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Financing for Development. On 22 March 2002, Heads of State gathered in Monterrey, Mexico, to “address the challenges of financing for development around the world”, particularly for developing countries, at the first International Conference on Financing for Development.
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On 22 March 2002, Heads of State gathered in Monterrey, Mexico, to “address the challenges of financing for development around the world”, particularly for developing countries, at the first International Conference on Financing for Development.
What are the major challenges of Financing for Development at the national and international level?
Leading Actions Mobilizing Domestic Resources Mobilizing International Resources International Trade International financial Cooperation External Debt Addressing Systemic Issues
Mobilizing domestic FinancialResources • Countries with extreme poverty adopt and begin to implement, no later than 2006, a national development strategy bold enough to meet the Millennium Development Goals by 2015
Mobilizing international resources • A high proportion of foreign direct investment should be directed to low-income countries and foreign direct investment’s positive contribution to their development should be ensured
DESPITE HIGH LEVELS OF FDI, NET RESOURCE TRANSFERS HAVE BEEN NEGATIVE FOR 7 CONSECUTIVE YEARS
NET TRANSFER OF FINANCIAL RESOURCES FROM THE DEVELOPING TO THE DEVELOPED WORLD • Net outward transfers of financial resources have been increasing steadily in developing countries since 1997 and reached an estimated $350 billion in 2004. • The net outward resource transfer from developing to developed countries is usually considered to have a negative impact on domestic growth since the net export of goods and services reduces the resources available for domestic consumption and investment.
The improvement in net private flows, while substantial was not sufficient to offset the net outflows. • This negative transfer is partially reflected in a record increase in international reserves.
International Trade as an engine for development • Recognizing the links between trade, development and finance, a more open, equitable, rule-based, predictable, non-discriminatory and equitable multilateral trading system is critical to exploiting the potential of trade to act as a source of financing for development.
Increasing international financial and technical cooperation • Official Development Assistance is increasing in nominal terms but more needs to be done to increase assistance to ensure the financing required to attain the • Millennium Development Goals.
OFFICIAL DEVELOPMENT ASSISTANCE PLEDGES AND REALITY agreed target Average Aid
Debt Sustainability • Three decades of debt crisis has engulfed most of the world’s developing countries at the cost of millions of lives. • “Allow countries to meet MDGs by 2015, without accumulating unsustainable debt ratios.” • Secretary-General
External Debt- Foreign Debt Service Payments In Billions Of US$
Addressingsystemic issues • Enhancing the coherence and consistency of the international monetary, financial and trading systems in support of development
Create the political will to enhance developing countries’ sense of responsibility and domestic ownership of their own development by providing them with a more equitable voice and participation in the institutions that take the decisions that affect their development prospects.
