Wednesday, July 8, 2009

International Financial Institutions need to reform policies

Kaieteur News news item, Wednesday 08 July 2009 - "International Financial Institutions need to reform policies" -

…developing countries need a bigger voice at developed world - Jagdeo

By Gary Eleazar

Head of State Bharrat Jagdeo

Head of State Bharrat Jagdeo

The International Financial Institutions need to reform their policies as to give a louder voice to the developing countries such as the ones in the Caribbean Community according to Head of State Bharrat Jagdeo, who was speaking to regional and local journalists during the recently concluded CARICOM Heads of Government Meeting.
The President drew reference to a recent request to an IFI for an official to meet with the regional heads.
He said that the IFI wanted to send two junior representatives instead. “I would not allow that to happen,” said Jagdeo
According to Jagdeo developing countries are given the cold shoulder by IFIs given that they did not generate a significant part of global output or global investment. Further, their populations are small.
This, the President said, causes developing countries to experience a difficult time seeking to command high level respect in the multi lateral financial institutions. “We don’t pose systemic risk.”
The president said that developing countries must now lead a demarche in a bid to get larger countries that are sympathetic to the views of developing countries to push the developing countries’ agenda.
This, he said, must be a reform of the IFI polices in order to facilitate greater accommodation.
He noted, too, that the reform must also be extended to the instruments through which the IFIs relate to the developing world.
The president was referring specifically to loan and grant instruments with the appropriate conditions and figures.
He noted however that in the absence of the reforms CARICOM would have to mobilise internal resources pointing to the significant reserves currently being held outside of the region.
According to President Jagdeo there would have to be a policy aimed at addressing the investment of the reserves.
There must be sovereign decisions given that the reserves are held by individual countries.
He noted that if those reserves are invested in “our” country ensuring that it is safe and liquid, “then I think that we can use our own resources to develop our region…these are substantial resources.”
The President said that the region will have to do things to make the region much more attractive to investment from non-traditional sources.
He added that the region has to not only seek to depend on North America and Europe for development, but to other large countries that have significant funds. “Take for example the Arab world and their sovereign wealth funds.”
He noted, however, that given the current global financial debacle, assistance through bi-laterals might not be forthcoming in the short term and as such; the developing world has to look to the IFIs to try to trigger the quick flow of the money that was pledged at the recent G-20 meeting.
Only recently, Finance Minister Dr. Ashni Singh speaking at the United Nations (UN) Conference on the World Financial and Economic Crisis and its Impact on Development last Wednesday, said that developed countries should be held accountable for their failure to honour aid commitments.
Dr. Singh also highlighted the fact that the interconnectivity of the world is undeniable and stressed the need for uniform action by all parties to combat the pervasive nature of the global financial and economic crisis.
Addressing the forum, Dr Singh stated his appreciation for the promises made by the G-20 countries to increase the resources available for relief to countries in distress through the International Monetary Fund (IMF) and the multilateral development banks (MDBs), noting that similar previous promises have gone unfulfilled.
“If the past were to be our guide, there has been no shortage of declarations of good intent. One merely has to consider as an example, that longstanding target of 0.7 percent of gross national product as official development assistance from developed to developing countries, an undertaking of the United Nations General Assembly that is four decades old next year, three and a half decades overdue, innumerable times reaffirmed, and still nowhere in sight of being realized.
“The same can be said of the worthy objectives of the Paris Declaration and the Accra Agenda for aid effectiveness.”
Also, reforms to conditionality have been slow, aid continues to be fragmented and donors uncoordinated, Dr. Singh said.
He said that the success of efforts to restart the global economy will depend largely on the promptness with which the additional support promised by the G-20 countries is delivered to the MDBs, the comprehensiveness and depth of the reforms to the instruments for delivering assistance and ultimately, the actual receipt and effective utilization of the intended support by the countries most in need.
Dr. Singh noted that at this time one-sixth of the world’s population is undernourished, more persons than ever before in human history, and a situation exacerbated by the current crisis.
In the Caribbean, export prices for key commodities are affected, oil prices remain high and are climbing again, activity in the tourism sector which is the dominant employer in many countries is reduced, foreign direct investment is slowed, and remittance inflows are threatened.
Noting that the Guyana Government has been responding with policies aimed at implementing an accelerated public investment programme particularly in enabling physical infrastructure, promoting labour intensive economic activity, facilitating diversification and improving competitiveness in our productive sector, and expanding and deepening social programmes, said Dr. Singh.

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