[stop-imf] UNCTAD support for debt cancellation

[robert weissman]

PRESS RELEASE

UNCTAD/PRESS/PR/2004/035=E2=88=97
18 October 2004

CANCELLING AFRICA=E2=80=99S DEBT WOULD HELP ADVANCE THE MILLENNIUM DEVELOPM=
ENT
GOALS,
says UNCTAD=E2=80=99s Trade and Development Board

The international community is in an absurd situation where poor
countries are sustaining rich country economies, thanks to debt-related
capital flows from poor to rich countries, several speakers told
UNCTAD=E2=80=99s Trade & Development Board, which concluded the work of its=
 51st
session on 15 October. =C2=AB Africa might just as well be in prison =C2=BB=
, said
Ann Pettifor, Senior Associate of the New Economics Foundation (UK)
during a debate on African debt.

During its two-week meeting (Geneva, 4-15 October), the 148-member Board
considered recent UNCTAD reports on economic development in Africa, the
least developed countries (LDCs), new developments in international
economic relations and UNCTAD=E2=80=99s assistance to the Palestinian peopl=
e. It
defined its programme of work for the coming months in keeping with the
priorities set for the secretariat at UNCTAD XI (S=C3=A3o Paulo, June 2004)=
.
The Board also held consultations with representatives of civil society
and discussed interdependence and global economic issues from a trade
and development perspective, based on the Trade and Development Report
2004 (for background, see press releases UNCTAD/PRESS/PR/2004/033 of 8
October and UNCTAD/PRESS/PR/2004/034 of 12 October).

Carlos Fortin, Officer-in-Charge of UNCTAD, identified four key elements
for defining the parameters of the work ahead:  the importance of
building productive capacities in developing countries and ensuring
development gains from trade ; the notion that trade is not an end in
itself but a means to growth and development ; the need for developing
countries to enjoy some flexibility in the choice of policies, so that
their developmental efforts are not hindered by international
obligations unsuited to their development and income levels ; and the
identification of specific areas of activities in which UNCTAD could
enhance its role in promoting the beneficial integration of developing
countries into the international economic system. These areas are
outlined in the S=C3=A3o Paulo Consensus, one of the two main documents
adopted during UNCTAD XI.

Developments in the post-Doha work programme of particular concern to
developing countries; the sustainability of African debt; ways to
achieve the Millennium Development Goals (MDGs), in particular for the
world=E2=80=99s poorest countries; and follow-up to UNCTAD XI, including a
review of the multi-stakeholder partnerships launched there, were also
discussed.


Economic development in Africa : Issues relating to Africa=E2=80=99s debt
sustainability

For the first time, the Board considered the issue of the total
cancellation of Africa=E2=80=99s debt. In its conclusions, it stressed that=
 debt
sustainability depended on a wide range of variables and that debt
sustainability analyses should therefore incorporate a comprehensive set
of variables, including country-specific factors and vulnerabilities. To
that end, the Board stressed the need for an assessment of debt
sustainability by an independent panel of experts.

It encouraged further efforts to address multilateral and bilateral debt
and underscored the shared responsibility of both creditors and debtors
in preventing and resolving unsustainable debt situations.

Indifference towards the African debt question appeared to be a thing of
the past, as suggested by the recent statements of Tony Blair. The
international community was demonstrating greater political will, having
realized that without economic growth, Africa=E2=80=99s poverty levels woul=
d not
diminish. The UNCTAD report on African debt pointed out that many
African nations were still suffering from a heavy debt burden, including
even those countries that had benefited from the Heavily Indebted Poor
Countries (HIPC) Initiative. The African continent was the only one
where poverty was actually increasing. The debt burden was a major
obstacle to these countries making it difficult to attract the
productive investments needed for them to escape the poverty trap.

The political movement emerging in favour of cancelling this
unsustainable debt was very encouraging, speakers said. But it should be
accompanied by measures on behalf of African development that would
guarantee better access to international markets, by an end to
agricultural subsidies and by accelerated capacity-building. More
capital flows should be directed to Africa, as current levels were
insufficient and unreliable. In this area, specific development
programmes should be set up. Equally important is the third negotiating
round on the Global System of Trade Preferences among Developing
countries (GSTP), launched at S=C3=A3o Paulo, which holds great potential f=
or
expanding South-South trade.

Participants in an informal panel discussion on Africa stressed that
debt cancellation should be considered in the context of the continent's
development. However, cancelling the debt was no panacea. It should be
accompanied by special and differential treatment and by sufficient
policy space. The commodities problem should be tackled as well. It is
worth noting that accruing debt per se is not a sin; in fact, it has an
economic value. The question is: what kind of debt, at what level and
for what purpose? These are important issues that UNCTAD could work on,
as well as the issue of the effectiveness of the credits granted to
developing countries.

Least Developed Countries Report 2004

UNCTAD=E2=80=99s LDC Report 2004, which served as the background document f=
or
the session on least developed countries (LDCs), put the development of
trade and poverty reduction in the LDCs into perspective. In reviewing
the report, the Board stressed the urgency to adopt development
strategies that responded to the development needs of the LDCs.
Increased international trade flows could potentially enable economic
development in these countries, it said, but such flows should also be
combined with other factors, including the effective development and use
of productive capacities to transform the vicious circle of the poverty
trap into a virtuous circle leading to the promotion of economic and
human development in the world=E2=80=99s 50 poorest countries.

