The Halifax Initiative would like to thank John Foster, North-South Institute, for his help in developing these FAQs
Revised November 2007
Answers
How is development normally financed?
Development is financed through a number of different means: revenues generated through trade; domestic resource mobilization (for example, import and export tariffs and taxation); foreign direct investment and other capital flows; technical assistance (for example, official development assistance or aid and innovative mechanisms for financing development); external debt relief and cancellation.
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What are the origins of the discussions around financing for development?
The United Nations-led process on Financing for Development (FfD) was a response to two distinct things, namely the need:
- to examine the internationally agreed development goals adopted over the past decade, including those contained in the United Nations Millennium Declaration, and the dramatic shortfalls in resources required to achieve them;
- to mobilize and increase the effective use of financial resources to be able fulfill these goals, in particular to cut the number of people living in extreme poverty by half by 2015, improve social conditions and raise living standards, and protect the environment.
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What happened at Monterrey?
To address the shortfall and need to mobilize more financial resources, the General Assembly agreed to hold an international intergovernmental conference on Financing for Development (FfD), which was held in Monterrey, Mexico from March 18-22, 2002. The United Nations-hosted conference on key financial and development issues attracted 50 Heads of State or Government, over 200 ministers and leaders from the private sector, civil society and all the major intergovernmental financial, trade, economic, and monetary organizations. The culmination of a four-year preparatory process, the Conference lead to the adoption of the Monterrey Consensus.
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What did the Monterrey conference seek to achieve?
Many observers saw the Conference as an opportunity to reinforce development finance as a means of achieving the commitments previously set out in other global conferences, such as the summit in Copenhagen on Social Development (1995) and in Rio on the Environment (1993)). A minimum objective for many was to ensure the availability of resources for developing countries to reach the goals and targets set in the Millennium Development Goals (MDGs).
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Who participated?
The conference preparatory process involved not only the United Nations but the World Bank and the International Monetary Fund as well as the World Trade Organization. The United Nations Conference on Trade and Development was later added. It was organized on a multi-stakeholder basis, with governments, multilateral organizations, the private sector and civil society all taking part. The agenda was broad and set in the context established by the United Nations Millennium Declaration of 2000 and the Millennium Development Goals (MDGs).
An ambitious civil society process was developed parallel to the Conference, with both an international NGO committee and a Mexican host committee, resulting in a large civil society event just prior to the formal Conference.
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What were the major outcomes? What was the Monterrey consensus?
The 2002 FfD Conference resulted in the inter-governmental “Monterrey Consensus”, which had been negotiated prior to the actual event, presented and discussed in roundtables and approved in plenary section at the actual conference.
The consensus is a 21 page document with sections on:
- Mobilizing domestic financial resources for development;
- Mobilizing international resources for development: foreign direct investment and other private flows;
- International trade as an engine for development;
- Increasing international financial and technical cooperation for development;
- External debt;
- Addressing systemic issues: enhancing the coherence and consistency of the international monetary, financial and trading systems in support of development.
Among commitments made in Monterrey were:
- Recognition that better coherence between different policy sectors, such as finance and debt or aid policy and trade, might contribute to better development, and that systemic issues such as the political balance between developed and developing countries in international financial institutions needed to be addressed.
- The need to reverse the decade-long decline in ODA.
- Efforts to enhance participation of all developing countries and countries with economies in transition in decision making at the IMF and World Bank.
- More official collaboration between the UN’s economic and development arms, the World Bank and International Monetary Fund to a lesser extent, and the World Trade Organization.
- And to “[enhance] the coherence and consistency of the international monetary, financial and trading systems.”
- In return, developing countries committed themselves to “sound policies, good governance at all levels and the rule of law”, to “mobiliz[e] domestic resources, attract international flows, promote international trade as an engine for development, increase international financial and technical cooperation for development, sustainable debt financing and external debt relief”
Many emerged from the Conference feeling there was a general bargain between developed and developing countries, while others concluded that it had merely modified the continuing “Washington Consensus” and failed to really address the fundamental need for change.
Among the latter, were NGOs who declared in their collective message to the Conference that they did not share the official consensus.
It is also worth noting that there was an advisory report was prepared by the High-Level Panel on Financing for Development chaired by ex-President Ernesto Zedillo of Mexico with participation from such experts as Robert Rubin (former U.S. Treasury Secretary), Manmohan Singh (Prime Minister of India), David Bryer (former director OXFAM-UK) and Jacques Delors (former French and European Cabinet member). This report recommended among other things the formation of an international Economic Security Council under the aegis of the United Nations.
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What were some of the other key outcomes?
Perhaps the most productive result was the resolution to “stay engaged” on the issue. This allowed for ongoing work on the issue within the United Nations’ Economic and Social Council (ECOSOC). A Financing for Development office was established. Annual meetings are held between the United Nations, the World Bank and International Monetary Fund, the World Trade Organization and the UN Conference on Trade and Development (with private sector and CSO involvement). Finally, there are biannual High-Level Dialogues on FfD at the General Assembly which are broader than the annual ECOSOC meetings with other stakeholders.
