STATEMENT
BY
H.E. AMB. Z.D. MUBURI-MUITA
AMBASSADOR/PERMANENT REPRESENTATIVE
OF THE REPUBLIC OF KENYA TO THE
UNITED NATIONS
ON
AGENDA ITEM 52:
MACROECONOMIC POLICY
QUESTIONS: (52B) INTERNATIONAL
FINANCIAL SYSTEM AND (52C)
EXTERNAL DEBT CRISIS AND DEVELOPMENT,
NEW YORK,
15 OCTOBER 2007
Let me commend the Secretary-General for the informative documentation presented under these items. My delegation aligns itself with the statements made by the representatives of Pakistan and Benin on behalf of the Group of 77 and China and, the African Group respectively.
Madam Chairperson,
Issues relating to the international financial system and external debt are at the core of finding solutions to the development problems of most developing countries.
The international financial system which has become synonymous with the International Monetary Fund and the World Bank play a key role in regulating financial flows including through direct financing of development activities. The two institutions have played a significant role in the expansion of economic base of developing countries over the last five decades. A new dimension and an emerging area of international interest is the correlation between the support offered by these institutions and the quantification of benefits accruing to the poor and marginalized.
The report of the Secretary-General has highlighted a number of important elements and I wish to comment on some of them as follows.
First, the report points to the continued increase in resource outflows from developing to developed countries. This trend is worrying as it in many ways undermines the development prospects of developing countries. Though these outward resource flows may be said to be important in addressing the current account imbalances, it reflects certain shortcomings in these countries that the international community should come out and address. We cannot continue to always identify lack of resources as a critical factor in the development endeavors of developing countries while the same countries are keeping huge amounts of resources in developed countries. Failure to address this kind of trend is an indication of the weakness of the international financial system to find ways and means of retaining these resources to foster development in the poor countries.
Second, the mix up between debt relief and official development assistance is a matter of moral concern. As indicated in the report, much of the increase in official development assistance since 2002 is accounted for by debt relief. Since debt relief does not avail any new, meaningful resources for development, it is deceptive to consider such action as amounting to provision of official development assistance. If this trend continues side by side the reluctance or slow base at which many developed countries are meeting their commitments made at Monterrey and other fora, it is unlikely that developing countries will be able to achieve the internationally agreed development goals, including the millennium development goals.
Third, the reform of the international financial architecture has been slow and punitive particularly to the developing countries. The level of participation of developing countries in decision making within the key international financial institutions does not reflect the large number and influence of developing countries in the global systems. The question of voice, participation and representation of developing countries in decision making within the International Monetary Fund and the World Bank needs to be addressed. In addition the strengthening of regional financial mechanisms is important in enhancing cooperation and self-reliance.
The Paris Declaration on Aid Harmonization has not been fully internalized within the disbursement structures of the IMF and the World Bank and more especially on the financing of programmes in Africa. Inspite of the ever increasing and goal-shifting disbursement conditionalities, ODA disbursement has been increasingly correlated with governance and political reforms. Although there has been a significant improvement in governance and political management in many countries in Africa, there has also been a trend of double standards on the formulation of conditionalities for countries in similar situations in different parts of the world.
Madam Chairperson,
The report by the secretary-general on recent developments in external debt indicate that there has been increase in nominal value of external debt from about US $ 2.7 billion in 2005 to US $ 2.8 billion between 2005 and 2006. The increase in debt coupled with the increase in net resource out flows from developing to developed countries poses a real threat to development potential and capacity in developing countries.
Many developing countries are faced with debt overhang; a situation that if not checked will seriously undermine their development prospects and lead to increased global financial and development imbalances.
We recognize the various debt relief initiatives thus the Heavily Indebted Poor Countries Initiative (HIPC) and the Multilateral Debt Relief Initiative (MDRI). These initiatives however are inadequate in a number of ways. For instance, they do not address all heavily indebted developing countries, particularly for a country like ours which is heavily indebted but is not considered “poor”. Hence the need to review the debt sustainability criteria and country classification to ensure fairness and real impact in the concerned countries.
In addition, the evolving trend that debt relief is considered as official development assistance need to be critically reviewed as it defies traditional knowledge about the two important but different aspects international finance and cooperation.
We however are of the view that the real solution to the developing countries’ debt problem would be 100 percent debt cancellation. The piecemeal approach to the debt problem may not be adequate and effective in the long-term.
I thank you.
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