." (para 125)

"The Financial Stability Forum and other international bodies set up to consider universal standards, codes and guidelines in the financial sector should pursue such procedures through fully inclusive, participatory, accountable and open processes." (para 137)

"A careful, in-depth study [should] be undertaken, in cooperation with the IMF and other relevant international financial institutions, of potential means for enhancing tax-related international cooperation, including mandating a specific negotiating process on international agreements on this subject and the possibility of establishing an international organization or forum for cooperation on tax matters."(para 142)

In view of the possibility of multiple, simultaneous financial crises, the IMF, in cooperation with other relevant international institutions, should undertake an assessment of the global capacity to respond to emergency needs for liquidity, including the feasibility of temporary allocations of Special Drawing Rights." (para 159)

For a copy of the report, interviews with UN officials or more information, contact Tim Wall, UN Department of Public Information, telephone 212-963-5851, e-mail; or Dalal Fassi-Fihri, telephone 212-963-4382, e-mail

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