On their way home from the spring meetings of the IMF and the World Bank, ministers of finance and development stopped in New York City for a day-long session with UN delegates, senior officials, and executive board directors from international organizations (including the UN, the IMF, the World Bank, the WTO, and the UN Conference on Trade and Development) and with representatives from civil society organizations and the private sector. With the aim of bolstering “coherence, coordination, and cooperation” among international agencies and other development partners, the delegates used small, interactive roundtables to address three topics: the effect of private investment and trade-related issues on financing for development, the role of multilateral institutions in reaching the MDGs, and debt sustainability and debt relief.
Investment, trade, and aid
In their discussions of private investment and trade-related issues, delegates emphasized the benefits that better market access for developing countries can confer on efforts to reach the MDGs. Participants broadly welcomed the IMF’s recent establishment of the Trade Integration Mechanism (see IMF Survey, May 17, page 135) and generally expressed support for the IMF’s review of the fiscal treatment of infrastructure and public-private partnerships. They agreed that higher saving and investment, more efficient use of resources, and greater private sector development are needed in developing countries if they are to reach the MDGs by the target date of 2015. Delegates also reiterated their call to developed countries to meet their official development assistance target of 0.7 percent of gross national income and asked all development partners to increase aid effectiveness.
Debt sustainability and debt relief
In their discussion of debt sustainability, delegates made it clear that sustainable debt was not an end in itself but an essential element in realizing the growth needed to reduce poverty and achieve the MDGs. Indeed, many speakers suggested that debt sustainability assessments should specifically take into account how countries can achieve the MDGs.
Concern was also expressed about the debt sustainability challenges facing middle-income countries, with several delegates suggesting that debt sustainability assessments ought to take account of the financing needs of the private as well as the public sector.
There was also substantial support for the IMF’s efforts to strengthen crisis prevention measures as a means of bolstering debt sustainability. It was useful, in the view of many participants, to have a comprehensive crisis prevention strategy that included consistent macroeconomic, financial, and monetary policies, as well as adequate sources of domestic financing. Strong domestic institutional frameworks were also needed to avoid the potentially costly impact of corruption on debt sustainability.
There was strong support for debt relief under the enhanced Heavily Indebted Poor Countries (HIPC) Initiative, as well as for IMF-World Bank efforts to develop a debt sustainability framework for low-income countries. Many delegates made a case for allowing all eligible countries to benefit from the HIPC Initiative and urged that the initiative be extended beyond its scheduled expiration date of end-2004. Participants also urged creditors to deliver on their debt-relief commitments.
Multilateral institutions and the MDGs
Many delegates in the roundtables saw Poverty Reduction Strategy Papers (PRSPs) as central to country-owned efforts to reduce poverty, but they also acknowledged that more needed to be done to clarify the relationship between PRSPs and the achievement of the MDGs. A number of participants also favored exploring alternative sources of financing to help achieve the MDGs, including an international financing facility and global taxation mechanisms.