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Permanent Mission of the Republic of the Philippines to the United Nations
Thank you for giving me the floor.
The Philippines joins others in thanking Antigua and Barbuda for delivering the G-77 and China statement. We would also like to align ourselves with the ASEAN statement delivered by Indonesia.
I am sure that the general tenor of all the statements delivered today share the same basic ideas – that the current financial crisis is of such a severe nature and that coupled with the other crises on fuel, food and climate change - many, if not all, countries will face economic difficulties in the near future. Further, these grave challenges must now force us to use the upcoming Doha Review Conference on Financing for Development not only to review implementation of the Monterrey Consensus and call for meeting commitments, but also as a possible starting point to discuss and restructure the global financial architecture.
These key concepts will be reported to capitals and I am sure a growing consensus is building in the developing countries to push this expanded agenda. We must however be cognizant of the various complexities surrounding current developments, and be ready to make haste slowly. In other words, while it is correct to try and seek ways to avoid a repetition of this perfect economic and financial storm in the future, there is much homework to be done and the Philippines believes that, just as in many other instances we are familiar with in the United Nations – there will be no ‘one size fits all’ solution.
Thus, while there is a political imperative to support a change in the system in Doha next month, we may find that there will be resistance to change and the debates will be long and tedious.
The Philippines believes that the main points of contention will revolve on the following general issues:
First, there is a widespread call for better regulation of global financial markets – however, what is not so clear is what body is in the best position to oversee this function. One ready answer would be in the call for reformed Bretton Woods Institutions (BWI), and the recent Development Committee Communique issued on 12 October 2008 seems to support this role for the World Bank Group and the IMF. The IMF, in particular, has been faulted to having had no role in preventing this current financial crisis, but considering the provenance of the turmoil and amounts of money involved, it is doubtful that the IMF had the capacity to do anything in the first place. Which brings us to the main argument –is the current system amenable to reform that could address the new financial market realities? If not, what new framework could fill this gap?
Second, the current financial crisis is still unfolding, and the measures that have been taken are what economists would call part of the containment phase – where confidence is first restored in the financial system. The next more difficult phase – the resolution stage – is designed to restructure financial institutions and corporations, and its long-term success depends on having chosen the right containment policies in the beginning. At this point, while some calm has returned to the markets because of the drastic actions taken by governments around the world – some experts point to instances where policy measures such as substantial liquidity support and government guarantees of financial institutions’ liabilities, have in fact, been fiscally costly and may not have contributed to a speedy economic recovery. Indeed, some delegations here have pointed to the apparent ‘double standard’ through which past policy recommendations have been ignored with the justification that this is a totally different situation. Perhaps this can be explained by the fact that economic theory is often trumped by political reality, and therefore, we do not know if the measures taken today are actually the best prescription for this illness.
Finally, Madam Chair, and perhaps most unfortunately for developing countries, the question that all of us here are supposed to be addressing but that is in fact in danger of being the biggest casualty of these crises, is the impact on financing for development.
There are studies that show that after experiencing financial crises, donors tend to reduce the amounts of Official Development Assistance extended to developing countries. This refers not only to assistance given by the government, but also to assistance given by private companies and individuals through civil society organizations, which is some cases is even bigger that the official aid given by their governments. This effect is a logical product of having to tighten one’s belt during difficult times, the unfortunate consequence being less money for assistance outside one’s borders. This real possibility confronts us at a time when ODA was already shrinking during a time of relative global growth.
Thus, while the Monterrey Consensus was agreed upon as a result of the real need six years ago to solidify international aid commitments to developing countries, we stand here today faced with a troubling reality. If aid commitments were not realized when times were good, what assurance do we have that they can be met now? Can we focus on certain chapters of the Consensus to make up for a loss of ODA?
The reality under which the Draft Outcome Document was first negotiated is very much different from the developing reality that is still unfolding. Our discussions here in New York now, and not in Doha next month, provide us the opportunity to reflect and affect the future outcome. The Philippines joins all like-minded delegations in trying to ensure that FfD remains a discussion on Financing for Development and that it does not become a Financial Failure Debacle.
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