Your Excellency, Mr. Nursultan Nazarbayev, President of the Republic of Kazakhstan,
Honourable Presidents and Prime Ministers,
Your Excellencies,
Distinguished International Experts,
Ladies and Gentlemen,

1. I have the honour to deliver this statement on behalf of the Group of 77 and China.

2. At the outset, I would like to extend my sincere thanks to the organisers of this Conference for inviting me, in my capacity as Chair of the Group of 77 and China, to participate in this high-level event. At a personal level, I wish to thank you, President Nazarbayev, and through you, the people of Kazakhstan for the warm reception and hospitability extended to me since my arrival in your beautiful city.

3. I would also like to commend President Nazarbayev and his country for organising this important world conference. I am honoured to participate amongst a group of eminent political leaders, Nobel Prize Laureates, prominent international experts, and so many distinguished participants at this special event with the key objective to address the problems of the global financial system and consider proposals for a quick and sustainable recovery from the ongoing world financial crisis.

Mr. President,

4. Five years after the eruption of the global financial crisis, the world economy's growth prospect is still very fragile. According to the latest EU statistics released by EUROstat, nine members of the European Union are currently in recession, including France. It is of concern that the essential tools of fiscal stimulus are not being carried out in the developed countries to recover from the recession. Instead, pro-cyclical fiscal austerity measures are generally implemented across the Euro zone. Even though there is value in reinstalling prudent fiscal discipline, evidence indicates that austerity measures applied across affected countries have led to contracted economies which dampened demand, employment and other social indicators. This poses a grave threat to recovery as well as growth and long-term development. On the other hand, expansionary monetary policies and currency devaluations adopted by developed countries have also adversely impacted developing countries, taking into account their effect as an equivalent of across-the-board export subsidies and a generalized increase in import tariffs, thus nullifying or impairing existing market access commitments.

5. While developing countries did not cause the latest financial crisis, they are nonetheless severely affected by its adverse consequences that threaten their economic and social progress achieved during recent years, leading to increased poverty and inequality. Because of the limited scope of their economies, many developing countries are unable to implement appropriate fiscal measures to mitigate the adverse impacts of the crisis, further hindering the capacity of developing countries to achieve many internationally agreed development goals, including the Millennium Development Goals.

6. In the face of uneven and unpredictable forces, developing countries need to maintain their right to development through policy space and strategies based on their unique social, political, economic and environmental conditions. The increasing interdependence of national economies in a globalizing world has accentuated once again the importance of strengthening the role of the United Nations in global economic governance as well as a need to strengthen coordination within the United Nations system in close cooperation with all multilateral, financial, trade and development institutions in order to promote sustained economic growth, poverty eradication and sustainable development.

7. The United Nations, particularly the General Assembly, provides a truly universal and inclusive multilateral forum for dialogue and norm-setting, which is the basis for its legitimacy and confers incomparable value to its discussions, its negotiated agreements and to the UN's operational activities. In this regard, the UN General Assembly and a strengthened Economic and Social Council (ECOSOC) could both act, in collaboration with the UN Funds and Programs and specialised agencies to assist national governments of developing countries to mitigate the impacts of the world financial crisis. It is encouraging to know that discussions on the role of the United Nations in global economic governance is currently taking place in New York. The Group of 77 and China will be actively engaged in the negotiations for a resolution on the same subject in the General Assembly this year. We also call on the UN to convene a follow-up meeting, as soon as possible, on the 2009 UN Conference on the World Financial and Economic Crisis and its Impact on Development.

Mr. President,

8. The latest world financial crisis has underscored that the existing institutional arrangements and financial architecture have proved to be inadequate in addressing global financial crisis. It is clear that the international financial and monetary systems in the context of global public authority need urgent deep-set systemic reform to make them more effective, transparent and legitimate. The Group of 77 and China has repeatedly called for a viable model of international financial architecture, one that reflects the realities of the 21st century, and gives developing countries an increased voice and representation in global economic governance. It is important that efforts to reform the international financial architecture be internationally coordinated and should lead to the full participation of developing countries in international financial and economic decision-making and norm-setting.

9. The Group of 77 and China reaffirms its support for a comprehensive reform of the Bretton Woods Institutions including the enhancement in the voting powers of developing countries in a time-bound manner which would give greater equity between developed and developing countries. It is of concern that despite some positive progress, the 2010 IMF governance reforms continue to await ratifications by some key IMF members. Their support to the current reform process is much needed. Moreover, the Group also calls on the IMF and World Bank to give serious consideration to revising their respective governance structures on a periodic basis, in order to make incremental and continuous advances towards a more universal and thus legitimised institution, where the voice and participation of developing countries is guaranteed.

