Special high-level meeting
H.E. Mr. Hasan Kleib
Ambassador/Charge d’Affaires of the
Republic of Indonesia to the United Nations
At the Special High-level Meeting of the ECOSOC with the Bretton Woods Institutions, World Trade Organization, and United Nations Conference on Trade and Development
New York, 27 April 2009
“Addressing the impact of the global financial and economic crisis
on development, including issues related to the international financial
and monetary architecture and global governance”
I should like to begin by conveying Indonesia’s appreciation to you for convening this meeting. Allow me to take this opportunity to also thank the chairpersons of the intergovernmental representatives for their statements.
In making this statement I would like to align myself fully with the statement made by Thailand on behalf of ASEAN and Sudan on behalf of the G77 and China.
As we are all fully aware, the financial and economic crisis has deepened, engulfing the economies of developed and developing countries alike. For developing countries the challenge is two-fold. On the one hand, the crisis is set to dilute the hard work and the difficult reforms undertaken by many developing countries and greatly reduce the development gains they have achieved, including on the MDGs. At their doorstep are development problems such as increasing poverty, unemployment, and deterioration of the health and education sectors.
Additionally their situation is much worse because they are also handicapped by limited financial capacity and policy space constraints. These have rendered them ineffective in addressing the crisis, especially through the use of counter-cyclical policies.
Faced with the drying up of liquidity, investment and capital in their economies, developing countries must not be left to their own devices to suffer from the unmanageable development problems, as if they are being punished. They require the extension of international assistance and cooperation because these problems have been externally generated.
However, it is not sufficient for calling for assistance, but it is also necessary each one of us to enact measures to counter this downturn. Be of a minor or major one. This will ensure that each one of us contribute in the stabilization of the current economic predicament. This is the responsibility of all of us.
In order to mitigate the impact of the crisis, Indonesia believes the establishment of a global expenditure fund financing is essential in assisting developing countries. Such a fund can serve as a buffer and provide developing countries with needed resources to sustain development goals, as well as counter-cyclical policies that have large multiplier effects in sectors such as infrastructure and agriculture.
Part of the immediate response to offset the impact of the financial crisis on the poor and most vulnerable, should be the strengthening of the social safety net systems in developing countries. Some developing countries have had this net, but not all. We must ensure that many more will be able to have this important net. It ensures the stability of a country. It also ensures the unfortunates to have a life of dignity.
Indonesia wishes to emphasize the comparative advantage of UN programs and specialized agencies in this area. They have very strong mandate to deal with poverty reduction, promotion of sustainable development, capacity building, and enhancing social safety nets. As such programs and actions implemented by the funds, programs, and agencies should aim to play a counter cyclical role to help tackle the crisis.
In this regard, while we welcome the G20 commitment to recapitalize the multilateral development bank and the IMF, recapitalizing the UN programs and agencies should be treated as equally important to help developing countries address the crisis, particularly in the short term. Also important is increasing efficiency in the implementation of such programs, by reducing administration costs, and as much as possible using local products and services.
We need to ensure a higher degree of return of capital. These precious capitals have to yield major impact, and not merely about distribution of capital.
Addressing the long-term impact of the crisis requires that we objectively examine the causes of the crisis and undertake measured and appropriate approaches to overcome the problems associated with it. Tackling transparency, rules, regulations and supervision deficits of financial markets is essential for restoring confidence. This must include addressing financial centers being used as tax havens, and safe havens for illicit funds. Caution must however be exercised to avoid being overly strict and thus stifling innovation in financial markets and restricting growth.
Also important is the recovery of the real economy. For many developing countries, export earnings and remittances represent the lifeblood of the real economy. Genuine commitment must therefore be made to avoid protectionist policies in the area of trade, investment, and movement of labour.
Central to this is the conclusion of the Doha round. It must ensure a fairer trade in the agriculture sector eliminating export and domestic subsidies, as well as ensuring developing countries have access to special safeguard mechanism.
Beyond addressing rules and regulations and recovery of the real economy Madame President, is the critical need to reform and strengthen the international financial and monetary architecture and governance. We must demonstrate the political commitment to move beyond words on this issue.
Reform must be adopted and implemented immediately to better amplify the increasingly important voices and representation of emerging markets and developing countries in international financial forums. The United Nations should take an active part in the reform process. We are after all the designer and founder of the Bretton Woods Institutions and the multilateral trading system.
Time has come to instill greater voices for developing and emerging countries at decision-making processes and increasing their representation at the IMF and World Bank.
Central to this reform is the resolution of the stigma problem that has become attached to the international financial institutions, especially the IMF. The stigma of the IMF is intimately connected to a very long list of unrealistic conditionalities, which were often inflicted on developing countries causing serious social and political trauma, as happened during the crisis of 1997/1998. The IMF needs to revise its lending practices to make them more flexible.
Realigning the relationship between the UN, BWIs and WTO is also a necessary and an indispensable part of reforming and strengthening the international economic and development architecture. This will help to better realign national and international development, monetary, financial, and trade policies. In this regard, there is a need to enhance or develop mechanisms for members and these international institutions to better coordinate. One such mechanism that could be utilized is a regular biannual information exchange session between the three organizations.
We must also not let the financial crisis delay concrete actions to address climate change, in accordance with the United Nations Framework Convention on Climate Change and the Meetings of Parties of the Kyoto Protocol. Climate change threatens all aspects of development. We must therefore act together to advance the implementation of the Bali Roadmap and Bali Plan of Action and ensure that the forthcoming Climate Conference in Copenhagen, Denmark, will lead to a global consensus on how to address climate change.
Finally, Madame President, Indonesia welcomes the UN High-level conference on the world financial and economic crisis and its impact on development to be held in June 2009. For developing countries this conference cannot come soon enough.
This conference must however be seen as a part of a global process and not be a one-time event. It must serve as a step towards reviving the role of the United Nations as stipulated in the charter which is “to achieve international cooperation in solving international problems of an economic character”. This will contribute to strengthening the international financial and economic architecture to better serve global development. It must also complement the work being done by other processes, such as the G20.
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