H.E. Mr. Celso Lafer
International Conference on Financing for Development
To finance is to give credit. But not simply in the narrow sense of those who provide loans. The word “credit” is derived from the Latin “credere”, which means “to trust”. In any financing relationship, the bridge that links the present to the future is trust. Here in Monterrey we seek to lay out the foundation for strengthening the bonds of trust that will allow us to deal with the future in a constructive manner.
This conference has the fundamental goal of conveying to our societies
the unequivocal commitment to provide a new impetus to development.
It is self-deluding to believe that the invisible hand of the market will solve this problem. The socioeconomic system in our countries must be inclusive and respond to the cries and urgent needs of the less fortunate. The Declaration that we will sign constitutes an important step towards reaching a balance between macroeconomic goals and social ends and establishing the foundations for a real and new “growth pact”, in which financing for development is a crucial element.
Each government must accept its responsibilities. Adequate national policies are part of the answer, but they alone are not enough. There must also be good governance at the international level.
During the 1990s, the inflow of capital to developing countries more than doubled. The proportion of total private capital inflows received by developing countries rose from 11.8%, in 1991, to 14.4%, in 1997. Since then, however, this figure has dropped precipitously, down to 7.6% in 2000.
The seriousness of this situation, which stems from a mistaken perception of risks, should not be underestimated. The global economy’s ability to grow and recover depends largely on restoring the vitality and predictability of financial flows.
A consistent growth of the so-called “emerging markets” would have significant effects worldwide because they have the largest potential for growth of consumption anywhere in the global economy.
For the countries that are not completely integrated in the international market, the “growth pact” should be based on solidarity and support from the more developed world.
The decision of the United States and the European Union to increase resources for development assistance is a positive step. Nevertheless, only very few countries have met the target of allocating 0.7% of their GDP to ODA.
To restore confidence, it is also essential that the international community attain a sense of “ownership” for the plan that we are announcing here today. In order to achieve that, we need to democratize the international decision-making process, particularly on issues concerning the international financial system. The allocation of resources in international organizations no longer corresponds to the realities of today´s world. It is hence necessary to improve the role of developing countries as members of international financial institutions like the IMF in order to correct this imbalance. Monterrey should strengthen the multilateral governance arrangements, which are the only ones that are truly capable of dealing with the uncertainties and instabilities that threaten our collective ability to fight poverty.
We should also strentghen our mechanisms to prevent and manage crisis
situations. All countries should be able to rely on predictable and
supportive advice from international financial institutions and should
not be left on their own when crisis occur. Delaying response to crisis
situations raises unnecessarily the risks at stake and renders solutions
more difficult. Argentina is doing the utmost under extremely difficult
social and economic conditions to stabilize her economy.Important measures
have been put in place. There is no justification to delay any longer that
support. The sooner it comes the better will the Argentine government be
in a position to pursue the path of stabilization it has already been following.
The Doha Round presents an extraordinary opportunity to eliminate unacceptable distortions that still persist in global trade. The world cannot continue to watch passively as the agricultural sectors of the developed countries are given vast subsidies amounting to over $1 billion per day displacing a significant amount of agricultural export products from countries that need funds to finance their development, and distorting international trade in a manner that is deeply unfair, with sometimes dramatic social consequences.
Here in Monterrey, the United Nations has recovered the ground towards building a broader engagement to mobilize funds for development. Absolute poverty and the international insecurity that arises out of it have added urgency to a permanent task.
Our response must involve a wide range of mechanisms in order to restore a network of confidence, with the engagement of governments, businesses, and other economic actors that have the ability to generate the substantial funds needed to finance development.
I would like to finish quoting a famous Mexican poet, Alfonso de Reyes, who by the way also was a diplomat and lived for a few years in my country, in Rio de Janeiro. In Sol de Monterrey (Sun of Monterrey), Alfonso de Reyes made a beautiful and plastic description of the sun we can all today enjoy in this beautiful city: “(...) despeinado y dulce, claro y amarillo: ese sol con sueño que sigue a los niños”. Just as the sun of Monterrey is a sun of dream, but a sun that nevertheless follows children in their way to adulthood, influencing the course of their lives, I am confident that this conference will change in a definite manner the way our countries engage in the search for development, leading developed and developing countries towards a more human and more responsible future.
Thank you very much.
Statements at the Conference