The majority of speakers agreed that concerted action was required by
the international community. Since the creation by the United Nations of
the LDC category in 1971, the number had grown from the original 25 to
50 in 2004. If current economic trends continued, only 11 of them would
achieve the MDG of reducing poverty by half by 2015. The international
community had both a moral and an ethical responsibility to reverse
those trends and redress existing imperfections in the world economic
order, as the LDCs were still marginal players in the world economic system=
.
At the same time, the Board stressed the need for sufficient national
policy space in which LDCs could implement the structural changes needed
to integrate further into the international trading system and ensure
development gains. Within that context it was also important to find a
solution to the question of commodity prices and implications for debt
servicing.

Most participants agreed that the financial and human resources
available for UNCTAD's Special Programme on LDCs should be increased if
it is to contribute effectively to the implementation of the LDC
Programme of Action adopted in Brussels in 2001 and help the LDCs meet
the Millennium Development Goals, particularly the poverty reduction
target. More emphasis needs also to be placed on trade between LDCs and
other developing countries, given the growing importance of South-South
trade.

A number of success stories were cited during an informal panel
discussion. Among the conclusions on how best to replicate these
successes was the need for cooperation between public and private
sectors on building sufficient production capacity to meet clearly
identified sources of demand in international markets.

Report on UNCTAD XI multi-stakeholder partnerships

UNCTAD Officer-in-Charge Carlos Fortin summed up progress on the
partnerships launched at UNCTAD XI in the areas of information and
communication technologies (ICT) for development; commodities;
investment; and capacity-building and training, including through
training institutions and universities. The partnerships reflected a set
of development issues on which UNCTAD was well placed to act.

The partnership on ICTs for development focused particularly on
e-tourism. Since UNCTAD XI, consultations had taken place with key
actors in the sector to identify the technical specifications required
to build an e-tourism platform. A prototype was currently being tested.
If that system met the specifications, it could eventually be
complemented by specific functions. A trust fund had been created to
implement the e-tourism initiative.

With regard to ICT training activities, a meeting of donors would be
held in Geneva on 18 October to raise awareness of the need for
technical assistance activities aimed at helping poor countries collect
statistics on the information society. An international meeting on ICT
statistics would be organized in early 2005 to identify key ICT
indicators that could be collected by all countries. The meeting=E2=80=99s
results would be presented at the second phase of the World Summit on
the Information Society, to be held in Tunis in November 2005.

Mr. Fortin said that several cooperation agreements had already been
formalized on the investment for development partnership. Initial
funding would enable the start-up or reinforcement of some projects,
such as the business linkages programme in Brazil and the
capacity-building programme for gathering statistics on foreign direct
investment (FDI) in Africa. There was no time limit on the partnership.
Its flexible structure enabled it to mobilize partners and resources
based on changing demand in its developing-country members.

UNCTAD=E2=80=99s Virtual Institute partnership had been launched to create =
a
database to enable systematic long-term cooperation  with universities.
It was open to academic institutions that could benefit from enhanced
teaching and research capacity in the fields of trade, investment and
development. The Virtual Institute had started with four founding
members: the University of Campinas (Brazil), the University of R=C3=A9duit
(Mauritius), Jawaharlal Nehru University (India) and the University of
Dar-es-Salaam (Tanzania).  Two other universities had joined since
UNCTAD XI : the University of Jordan and the Pierre Mend=C3=A8s France
University of Grenoble (France). The goal was to have some 15 to 20
partners within the next two or three years.

The International Task Force on Commodities had been launched at UNCTAD
XI to come up with innovative ways to make the commodity sector a key
element for achieving the MDGs, particularly poverty reduction. The Task
Force would eventually comprise 30 to 40 eminent persons representing a
cross-section of all stakeholders: Member States, international
organizations, corporations engaged in commodity-related activities,
NGOs, the private sector and academia. The list of members was currently
being drawn up, and possible means of financing were under
consideration. The Task Force would hold its first meeting in the first
quarter of 2005, funding permitting.

President=E2=80=99s report on the high-level ECOSOC meeting with the Bretto=
n
Woods institutions and the WTO

This year marked the first time that the President of the TDB had been
invited to participate in the high-level ECOSOC meeting, held in
Washington, DC, on 26 April. The outgoing President, Zukang Sha (China),
who was succeeded this month by Mary Whelan (Ireland), presented the
major points raised at the round tables on inter-institutional
partnerships, as defined in the Monterrey Consensus. The key role of the
private sector was stressed, particularly in the area of investment, in
promoting economic growth and poverty reduction. As to the role of
multilateral institutions in meeting the MDGs, the lack of coordination
and clarity in the division of labour was regretted. Efforts to update
national statistical systems should close the gaps in available
information. The need was also expressed to continue adjusting the
poverty reduction strategy papers (PRSPs) to the conditions prevailing
in each country and to incorporate them into the national budget while
at the same time linking them more closely to realizing the MDGs.
Ambassador Sha underlined the need for greater neutrality among the
various fora dealing with debt rescheduling. He also emphasized that
these fora should not be dominated by the creditors.

Members of the Board called for the institutionalization of the TDB
President=E2=80=99s participation in the high-level joint meeting of ECOSOC=
 and
other international bodies.

Consideration of technical cooperation activities

The Board considered and adopted a report which reflected the new work
areas arising from UNCTAD XI in the current programme budget. While
there was a general agreement that the poorest countries should continue
to benefit from UNCTAD's technical cooperation, it was stressed that the
secretariat should ensure equal access to its technical support by all
developing countries.

The fifty-second session of the Trade and Development Board will be held
from 3 to 14 October in the Palais des Nations, Geneva.

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