Ad Hoc Expert Group Meeting
“Rethinking the Role of National
Development Banks”
(New York, 1-2 December 2005)
Overview: Multi-stakeholder consultations
on financing for development, 2004-2005
Alexander Trepelkov, Chief, Multi-stakeholder
Engagement and Outreach Branch,
Financing for Development Office, UN-DESA
Mandate
In its resolution 58/230 of 23 December 2003, the General Assembly
requested the Financing for Development (FfD) Office:
• “to organize workshops and multi-stakeholder consultations … to
examine issues related to the mobilization of resources for financing
development and poverty eradication” and
• “to convene activities involving various stakeholders … to promote
best practices and exchange information on the implementation of
the commitments made and agreements reached at the International
Conference on Financing for Development”.
In response, the FfD Office, in cooperation with major institutional
and non-institutional stakeholders in the follow-up process to the
Monterrey Conference, launched a series of multi-stakeholder
consultations, including experts from the official and private sectors,
as well as academia and civil society, to examine selected issues on
which informal and expert-level discussions by multiple stakeholders
might facilitate policy debates in international forums.
Process
The 2004-2005 consultation process comprised a total of 21 meetings.
•
The Financing for Development Office organized consultations on:
(i) building inclusive financial sectors for development; and
(ii) sovereign debt for sustained development.
•
The World Economic Forum conducted another set of consultations on:
(iii) understanding how public-private partnerships can improve the reach
and effectiveness of development assistance; and
(iv) improving the climate for private investment through leveraging
multilateral development banks and aid agencies to catalyze private
investment and through bringing financial governance capacity building to
scale.
•
The New Rules for Global Finance Coalition organized meetings on:
(v) selected issues related to enhancing the coherence and consistency of
the international financial, monetary and trading systems in support of
development.
Outcome
• Report of the Secretary-General, entitled “Multi-stakeholder
consultations on financing for development”, which was issued as
an addendum to the annual report on the “Follow-up to and
implementation of the outcome of the International Conference on
Financing for Development” (A/60/289/Add.1), outlined the basic
modalities, main findings and substantive outcomes of those
consultations.
• Additional information is available on the Financing for Development
website: www.un.org/esa/ffd.
Building inclusive financial sectors for development
•
In the context of the International Year of Microcredit, 2005, UN-DESA and UNCDF
undertook to produce a “Blue Book” on “Building inclusive financial sectors for
development” to serve as a reference point for national multi-stakeholder discussions
in developing countries to help governments shape strategies towards inclusive
financial sectors. That volume is in an advanced state of preparation. It was
launched at the United Nations International Forum on Building Inclusive Financial
Sectors (New York, 7-9 November 2005).
•
The “Blue Book” seeks to identify the key constraints to financial inclusion focusing on
impediments at the level of the customer, the retail financial institutions, the financial
markets, the policy and legal environment, and the regulatory and supervisory
environment. In each case, the Book points to areas in which strategic policy choices
are likely to make the biggest difference to the future development of inclusive
financial sectors. Finally, the Book offers a series of strategic options.
•
The “Blue Book” is not a Blue Print. The relevant stakeholders in each country
should engage in their own consultative process to identify and address countryspecific issues. It is most important to increase understanding of the key options
facing countries, rather than offering a single solution. Domestic stakeholders may
develop their own country-specific “blue books” consistent with their national
development strategies.
Sovereign debt for sustained development
•
The FfD Office, in consultation with major stakeholders (UNCTAD, IMF and
the World Bank), prepared an issues paper “Strategic issues in managing
sovereign debt for sustained development” focusing on three main areas:
(i)
how to make the concept of “debt sustainability” operational;
(ii) how to manage sovereign debt for policy coherence; and
(iii) practical ways to contain risk and reduce uncertainty.
•
There was a convergence of views across stakeholder groups on two broad
points:
(i)
the absence of agreement on the concept of debt sustainability; and
(ii) the need for an improved mechanism to achieve cooperative debt
workouts from crises.
