The Hindu Business Line : Left calls for reform of multilateral institutions

UNITED NATIONS: CPI has called for reform of multilateral institutions to ensure “full'' participation of developing countries so as to achieve “genuine'' coordination to effectively meet global financial crisis.

“Clearly, in the global economic realities of today, traditional responses involving select developed countries cannot deliver the results,'' CPI national secretary and Member of Parliament, Mr D Raja told the financial and economic committee of the UN G eneral Assembly on Monday.

Stressing that a comprehensive reform and democratisation of the 'Bretton Woods Institutions' (International Monetary Fund and World Bank) are indispensable, Mr Raja told the delegates that the reform must enhance the voice and participation of developin g countries in these institutions.

“The steps taken so far have been inadequate, and must be intensified,'' he said and called for the UN overseeing the process of reform given its “unique role and legitimacy.''

Referring to the current global financial crisis, he urged the developed nations to take effective steps to ensure that their commitments on financial front to the developing countries are not diluted.

In fact, Mr Raja said many developing nations would need additional international support to address the impacts of the financial as well as food and energy crises.

In this context, he reminded the rich that the crises did not originate in the developing nations but are likely to feel its impact through overall slowdown in the economic growth.

Even before the onset of the current financial crisis, Mr Raja stressed, developing countries did not enjoy an international environment conducive to development.

“While there has been an increase in private capital flows into developing countries, as recent developments have underscored, not all such flows were stable, pro-development,'' he added.

For more than a decade now, he said, there has been an increasing net transfer of financial resources from developing to developed countries and last year, it amounted to $0.8 trillion.

He said private flows are not attracted towards social sectors and other development related sectors and not all investment flows have fostered commensurate linkages. In addition, the international community appears to be “paralysed'' by a steadily decl ining trend in Official Development Assistance flows, which remains crucial for many countries, he emphasised.

“It is of grave concern that most donors are not on track to meet their commitments. We believe that a thorough review of these issues, under the Development Cooperation Forum of the Economic and Social Council of the UN, is urgently required,'' he told the delegates.

Referring to the debt situation of poor nations, Mr Raja agreed that there has been some improvement but emphasised that several low income countries have current account deficits and their international reserves are well below the level of their short-t erm debts.

The debt relief was not additional to other forms of aid, he said, adding that instead, it was “erroneously counted'' as Official Development Assistance.

He called for finding solutions to the financing needs of the developing countries, particularly low income states, if the Millennium Development Goals are to be achieved.

In this context, he suggested measures such as creating an international debt commission, to redress the problem of developing country debt, but any new mechanism must include effective participation of developing countries. - PTI

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