10. Within the international monetary system, the Group of 77 and China believes there are two key areas that require systemic reform. These are the reserve system and global imbalances. Mounting reserve accumulation in developing countries constitutes a perverse net flow of resources from developing countries to the developed countries. This practice is very costly both in terms of global imbalance and in social costs on a national level. Instead of allowing these resources to sit dormant in low-yielding assets, primarily on US Treasury bills and bonds, which currently have record-low interest rates, they could be used for productive investment and development financing in developing countries domestically. Policy actions are required to reduce the reserve needs of developing countries in order to address the insurance-based nature of the current reserve system, which creates wide global imbalances between surplus and deficit countries.

11. One of the most feasible ways is to move away from the current reserve system anchored to the US dollar, to a reserve system based on a composite international currency, such as the Special Drawing Right (SDR). SDRs are a valuable boost for developing countries because they can be converted into hard currency to be used as governments determine without conditions attached. However, their potential role has been limited by the fact that general allocations are done according to the 'quotas' which determine voting power at the IMF and are based on the economic size of member countries, resulting in most of the SDRs going to wealthy countries because they have the biggest quotas and largely control the IMF. The Group of 77 and China is of the view that SDRs should be allocated according to a 'needs-based' formula, using objective criteria such as development indicators and relative poverty levels to allow the SDRs to distribute the benefits of reserve creation more broadly across the globe.

Mr. President,

12. The international community must realise that no recovery can be achieved and no path to growth can be construed or fostered with unsustainable debt overhang. This message was stressed by the Prime Minister of Fiji as Chair of G77 and China at the UN debt sustainability conference in New York last month. Sovereign debt management has been a crucial issue for developing countries, both as a cause for concern in past decades and as a strong point in more recent years due to the activities of vulture funds. Recent examples of vulture funds' actions in international courts have revealed their speculative and profit-seeking nature. These vulture funds pose a serious risk for all future debt-restructuring processes, both for developing and developed countries. The Group of 77 and China believes that vulture funds must not be allowed to paralyse the debt-restructuring efforts of developing countries, and that these funds should not supersede a State's right to protect its people under international law.

13. As pointed out by my Prime Minister, when the market-based, ad hoc contractural approach to working out government debt is insufficient to deal with debt crises, thereby leading to cascades of litigation and causing ripple effects throughout the debt market, the preferred option should be a human-rights approach. This approach calls for a fair, human-centred and development-oriented mechanism to assist governments facing sovereign debt problems to fulfil their sovereign duty to respect their people's right to development. Accordingly, the Group of 77 and China would also like to use this occasion to reiterate its support for the setting up of an independent international system of debt arbitration, in which countries facing risks of debt distress can have recourse to a debt standstill. Such a system would facilitate debt workouts with burden-sharing procedures.

Mr. President,

14. It is important for us to raise our collective understanding of the root causes and impacts of the financial crisis in order to equip decision makers with appropriate policy responses at the national, regional and international levels. I have spoken at length about the deficiencies of the international financial system and have suggested a few policy responses. Let me now make a few brief comments on the domestic front.

15. At the national level, developing countries should review their development strategies to see if they are still appropriate or whether changes are needed to respond to the changed international situation. For developing countries, it is time to seriously consider alternative development strategies when the prevailing business-centred development model does not lead to sustainable and inclusive growth, particularly when the ongoing financial turmoil has shown how neglecting the right to social security has resulted in millions of people worldwide being mired in poverty. We must reflect on the appropriateness of the prevailing development paradigm and consider suitable regulation to ensure that markets will complement efforts of states towards achieving inclusive sustainable development. In this regard, government responses to the financial crisis must be people-centred and pay special attention to the needs and vulnerabilities of the weak and marginalised members of society. Rights to development with a human face must feature prominently in tackling the financial crisis.

16. Lastly, I wish to share with you that Fiji, as the Chair of the Group of 77 and China, hosted a High-level Panel of Eminent Personalities of the South on 7-9 May 2013. The objective of the three-day meeting was to map out the future landscape of South-South cooperation. The meeting acknowledged that South-South cooperation is playing an important role in helping many developing countries to address the multiple and complex development challenges. The meeting also emphasised that the common endeavour of the South should not be seen as a replacement for North-South cooperation. At the global level, South-South cooperation requires adequate and structured financial and institutional support, including the political will of the developed countries to honour their Overseas Development Assistance commitments.

Mr. President,

17. On behalf of the Group of 77 and China, I wish the VI Astana Economic Forum and World Anti-Crisis Conference a great success!

Thank you!