On November 29, 2008, the United Nations will hold a conference at Doha, Qatar as a “follow up” to the Conference for “Financing for Development” held six years ago at Monterrey, Mexico.

The conference (March 18-22, 2002) was convened to address key financial and development issues faced by developing countries. According to the conference’s consensus document, a firm agreement was reached to “eradicate poverty, achieve sustained economic growth and promote sustainable development.”

The Monterrey event was a star studded with 50 heads of state or government participating in it.

The significant features of the Monterrey accord were: a truly global consensus, unveiling the blueprint of a new partnership, anchored on shared responsibility of developed and developing countries for achieving development goals including the Millennium Development Goals (MDGs).

The accord laid down a six-point agenda of action: (a) domestic resource mobilisation for development, (b) international resource mobilisation (FDI and other private flows for development, (c) substantial pro-poor liberalisation of international trade, (d) improving international financial and technical co-operation for development, (official development assistance), (e) resolving problems of external debt, and (f) addressing important systemic issues germane to financing for development.

According to the latest World Bank study, no less than 1.4 billion people are now living in extreme poverty (revised poverty line: $1.25 or less per day) as compared to 1.9 billion 25 years earlier. The reduction in poverty has been uneven across regions but it has been dramatic. Poverty may increase in the current global economic slump and greater efforts are needed to halve it by 2015.

Domestic resources: The Monterrey Consensus stated: “…a critical challenge is to ensure the necessary internal conditions for mobilising domestic savings, both public and private, sustaining adequate levels of productive investments and increasing human capacity.”

In the years following the Monterrey accord, many developing countries have made significant progress in key areas of their economies by adopting sound macroeconomic policies, building pro-development institutions and thereby contributed to an increased mobilisation of domestic resources.

Substantial progress also took place in many countries in establishing a congenial investment climate. Good governance including combating corruption played an important part in this success. However, a large number of countries have not been so successful. Something needs to be done by the world community for this group of vulnerable nations. Others need to focus, in particular, on building institutions for structural change and better performance of economies and societies.

Private capital flows: These flows have assumed great importance for developing countries during the last 20 years, reaching a record level of $647 billion in 2006; but the poorest 51 countries were recipients of only eight per cent of total capital flows.

Pro-active strategies need to be introduced to make the process more inclusive by provision of appropriate incentives and guarantees by affluent countries to their entrepreneurs.

Liberalisation: Unfortunately, the Doha Round of trade negotiations has again collapsed, dashing to ground hopes for a better tomorrow for low-income countries. Against this somber backdrop, it is imperative to renew the commitment to reach an accord in these talks. What is required is an approach, anchored on long-term enlightened self- interest by industrial countries and pragmatic flexibility by leading developing countries.

Financial and technical cooperation: Since the Monterrey Conference, there has been a significant turnaround in the overall volume of aid flows. Official Development Assistance (ODA) in real terms (on current prices) doubled between 2001 and 2007. But a significant part of this increase consisted of one time grants for debt relief. The increase in ODA due to this reason has ceased to be available and therefore, a real decline has occurred in aid stream now at $103.7 billion, registering a fall of 8.4 per cent in real terms.

Some donor countries have made encouraging ODA commitments e.g. European Union for 0.56 per cent of gross national income (GNI) by 2010 and 0.7 per cent by 2015. Equally important is the aid targets by the G-8 countries, envisaging an increase in their ODA to $130 billion by 2010. The full implementation of these targets is vital to realisation of the millennium development goals of halving the level of extreme poverty by 2015.

Owing to the global financial crisis, donors are now facing extreme pressure. It is important that they avoid making cuts in aid budgets.

Debt relief: Debt servicing liability for a considerable number of low and middle-income countries is still too high. The existing international debt resolution mechanisms, including the Paris Club, should ideally guarantee equivalent and just treatment of all creditors and debtors but owing to a number of constraints, they cannot do so.

It is necessary to improve the international financial mechanisms for debt crisis prevention and resolution. The partnership principle of Monterrey demands that debt resolution is regarded as a joint responsibility of debtors and creditors.

Systemic issues: Despite efforts, progress in strengthening global governance has proved so far inadequate. Many fundamental changes in the governance regime of the global economic and financial institutions are needed. The G-20 nations in their meeting at Sao Paulo, a few days back, have advocated overhaul of the IMF and the World Bank. Among other things, greater efforts need to be made to enhance the voice and participation of developing countries on the IMF and the World Bank boards.

Specifically, changes should be made in the governing law of these institutions to prevent one member with the largest amount of votes (quotas/shares) to block the will of other shareholders.

Doha will be an important opportunity to review the progress of journey started at Monterrey. There have been some encouraging achievements and some lags and setbacks. Lessons must be learnt and journey should continue with greater zeal.