On financing for development, we need to lead against the wind - says Joseph Stiglitz

Addis Ababa, 15 July 2015 (ECA) - Participants in a round table on “Regional Perspectives on Implementing an Ambitious, Transformative Sustainable Development Agenda” held on 14 July in Addis Ababa agreed on the world’s need for a major review of the way access to finance, debt resolution and financial risk are being managed at the global level.

Africa has the fastest growth as a continent, but is not happy as this is a growth without quality”, said ECA Executive Secretary Carlos Lopes, stressing that African leaders want a very different take on ODA, which have become very little compared to their ambitions and less than remittances or Illicit financial flows (IFF) coming out of Africa. However, money transfers to Africa remain much more expensive than in the rest of the world, and tax evasion, rent seeking and badly handled negotiations for the extraction of natural resources reduce its resources further.

However, these issues are not specific to Africa: In Latin America, investment is about as much as Illicit Financial Flows  (150 for investment, 160 for illicit financial flows), said Alicia Bárcena, Executive Secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), who also called for the setup of a global debt restructuration framework.

“There has to be movement to improve eligibility criteria for countries, which would take their situations into account”, said Jordanian Minister of Finance Ahmed Fakhouri, describing his country’s struggle to protect its economy and plan the next steps towards the SDGs despite its difficult regional context, one of the highest refugee per capita ratio in the world and severe lack of water.

Jordan is no exception in the Arab world: with 40% of States suffering from conflicts and the original home of half the world’s refugees, Arab countries alone would need USD 650 billion dollars to achieve the SDGs, according to the Economic and Social Commission for Western Asia (ESCWA) Executive Secretary Rima Khalaf.

“We also need to pay a closer look at sub-national governance, as the bulk of the sustainable development agenda is to take place on a sub national level, only there is weak access to finance at this level”, said Shamshad Akhtar Economic and Social Commission for Asia and the Pacific (ESCAP) Executive Secretary.

“The world’s needs for development are enormous: 75 trillion dollars are needed for infrastructure alone”, said Christian Friis Bach, Executive Secretary of the Economic Commission for Europe (UNECE).
For his part, Nobel Laureate Joseph Stiglitz said, “It’s important to have a discussion on these issues, to see how we can facilitate finance so as to manage risk better, enhance development and increase wellbeing in developing countries” and added: “This is a big issue”: while enormous savings are left unexploited because of a glut, important needs for investment, education and the fight against climate change are not being met.

He also stressed that financial markets are very short sighted about risk, and because of market requirements, banks etc. must be short sighted. We need to lead against the wind instead of exacerbating the situation by going in the same direction.

Gathered in the margins of the Financing for Development Conference, the Executive Secretaries of the five UN Regional Commissions (ECA, ECE, ECLAC, ESCAP and ESCWA) and Ministers of Finance from various regions shared their experiences and concerns on how to finance transformative and sustainable development. They also shared their countries’ best practice and lessons learned on how to implement development policies and initiatives to attract additional financing for development, unlock resources to achieve the SDGs, including through innovative financing, channeling private flows in support to sustainable development, addressing tax loopholes and reducing illicit financial flows.

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