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What is Doha and how does it work?
The Monterrey FfD Conference agreed that there should be a follow-up international conference to review implementation of the Monterrey Consensus, still under the authority of the United Nations. In 2006-2007 it was decided to accept the invitation of the government of Qatar to hold the conference in Doha on November 29 - December 2, 2008.
Consultation in preparation for that Conference is presently under way. The preparatory process is to be informed, and all “relevant stakeholders” are to be consulted, through civil society and high-level dialogues among other initiatives, however the final shape of the process is to be defined by a resolution of the General Assembly late in 2007. The UN Ambassadors of Norway and Egypt are co-facilitators organizing the preparatory process.
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Who is involved?
Like Monterrey, there is an International Facilitating Group which includes such bodies as the Women’s Environment and Development Organization (WEDO), Social Watch, the International Trade Union Confederation (ITUC) and many others. There is also an NGO Committee on FfD involving many religious orders, among others, and the New Rules Coalition based in Washington, D.C.
These coalitions and other independent groups collaborate on preparation for the key meeting. An inter-active web-space has been created to facilitate information, collaboration and action.
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The UN has held hearings with business and civil society about Financing for Development. What is this all about?
One of the innovations initiated by the Financing for Development process, beyond debates and dialogues in the General Assembly, is the holding of hearings where selected spokespersons for CSOs and for the private sector can put forward their recommendations for enhancement of the Monterrey follow-up. The most recent of these was held on October 22, 2007 at the UN. Canadian Rodney Schmidt of the North-South Institute presented an address on the Currency Transaction Tax. Latin American, Asian and African CSOs also presented statements. The most recent business hearing was held on October 11, 2007 and addressed by representatives of such organizations as the U.S. Chamber of Commerce and the Center for International Private Enterprise.
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What are the themes which the General Assembly FfD Dialogues hopes to address?
As part of the follow-up and monitoring of agreements made at Monterrey, the UN General Assembly hosts bi-annual High Level Dialogues on Financing for Development, which include a two day General Assembly debate where each delegation has the right to speak, together with a series of thematic multi-stakeholder dialogues. Because it is a General Assembly rather than an ECOSOC forum, the participation of private sector and NGO representatives is more limited. The third biannual two day session in October 2007 included a General Assembly debate with more than 100 states speaking. Country delegates and officials, together with a limited number of business and civil society representatives, joined six crowded roundtables to discuss the principal themes that had framed the outcomes of Monterrey, namely:
- Mobilizing domestic financial resources for development;
- Mobilizing international resources for development: foreign direct investment and other private flows;
- International trade as an engine for development;
- Increasing international financial and technical cooperation for development;
- External debt;
- Addressing systemic issues: enhancing the coherence and consistency of the international monetary, financial and trading systems in support of development.
There were also a series of side-events, sponsored by governments, business and NGOs. The Norwegian delegation sponsored a session on lost money (corruption, criminal transfers, tax evasion and transfer pricing), the French led on innovative financing, and UNIFEM, Social Watch and NGLS sponsored a well-attended session on the gender dimensions of FfD.
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What do these High Level Dialogues hope to achieve?
The 2007 dialogue was deemed to have “special significance” in terms of responding to the Report of the Secretary-General and contributing to the framing and preparation of the follow-up International Conference planned for Doha. The Dialogue is a ministerial-level forum, open to other stake-holders.
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Was Canada at Monterrey, what role did they play, and how are they involved in Doha?
Then Finance Minister The Hon. Paul Martin participated in the Ministerial-level meeting at Monterrey.
Canadian CSOs were also actively present, including representatives of Rights and Democracy and The North-South Institute.
The Canadian government is a participant in the preparation for the Doha Conference and will be represented at the Conference itself. The level of representation remains in question.
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How do I get involved?
If you are a non-governmental organization, Daniel Platz (platz[a]un.org) is the key NGO contact person for the Financing for Development office. The UN Non-Governmental Liaison Service is also playing an active role.
As an individual the best starting place is the monthly Road to Doha newsletter. There you can find out about upcoming events, key documents, etc. It is available through NGLS and through the FFD office.
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Does this mean we don’t need to worry about ODA?
This is a good time to worry about ODA. 2008 will see the donor countries organize a review conference on “aid effectiveness” as expressed in the Paris Declaration. The results of this review conference (Accra, September 2-4, 2008) will undoubtedly influence the result of the Doha FfD Conference.
The United Nations, as part of the reform process, has also inaugurated a new body, the Development Cooperation Forum, which will have its first full meeting in July 2008. This body offers something which the OECD does not: it is universal in membership, rather than being a donor club. As a body related to the Economic and Social Council of the UN, it is also accessible to NGOs.
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