Statement by
Mr. Mohamad Oemar
Representative of Indonesia
before the Second Committee
of the 58th Session of the General Assembly
on
Agenda Item 91:
Macroeconomy Policy Questions

New York 24 October 2003

 

 

Mr. Chairman,

At the outset, I would like to express my delegation’s appreciation for the Secretary-General’s informative reports on the agenda items before us. I should also like to associate my delegation with the statement of the distinguished representative of Morocco on behalf of the Group of 77 and China.

My delegation has noted that the report includes analysis of the external debt and debt-servicing problems of developing countries as requested by the General Assembly in its resolution 57/240. However, the report does not appear to go far enough in the sense that it has not elaborated further on the need to pursue the reform process of the international financial architecture which is directly linked to the debt issue.

Mr. Chairman,

My delegation is deeply concerned about the slow progress of the enhancement of developing countries’ participation in international and economic decision-making process. We urge the World Bank and the IMF to continue focusing on the issue of voice and representation as a matter of urgency with a view to achieving concrete recommendations and results that will make them more representative at the board level and ultimately more responsive to the legitimate demands and aspirations of the developing world. As key players in the world of international finance, the BWIs have the ability to advocate and the power to bring about fundamental changes to the international financial system in order to make it truly democratic and fair in its norm-setting and decision-making processes.

However, in addition to the work that is required to adjust the international financial architecture, other important changes in the global system must be carried out to create an enabling environment which would allow developing countries to experience economic growth and thus be empowered to eradicate extreme poverty in their midst. Strict attention must be paid to the need for substantial increases in ODA and FDI as well as for genuine free trade. All of these factors are intimately connected and converge at the international level with the debt problem to create the conditions for poverty in the developing world.

The simple fact of the matter is that developing countries must receive more ODA, in keeping with the demands of the Monterrey Consensus, to improve their human resources and build infrastructure. After a decade of decline, ODA began to climb in 2002, according to the Secretary-General, but the global economic slowdown and domestic budget pressures are threatening to interrupt this progress. However, ODA must not decrease but increase to the 0.7 per cent internationally agreed level to assist developing countries, especially HIPCs. It would also be very helpful if FDI would not discriminate against least developed countries because of their alleged unattractiveness as places of investment. More than any others, they desperately need such support in the face of uncertain ODA contributions and the widespread threat to human survival that they confront daily.

Yet, as the developing countries struggle with insufficient ODA and FDI, they cannot expect any great relief through genuine free and fair trade. The constraints to free trade are well known and do not bear repeating. Once again, we call on developed countries to demolish the protectionist walls that make their markets difficult to access. Beyond the rhetoric of well-articulated commitments, there must be positive action to change the existing unfair international trading arrangements, which even Cancun V failed to redress, so that goods from developing countries can reach developed markets. Along with free trade, increased ODA and FDI, debt relief is absolutely imperative.

Mr. Chairman,

In its formal statement during the 57th session of the General Assembly, my delegation stated that sustainable debt continued to be elusive. Today we still witness the same situation where there is no significant progress towards sustainability of the debts of developing countries. Their debt problems continue to cripple their ability to develop and as result they lack the capacity to progress towards the achievement of the Millennium Development Goals. This external debt burden situation has significantly reduced the ability of governments to provide the stimulus to promote economic growth to a sustainable level. Therefore, we are of the view that in addressing such problems creditors and debtors alike should work together as partners with a shared responsibility for a durable solution to external debt of developing countries.

My delegation is of the view that existing debt rescheduling mechanisms offer solutions to the liquidity problems of developing countries without addressing the need for a durable solution to external debt problems. These mechanisms cannot assist governments to attain realistic economic growth, thus stimulating employment growth. In this regard, we should continue our efforts to create a framework to deal comprehensively with the huge debt burdens of insolvent developing countries. Sound debt management is a must for debt sustainability. We therefore urge creditors to continue their commitments to build capacity in developing countries for debt management through transfer of knowledge, and the provision of technical and financial assistance.

The report before us notes that although the framework of Heavily Indebted Poor Countries (HIPC) Initiative has been enhanced, there have been increasing doubts in recent years that the Initiative in its present form and scope can meet the objectives of addressing the serious constraints to the development and poverty-reduction agenda of many of the poorest countries. The report also notes that the progress of programmes under the Initiative has continued to be slower than expected. In this respect, we believe that the BWIs should exercise more flexibility in order to speed up the process of debt relief and make it more meaningful for developing countries.

In conclusion, Mr. Chairman, my delegation observes that the resources at the disposal of the international financial institutions to support developing countries experiencing payment difficulties are inadequate. To make a more significant impact on the overall debt burden of the developing countries, including both low and middle-income countries, we must fully explore new initiatives such as mechanisms for debt-for-sustainable-development swaps and the cancellation of unsustainable debt. This approach should be further explored as an innovative means for mobilizing sources of financing for development for the developing countries, as mandated by the Monterrey Consensus as well as the World Summit on Sustainable Development.

Thank you.