H. E. Sri Mulyani Indrawati
Minister for National Development Planning
Republic of Indonesia
High-Level Dialogue on Financing For Development
New York, 27 June 2005
Ladies and Gentlemen,
Indonesia recognizes the significance of today’s discussions in our pursuit to ensure concrete implementation of the Monterrey Consensus.
The Consensus is a unique international agreement that serves as a turning point to reverse the downward trend of official development assistance, promotes international cooperation and partnership to mobilize resources, both domestically and internationally, through international trade, foreign direct investment and mobilization of innovative financing.
To realize the Monterrey Consensus, much more needs to be done. Developing countries, for their part, have been struggling to undertake measures to build strong institutions based on good governance, while also trying to accelerate their development and investment on hard infrastructure as well as human capital that are necessary for sustaining development and eradicating poverty. Developing an integrated national strategy to eradicate poverty is critical for achieving those concerted efforts domestically, but not sufficient in themselves unless strengthened by consistent and adequate international support. Indonesia is one of the developing countries that have adopted that approach.
In recent times, Indonesia has experienced major challenges in the economic, social and political arenas. These include the economic and financial crises back in 1997/98, accompanied by fundamental political, legal and social transformation, to the most recent Tsunami tragedy and its aftermath. Despite these constraints, the first successful direct election in our nation’s history was held and has laid a solid foundation for us in addressing the challenges we face. Our early but robust democratic system has become an asset and source of our strength to build a safe, peaceful, and prosperous nation.
Several important good policies have been established and continue to be implemented. Our stable macro economic conditions, with a modest inflation rate and a flexible exchange rate to sustain our competitiveness, has become an important anchor for the upward trend of our economic growth. This year’s economic growth is expected to reach 6%, despite high and rising oil prices, with investment and exports as the engines of growth. Recently we adopted a painful policy to reduce fuel subsidies to increase our spending on education, health, and basic rural infrastructures. We are ready to put into effect all necessary, difficult policies to ensure robust and sustainable economic growth.
The major thrust of the Government’s policy is to strengthen our macro-economic fundamentals, deepen our structural reform to improve and enhance our public institutions based on good governance and the upholding of the law. We are developing a more open regulatory framework for investment and promoting the policies of good corporate governance. We are committed to making investing in Indonesia excellent value for money. Our anti-corruption efforts have begun and early successes have been made, as reflected in the substantial increase in investigations and successful cases concluded at court. Our target in the next five years is to reduce the poverty rate to 8.2 percent from 16.6 percent in 2004 and cut unemployment to 5.1 percent from 9.9 percent by 2009. Consistent with these efforts, the government has also mobilized financial resources that will be accessible by millions of potential micro entrepreneurs.
Indonesia has also walked an extra mile by initiating, with South Africa, a path of intercontinental partnership to address common problems and promote practical cooperation among the Asian African nations. The New Asian African Strategic Partnership was adopted at the Asian African Summit held in Jakarta, 22-23 April 2005, to promote concerted efforts in alleviating poverty, managing the challenges of globalization, and addressing emerging issues of common concerns. Within this context, the fulfillment of the Monterrey Consensus on Financing for Development is an extremely important element to achieve those noble goals. While the main responsibility to mobilize adequate resources for development lies with each respective county, it should be noted that for many developing countries with limited fiscal leverage, the role of external financing is indispensable.
While developing countries have been relentlessly seeking to build fiscal strength by mobilizing more local resources for development, the international community has not always been quick to respond in a favorable and timely fashion to these efforts. Even when the momentum and ownership of reform is strong in developing countries, most of the time the support from international communities is neither available nor adequate. Indonesia therefore not only supports the international call for increased ODA, deeper debt forgiveness, and the elimination of systemic inequities, but also supports developing a reliable international system to help those developing countries adequately and reliably that display strong momentum and ownership of the reform process to eradicate poverty and to sustain development.
It is Indonesia’s view that ODA provisions should not be allowed to drop below existing levels and those developed countries that have not yet done so should set firm timetables to meet this commitment in the near future.
To achieve better and sustainable results, mutual agreement between donors and recipients is a must. The agreement should address what constitute best practice policies and acceptable governance structures and institutions as qualifiers for receiving increased ODA. The objective of those conditionalities should not result in reforms being imposed from outside, but instead strengthen domestic ownership and institutional capacity to maintain the reform momentum, and to protect those vulnerable and poor people that will be affected by reform.
We strongly urge donor countries to coordinate their aid and ODA policies and procedures by simplifying and streamlining them in order to enhance the efficiency and effectiveness with which these transactions are conducted.
Along with these various sources of development funding, deeper debt relief should be granted to LDCs and even some financially handicapped middle-income countries. While Indonesia acknowledges the decision of the 6-8 to grant significant relief to 18 HIPCs, the fact is persistent high indebtedness continues to hinder the development of most LDCs. They need substantial relief as quickly as possible to allow them to move towards achieving the MDGs.
Like meaningful debt relief, the expansion of free and fair international trade remains on the list of outstanding Monterrey Consensus goals to be achieved.
We support the fulfillment of the timeline of the Doha Development Round at the end of 2005. In this regard, we urge all WTO members to work collectively for the success of the 6th Ministerial Meeting of the WTO in Hong Kong, in December 2005. We particularly call for the developed countries to uphold their commitment for the Doha Development Agenda, by providing more flexibility on the issues of agriculture and special and differential treatments. Such willingness will help ensure that the development needs of developing countries are effectively placed at the heart of the multilateral trade framework.
We go further and add that until the macroeconomic imbalances of developed countries are corrected constructively and until developing countries can decisively impact the norm¬setting and decision-making processes of multilateral trading and international financial institutions, the world will be deprived on adequate effective mechanism to achieve the noble goals of eradicating poverty, maintaining global economic stability, and enhance equitable and sustainable prosperity for all. Good governance and credibility of international organizations most importantly the Bretton Woods Institutions and the United Nations, is key to ensuring the soundness and legitimacy of agreements and to their effective and efficient follow-up.
To conclude, Indonesia wishes to acknowledge the importance and value of this High-level Dialogue that would form a common vision and strategy to move forward in implementing the Monterrey consensus. As part of our preparation for the Summit in September, I hope that we can develop further consensus to mobilize financial resources and promote good governance in our common pursuit to achieve the internationally agreed development goals including the Millennium Development Goals.
Permanent Mission of the Republic of Indonesia to the United Nations, New York
325 East 38th Street, New York, NY, 10016, USA
Tel: 1.212.972.8333, Fax: 1.212.972.9780 - www.indonesiamission-ny.org