Mr Co-Chairman,
During the discussions on Interlinkages the EU elaborated on the issue of enhanced coherence, co-ordination and co-operation which is a central theme under heading VI on Systemic issues. The EU has also proposed and submitted this as a possible theme to focus on in chapter 6 during the substantive preparatory work and it also reflected in the Facilitator's Working paper.
Systemic issues in their broadest sense are essential for the FfD process. One of our major goals is to ensure that the international system as a whole works at its best to ensure the mobilisation of both domestic and international resources for financing development and achieving the international development targets. This will require enhanced coherence, co-ordination and co-operation among all relevant actors at the national and at the international level; and at the policy and operational level in finance/monetary, trade and development related areas. This will also require increased co-operation with civil society and the private sector in the development effort.
At the national level this will require relevant ministries/government agencies and central banks to become more co-ordinated and to increase coherence among themselves when discussing and deciding upon common policy goals and approaches both domestically as well as in the governing bodies of the UN, the IFIs and other international and regional organisations. It will also require the identification of interlinkages between policy making in different areas and modalities for dealing with this.
Equally, it will require closer co-ordination and co-operation between international/regional organisations to enhance complementarity and synergies to ensure the effective functioning of the international system and to avoid overlapping and duplication of tasks.
Efforts at the policy/normative level to increase coherence need to be matched by corresponding efforts at the operational level when implementing policies and country strategies. This will contribute to a more effective use of resources, a decrease in transaction costs, increased ownership by recipient countries of the development process.
Mr Co-chairman,
The EU would like to make some general comments on other themes included in the Faciltator's Working Paper on Systemic Issues: (we have touched on some of them during the discussions on Interlinkages).
As mentioned at the outset the EU is in full agreement with the Facilitator that increased coherence between development, trade and finance is of utmost importance. The EU believes that the UN, in collaboration with other international institutions, provides a useful forum for dialogue on monetary, financial and trade issues from a development perspective. It promotes mutual understanding between international organisations of their respective policies and mandates, without interfering in their respective decision-making processes, and can ultimately lead to greater complementarity in the development effort We also believe that UN could provide a useful forum for a strengthened dialogue with the civil society and the business sector.
EU welcomes an increased dialogue between Finance, Trade and other relevant ministries in key meetings and high-level consultations of ECOSOC and other relevant international institutions. The annual joint meeting between ECOSOC and the Bretton Woods Institutions is an example which could be expanded.. The EU supports a further strengthening of co-operation to enhance coherence between the UN and the WTO. It might be useful to consider the possibility of a joint meeting between the ECOSOC and WTO Governing Council when possible.
The EU recognises the need for broadening and strengthening the participation of developing countries in international policymaking on matters of financing for development at the global level while respecting existing mandates and governance structures of the relevant international organisations. We had the opportunity to touch on this subject during the discussions on Interlinkages.
The EU has already stressed that capacity building is relevant in most areas of the FfD-agenda. In this context we would like to point at capacity building as an important step to enable developing countries, in particular the least developed countries, to broaden and strengthen their participation in international financial policy making and in the international trading system.
The EU believes that international bodies with restricted membership must make a broad outreach and consult the authorities with relevant expert knowledge in other countries. This is important not only for how the decisions are perceived but also to ensure that the adopted principles will be universally applicable. Based on the results of this work, bodies with restricted membership should co-operate with relevant bodies with global membership.
The EU welcomes the ongoing reform efforts by the governing bodies of the international institutions to help make those institutions more responsive to the challenges of globalisation and development, more accountable and transparent. As mentioned in our statement at the opening session we were very encouraged to note during the discussions between BWI:s and ECOSOC last week that the engagement by the BWI:s in the development agenda and in the FfD-process is steadily increasing. A true dialogue between the institutions should be encouraged to continue.
The EU believes that the risk for global financial panic is best addressed through preventive action.
The EU agrees that it is necessary to deepen national, regional and international efforts to improve surveillance, early warning, prevention and response capabilities for dealing with the emergence and spread of financial crises in a timely manner. We believe that that IMF lending should remain a catalyst for financing from other sources, in particular the private sector. Since official resources are limited, there is a need for clearer framework for private sector involvement in the resolution of financial crises. There is also a need for improved dialogue between the IFI:s and the private sector on these issues.We welcome the ongoing work in IMF in its attempts to involve the private sector.
Increased transparency by all actors including the private sector is crucial to enable the international institutions to make more comprehensive assessments of the financial situation in individual countries through multilateral surveillance, and thus to contribute to the prevention of future financial crises. The EU supports the efforts to prevent volatility of capital and financial crises, through for example increased co-operation on information and statistics compilation, that is being undertaken in various forums. Countries should continue their efforts to improve data collection, dissemination and transparency. This will give all parties, including credit rating agencies, a better basis for assessments.
One example of preventive measures is the application of agreed financial codes and standards. The EU considers that the implementation of codes and standards is a vital part of the reform of the international financial architecture. While the timing of implementation of agreed codes and standards can to a certain extent depend on a country's stage in development, standards should neither be weakened when securing wider endorsement and implementation, nor applied selectively. We welcome the progress made towards integrating codes and standards into regular IMF surveillance as an important step towards improving transparency and preventing financial crises. We also welcome the number of reports on the observance of standards and codes that have been published, and stress the need for improved market awareness of the process. Codes and standards will only work effectively if the private sector – including rating agencies – is aware of them and the information they provide.
In response to the question of symmetry in multilateral surveillance we would like to clarify that the surveillance carried out by IMF is already symmetrical. IMF is conducting article IV consultations and provides recommendations to all countries, also developed countries.
Finally, Mr Co-chairman,
The EU welcomes increased international co-operation on tax matters within the framework of existing institutions. We had the opportunity to elaborate on this issue during our discussions on Domestic Resources. /Thank you.