Press Releases

    Information Note 1

    14 March 2002

    Financing for Development and Eastern Europe:
    Recipients or Donors?

    (Background note by UNDP Regional Support Centre, Bratislava, for 14 March 2002
    press briefing at Vienna International Centre)

    The Monterrey conference on Financing for Development calls attention to the dramatic changes that have occurred in the provision of development cooperation assistance during the past decade. During the Cold War, assistance from UNDP and other donors was generally provided to countries of the developing south—the "third world"—rather than to the East European and Soviet "second world" countries. UNDP was a grant-dispersing agency, with neither the capacity for nor interest in policy advising. Lending by the IMF and World Bank concentrated on macroeconomic stabilization, balance-of-payments support, and structural adjustment, rather than poverty reduction and sustainable environmental policies.

    The fall of the Berlin Wall and collapse of the Soviet empire changed all this. For UNDP and other donors, lending and policy advising to support the post-communist transition toward democratic, market-based societies became key priorities. The growing role of the European Union – both as a body in which many post-communist countries are seeking membership, and as a development actor in its own right -- has also had a tremendous impact on development assistance in what used to be the "second world". The proliferation of such non-government providers of development support and finance as the Open Society Institute has also brought radical change to the development finance landscape. Development actors must increasingly supplement their own financial resources with funds coming from other donors. Innovative forms of financial and other partnerships must be used to promote development.

    The Central European countries’ approaching accession to the European Union will mark an important landmark in this process. Thanks in part to assistance and policy advice provided by UNDP, the Czech Republic, Hungary, Poland, and Slovenia during the past ten years have made major progress in putting in place policies for sustainable human development. UNDP is now helping these countries to make the transition from recipients to providers of development assistance. In addition to helping the Central European countries construct their own development cooperation strategies, UNDP is also exploring new collaborative financing mechanisms. These mechanisms allow pre-accession countries to use UNDP’s financial and programmatic infrastructure to realize their development cooperation strategies. An innovative UNDP trust fund developed by the Czech Republic allows the Czech government to channel a portion of its development cooperation assistance through UNDP to finance development projects in the Balkans and CIS countries. In addition to helping meet the UN’s poverty reduction objectives in the Balkans and CIS countries, this trust fund helps the Czech Republic to export its human capital and policy successes to neighboring states -- many which are very much in need of both. The development of other such "East-East" cooperative arrangements for financing and promoting development in the Balkans and CIS countries is a major priority for UNDP in the coming years.

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    For more information, please contact Sandra Pralong, UNDP/RBEC Communications Officer
    at phone: (421-2) 5933 7414