Financing forDevelopment

On 22 March 2002, Heads of State gathered in Monterrey, Mexico, to “address the challenges of

financing for development around the world”, particularly for developing countries, at the first International

Conference on Financing for Development.

What are the major challenges of Financing for Development at the national and international level?

Leading Actions

• Mobilizing Domestic Resources

• Mobilizing International Resources

• International Trade

• International financial Cooperation

• External Debt

• Addressing Systemic Issues

Mobilizing domestic FinancialResources

Countries with extreme poverty adopt and begin to implement, no later than 2006, a national development

strategy bold enough to meet the Millennium Development Goals by 2015

Mobilizing international resources

A high proportion of foreign direct investment should be directed to low-income countries and foreign direct

investment’s positive contribution to their development should be ensured

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Net resource transfers Foreign direct investment

DESPITE HIGH LEVELS OF FDI, NET RESOURCE TRANSFERS HAVE BEEN

NEGATIVE FOR 7 CONSECUTIVE YEARS

NET TRANSFER OF FINANCIAL RESOURCES FROM THE DEVELOPING

TO THE DEVELOPED WORLD

Net outward transfers of financial resources have been increasing steadily in developing countries since 1997 and

reached an estimated $350 billion in 2004.

The net outward resource transfer from developing to developed countries is usually considered to have a negative impact on domestic growth since the net export of goods and services

reduces the resources available for domestic consumption and investment.

The improvement in net private flows, while substantial was not sufficient to offset the net outflows.

This negative transfer is partially reflected in a record increase in international reserves.

International Trade as an engine for development

Recognizing the links between trade, development and finance, a more open, equitable, rule-based, predictable, non-discriminatory and equitable multilateral trading system is critical to exploiting the potential of trade to act as a source of financing for development.

Increasing international financial and technical cooperation

Official Development Assistance is increasing in nominal terms but more needs to be done to increase assistance to ensure the financing required to attain the Millennium Development Goals.

 OFFICIAL DEVELOPMENT ASSISTANCE PLEDGES AND REALITY

2004

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Average Aid

agreed target

Debt Sustainability

Three decades of debt crisis has engulfed most of the world’s developing countries at the cost of millions of lives.

“Allow countries to meet MDGs

by 2015, without

accumulating unsustainable

debt ratios.”

Secretary-General

External Debt- Foreign Debt Service Payments In Billions Of US$

Foreign Debt Service Payments

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Africa Cen Eur

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Addressingsystemic issues

Enhancing the coherence and consistency of the international monetary, financial and trading

systems in support of development

Create the political will to enhance developing countries’ sense of

responsibility and domestic ownership of their own development

by providing them with a more equitable voice and participation in

the institutions that take the decisions that affect their development prospects.