STATEMENT ON BEHALF OF THE GROUP OF 77 AND CHINA BY MR. GARFIELD BARNWELL, PERMANENT MISSION OF GUYANA TO THE UNITED NATIONS, ON AGENDA ITEM 17: MACROECONOMIC POLICY QUESTIONS; AND AGENDA ITEM 18: FOLLOW-UP TO AND IMPLEMENTATION OF THE OUTCOMES OF THE INTERNATIONAL CONFERENCES ON FINANCING FOR DEVELOPMENT (New York, 8 October 2020)
Good Morning, Mr. Chairman and other Representatives at the Head Table. With protocol already established.
I have the honour to deliver this statement on behalf of the Group of 77 and China.
At the outset, the Group would like to thank the Secretary-General, UNCTAD and DESA for the reports submitted under agenda items 17 and 18, which will enrich our deliberations on the relevant issues under consideration.
As developing countries embark on implementing the 2030 development agenda maintaining macroeconomic stability has been acknowledged as necessary to reduce the level of poverty in many developing countries. From country experiences over the past six months as a result of the impact of the COVID19 pandemic on the global and national economies it has been demonstrated that when a typical demand policy for stabilization is not effective, its impact on poverty has been devastating on the incomes of the poor that have declined significantly with falling output.
The current crisis require responses that looks way beyond the capacities of existing multilateral and international financial institutions like the IMF and the World Bank, even though these institutions are kept fully involved in the search for solutions. Indeed they and central bank governors are expected to take the lead in coordinating policy changes affecting key financial instruments like interest rates, exchange rates and foreign reserves policies of national governments.
There are growing concerns over the inability of many governments to minimize the impact of the COVID19 pandemic and the increasing anxiety over the likelihood of a protracted depression that drives the coordinated global effort to utilize monetary, fiscal and trade measures to stimulate global growth. Monetary measures have taken the form of reduced interest rates and the stimulation of bank lending. Global interest rates are now at record low levels.
Fiscal measures have taken the form of both tax cuts and expanded spending by governmental authorities. The International Financial Institutions (IFIs) have concentrated on increased availability of funding for social, infrastructural, and poverty programmes in developing countries though the issue of concessionality and conditionalities are still of concern.
Added to those listed above, are the crucial linkage between the economies in many developing countries and that of the rest of the world is created by the exchange rate regime and .the growing problems of debt, debt service payments and the call by developing countries for debt relief.
In this regard, the Group reiterates the urgency to strengthen global solidarity and multilateral cooperation to tackle the global economic slowdown and to help developing countries to increase liquidity and mitigate debt risk
Attempts have also been made to ensure that trade measures, under WTO-guidance have been coordinated to ensure that countries do not restrict imports or subsidize exports in an effort to confer preferment or advantages to their domestic producers. Such policies are called 'beggar thy neighbour policies' and were major contributory factors to the prolongation and depth of the Great Depression of the 1930s.
Another channel through which these adverse effects will be felt is investment in developing countries. This takes a myriad of forms: First, what is called 'official assistance' (aid in the form of grants and/or loans and technical assistance) will likely be curtailed.
A second type of investment flow that will be affected is direct investment in developing economies. This will come about partly because of the economic recession in the rich developed economies, and also as a result of proposed policy changes governing investment outflows from the rich countries.
In some ways the most disheartening consequence of the current health crisis and their spill-over to the financial and real sections of the economy has been to put on the back-burner of global attention, three very crucial global emergencies.
The first of these is related to the problem of poverty, nutrition, hunger, homelessness, and deprivation that the Sustainable Development Goals have targeted for global eradication.
The second is the issue of climate change and the global commitment to secure inter-generational equity, through preserving the sustainability of the natural environment for future generations.
A third variety of these problems relate to investment, which will be affected, that is the flow of investment funds from the diaspora back home. Many professional firms, services outlets and retail establishments in developing countries are financed by the diaspora. Such inflows are predicted to diminish as the recession in the rich developed countries intensifies.
Another type of investment which will be affected in many developing economies is securities holdings.
In concluding and in the context of the challenges facing the poor countries greater consideration should be given to their demands for national policy space to meet their situations. By this is meant adequate opportunities for national policies to combat the crisis, which could be implemented without prejudice or sanction from the international community.
I thank you, Mr. Chairman.