Financing for Development: A Progress Report on the Implementation of the Monterrey Consensus...
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Transcript of Financing for Development: A Progress Report on the Implementation of the Monterrey Consensus...
Financing for Development: A Financing for Development: A Progress Report on the Progress Report on the
Implementation of the Monterrey Implementation of the Monterrey Consensus Consensus
Meeting of the Committee of Experts of the 3rd Joint AnnualMeetings of the AU Conference of Ministers of Economy andFinance and ECA Conference of African Ministers of Finance,
Planning and Economic Development
25-28 March 2010, 25-28 March 2010, Lilongwe, Malawi
Current status of Current status of international financeinternational finance
• The current financial system is characterized by instability and highly uneven distribution of capital
• African countries require adequate and long term capital flows to sustain growth capable of reducing poverty
Hence the importance of monitoring the
implementation of Monterrey Commitments
Approach and MethodologyApproach and Methodology
• Analysis of the 6 core areas of Monterrey • Domestic resource mobilization• International resource mobilization• International trade• International assistance• Debt relief• Systemic issues
• With the comparison of two periods:• Pre-Monterrey (1995-2001)• Post-Monterrey (2002-2008)
• Analysis of trends in recent years
Economic Performance in Economic Performance in AfricaAfrica
• Africa has experienced 6 years of strong growth mainly driven by robust global demand and high commodity prices
• Growth accelerated in all African sub-regions in the post-Monterrey period
• However, the global financial crisis has pulled growth trend down to 2% in 2009
Post-Monterrey growth rate: World: 3.2%Africa: 5.7%
Pre-Monterrey growth rate: World: 3.1%Africa: 3.6%
Domestic resource Domestic resource mobilizationmobilization
• Savings followed an upward trend in the post-Monterrey period
• In 2009 however this positive trend was interrupted and Africa experienced a sharp drop in savings
• Tax ratios in Africa are still too low and 11 African countries still raise less than 15% of GDP in taxes
• Structural constraints and the effect of the financial crisis pose a serious challenge to increased government revenues
Post-Monterrey Savings ratio: 24.5%Investment ratio: 22.9%
Pre-Monterrey Savings ratio: 18.3%Investment ratio: 19.8%
International resources International resources mobilizationmobilization
• FDI rise sharply between the two periods, with the most noticeable increase in North Africa
• Year-on-year drop in FDI of 67% is noticed in the first quarter of 2009
• Uneven distribution of FDI across countries and sectors
• Remittances have been steadily increasing but contracted in 2009.
Post-MonterreyFDI (current USD): 26.8%FDI (% GDP): 5.3%
Pre-Monterrey FDI (current USD): 10.1%FDI (% GDP): 2.7%
International tradeInternational trade
• African exports have experienced an upward trend after Monterrey, particularly driven by commodities
• Drop in global demand resulted in a drop in Africa’s exports in 2009
• Narrow export base, with declining share in global trade
Post-MonterreyExport (%GDP): 36.3%Growth in exports: 9.5%
Pre-MonterreyExport (%GDP): 29.4%Growth in exports: 7.3%
International assistanceInternational assistance
• ODA to Africa has increased sharply in the post-Monterrey period
• However the target of 0.7, confirmed at Monterrey, is still out of reach
• Aid quality should be improved• Innovative sources of financing have developed
and many initiatives have emerged
Post-Monterrey
ODA (Billion USD): 20.5
Pre-Monterrey
ODA (Billion USD): 10.3
Debt reliefDebt relief
• Both as a percentage of GDP and of exports, debt has declined since Monterrey
• 21 African countries reached the completion point under the HIPC Initiative
• However sustainability remains a problem, due to new borrowings associated with the shocks of 2008
Post-Monterrey
Total external debt (%GDP): 38.1
Pre-Monterrey
Total external debt (%GDP): 64.8
Systemic issuesSystemic issues
• Progress in the area of systemic issues has been disappointing
• Despite its size, Africa has too little voice in international institutions such as WB, IMF and WTO and at the G20
• Africa’s specific needs should be taken into account in the current debate on reshaping the international financial architecture
ConclusionConclusion• Progress has been made in all areas but systemic
issues, during the post Monterrey period, particularly in:• International resource mobilization• Debt relief
• However there is room for improvement in:• Domestic resource mobilization (low tax ratios
below the 15% GDP threshold in various countries)• Foreign aid (donors still not on track on the 0.7%
GNI and on aid quality)• International trade (lack of diversification)• Systemic Issues (Africa needs to achieve more
effective participation in decision-making and norm-setting in international financial and trading institutions)
Policy RecommendationsPolicy Recommendations
Need to adopt a more proactive approach in implementing Monterrey, particularly by:
• Strengthening institutional framework including financial markets
• Stepping up technical support and training for national capacity building
• Increasing Africa’s voice and representation
• Harmonizing national, regional and international efforts and pursue policy coherence
• Implementation of the Paris Declaration and Accra Plan of Action on Aid Effectiveness
Thank You!Thank You!
www.uneca.org