2-8 May 2001

Enabling Environment

• The EU agrees with the facilitator that domestic resources are the foundation for sustainable development and that each country carriers primary responsibility for economic development.
  
  
• Effective mobilisation of domestic resources requires a favourable enabling environment. One of the pillars of an enabling environment is good governance and we acknowledge that the Facilitator brought it up with all its implications, for example a political and institutional environment that upholds human rights, democratic principles and the rule of law.
  
  
• Another important area of an enabling domestic environment is a sound macroeconomic framework including for example sound budget priorities for health, education and agriculture/food security; and transparent and accountable public expenditure management and an efficient tax system.
  
  
• On taxes the EU feels that efforts should concentrate on for example expanding the tax base, mitigating its volatility, especially as a result of interest-rate and exchange-rate volatility, improving the tax administration capabilities and providing workable guidelines towards fighting corruption.

Public Finance Management

• The EU would like to stress that national responsibility and accountability in public finance management is crucial for achieving financial stability at the national level and predictability for public spending. This should be accompanied by capacity building and institutional development to create the enabling environment for development in partner countries.
  
  
• An issue where a deeper discussion on substance can be envisaged is financial sector reforms. What reforms are needed to facilitate a pro-business environment? Mechanisms for increased saving and improved tax administrations could be starting points. Other areas of great importance are reforming the banking systems, strengthening the financial regulation and improving the efficiency of financial intermediation. Technical assistance will be important help here.
  
  
• The EU would also request a technical note from the co-ordinating Secretariat of the various ongoing efforts regarding tax cooperation.
  
  
• The EU believes that an important outcome of the FfD process is innovative thinking on how to mobilise domestic resources, in particular on how to involve the informal sector and on how to increase access to financial resources for small and medium sized enterprises to enable increased growth at the local level. Broader thinking on financial instruments for poor people is also necessary, especially in order to improve access to these for women. Expanded and improved micro-finance facilities are only one of many solutions and the EU anticipates a more detailed discussion on this.

Public-Private Partnerships

• A key area, and we are saying it again, is public private partnerships. One important objective of public-private partnerships is to increase the development impact of private investments. Both the public and private sectors together need to explore ways and means to pool resources in partnership in areas and sectors to facilitate the attainment of development goals. It should be explored where public resources can leverage domestic resources in an effective way. Incentives for this needs to be discussed further.
  
  
• The EU would like to again emphasis the participation of the private sector. We are soon reaching the point at which we stop gathering inputs and start turning them into outputs. As private flows increase and we work to create the conditions which would facilitate their direction to development goals, hearing from the private sector becomes increasingly important.

Corruption

• The EU welcomes a comprehensive discussion on a strengthened international framework against corruption and recalls the decision by the GA to start the elaboration of an effective international legal instrument that takes into account existing international conventions. Important steps have already been taken within the United Nations and at the regional level, e.g. the OECD Convention on Combating Bribery. The EU would like to thank OECD for its intervention yesterday which we found very interesting and enlightening. This work could be both broadened and deepened. Work at the international level will support national efforts to curb corruption. Initiatives by civil society organisations, such as Transparency International should also be recognised and encouraged.
  
  
• The EU would kindly request a technical note from the Co-ordinating Secretariat of the various ongoing international efforts regarding corruption.

Technical Assistance

• The EU agrees with the Facilitator that technical and financial assistance for enhanced capacity building is an important step to enable developing countries, in particular the least developed countries, to remove obstacles to development, strengthen their capacity to mobilise domestic resources, build and implement a nationally owned development policy, and to broaden and strengthen their participation in international policy making and in the international trading system. Capacity building needs and appropriate support will need to be defined on a case-by-case basis in the relevant policy areas and by the recipient countries in co-operation with relevant development partners.