FINANCIAL RESOURCES AND MECHANISMS: Savitti Kunadi opened Working Group I's consideration of Item 4, "Financial resources and mechanisms" (E/CN.17/1994/10). Kenneth Ruffing of the Secretariat introduced the documentation on financial resources. Dr. Lin See-Yan reported on the ad hoc intersessional working group on finance. Discussion focused on access to and mobilization of finances and innovative financing. He asked the delegates to: strengthen the capacity of international financial institutions; draw up a matrix of the optimal mix of instruments for each of the sectoral clusters; and allow the working group to continue its work. Japan reported on the preparatory meeting on finance, which it co-sponsored with Malaysia. The GEF representative reported on the progress of the GEF in: evaluation of its pilot phase; restructuring; and replenishment. He noted that the Council will hold its first meeting from 12-14 July 1994, in Washington, DC. The World Bank reviewed its role in funding Agenda 21 implementation, noting that there has been a shift from borrowing for industrial projects to borrowing for environmental projects.
Financial Commitments: The G-77 and China expressed concern that while developing countries joined the global partnership for sustainable development on the explicit understanding that additional resources would be provided, this aid has not been forthcoming. Japan noted this frustration, but commented that it has tried to keep funding high. The Nordic countries called for renewed efforts to close the gap between the goal of 0.7% GNP and present levels of aid. France noted that it hopes to reach this goal by 2000. Korea recognized the need for ODA, and announced that it will contribute $5.6 million over two years to the GEF.
More Efficient and Prioritized Aid: The G-77 and China are concerned that the call for reordering of priorities or greater efficiency in use of aid are attempts to divert attention from the provision of aid. The EU, the US and Australia mentioned the importance of increased effectiveness in the use of aid. The EU, the US and the Nordic countries suggested prioritizing aid towards the least developed countries. The Nordics also noted that a stress on effectiveness does not take away from the importance of the volume of aid. The EU suggested that reduced military expenditures would free domestic resources.Germany stated that increased public and private savings are indispensable resources for development. Germany and the UK called for sound pricing policies and removal of subsidies.
Matrix of Policies: The Nordic nations support the development of a matrix of options for financing sectoral issues. Canada suggested that efforts to develop a matrix should be made in the national planning process.
GEF: Japan suggested the GEF play a more important role as the financial mechanism to fund Agenda 21 activities. Korea hopes that transparency and democracy in decision making at the GEF will improve. Hungary noted that regional and subregional banks are also important.
Trade: The EU noted the benefits expected from the completion of the Uruguay Round. Colombia stated that trade is a key element to achieve the objectives of sustainable development. The G-77 called for enhanced access to markets and better terms of trade. India noted that trade liberalization and other measures will take time and more immediate concerns should be addressed here.
Foreign Direct Investment (FDI): The EU noted that FDI flows are at record levels, due in part to the increased attractiveness of developing countries for investment. Morocco noted that African nations are not among the significant recipients. Sri Lanka also voiced concern that the ability to attract investment varies between sectors and among countries.
Debt Relief and Swaps: Japan thinks debt relief is a second best solution, and that it is better to encourage self-help efforts. The UK pointed out that banks will be less willing to lend in the future if they are forced to cancel debt. Poland has established a fund for the management of debt swaps and has found them to be an effective tool for environmental protection.
Innovative Financing: Tradeable permits, emission taxes and air travel taxes were among the innovative methods discussed. Poland informed the delegates about its National Fund for Environmental Protection and Water Management. Brazil joined others in noting the need to examine new funding mechanisms closely. Egypt announced that it was tabling a proposal for a panel of experts to study innovative financing. Australia pointed out the importance of community-based, participatory initiatives. Pakistan proposed emission taxes be levied on non-renewable resources. Japan agreed that this method is promising in the long-run. Venezuela cautioned that the burden of implementation should not fall on energy producing nations.
Consumption and Production Patterns: Korea suggested using economic instruments to change these patterns. Sri Lanka suggested using the media to change priorities. Brazil suggested that this issue be added permanently to the agenda of the working group on finance, and noted that resources saved by developed countries could be channeled into aid for developing countries.
Intersessional Work: Korea believes that increased participation of experts in the <W2I>ad hoc<D> intersessional working group on finance is important. Morocco recommended the continuation of this group. Japan, the US and France found expert or informal seminars beneficial. Colombia said finance should be discussed within the context of the CSD. Morocco expressed concern that developing countries cannot afford to attend all informal seminars.
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