•
In follow-up, the FfD Office is cooperating with UNDP to assess the
relationship between debt sustainability and the achievement of MDGs in
HIPCs and other critically indebted countries, with the objective of providing
an operational definition of development-oriented debt sustainability.
Public-private partnerships to improve the reach and
effectiveness of development assistance
•
The World Economic Forum examined the status and promise of publicprivate partnerships (PPPs) in three areas: basic education, health and
water and sanitation.
•
The general findings of the consultations were threefold.
First, participants stressed that PPPs had a significant role to play in
achieving the MDGs. In particular, there was increasing recognition that
development challenges require new approaches and partnerships that
draw on the expertise of the private sector.
Second, the deliberations pointed to evidence of increasing amounts of
private resources being directed to development-oriented PPPs.
Third, many participants called on the official and private sectors to better
integrate PPPs into the structuring and delivery of aid programmes, and to
work towards scaling-up their use and strengthen their implementation.
•
The cross-cutting and sector-specific recommendations have been
elaborated by the World Economic Forum in its report “Building on the
Monterrey Consensus: The Growing Role of Public-Private Partnerships in
Mobilizing Resources for Development”.
Improving the climate for private investment
•
The World Economic Forum also explored ways of improving the climate for private
investment by leveraging multilateral development banks and aid agencies to
catalyse private investment and bringing financial governance capacity building to
scale.
•
While global capital markets could help meet the huge financing needs of developing
countries for infrastructure, they are unlikely to provide the necessary finance without
more targeted official sector support to cover unacceptable risks and uncertainties.
There is considerable unused capacity in the multilateral development banks that
could fund more official development finance without an increase in their capital.
•
Recommendations were made on how to unlock this “trapped capital” in both private
and public institutions, including the following points:
(i)
strengthen the risk mitigation products offered by official sector agencies;
(ii)
provide financial and technical assistance to project development capacities;
(iii) improve financial governance, including the quality of legal and regulatory
systems, transparency, information, accounting standards, and performance
standards across a range of private and public institutions; and
(iv) implement institutional changes within development agencies.
Systemic issues
•
•
•
•
•
The New Rules for Global Finance Coalition considered selected systemic issues
from the Monterrey Consensus focusing on the structural features of the international
monetary, financial and trading systems, the potential vulnerabilities they posed for
developing countries, and the institutional design of the international financial
architecture. The discussions generated many concrete proposals in the following
areas:
As for financial crisis prevention, participants proposed mechanisms to make financial
systems more resilient to the fluctuations of the financial cycle, including countercyclical prudential regulation, capital controls, strengthened local currency markets,
and market-based instruments to hedge against commodity price fluctuations.
With regard to crisis resolution, the consultations explored possible modalities of an
efficient and equitable debt workout mechanism. Speakers also highlighted the fact
that in a crisis situation affected countries needed quick and extensive funding in
order to facilitate the negotiation of a longer-term solution. Another concern was how
low-income countries could adequately protect themselves against external shocks.
The debate on how to secure viable sources of domestic finance focused on tackling
capital flight, improving international tax cooperation and finding an appropriate policy
mix for supporting the productive economy.
Lastly, the dialogues addressed the issue of enhancing the voice and participation of
developing countries in economic policy-making and standard-setting bodies.
Next steps
•
The 2004-2005 series of multi-stakeholder consultations on financing for
development have generated a number of interesting ideas and promising
proposals. A possible next step would be to continue to explore the existing
topical areas and viable recommendations, with a view to effecting their
implementation.
•
In addition, a new series of consultations, to be initiated in 2006-2007, might
be merited by the many other policy areas covered by the Monterrey
Consensus. The themes of these consultations may include:
(i)
improving the regulation of financial sectors;
(ii) rethinking the role of national development banks; and
(iii) securing the financing of basic services, in particular in the water,
sanitation and energy sectors.
•
The General Assembly, at its current session, may wish to provide further
guidance in this regard.