NEW YORK, March 23 (IPS) – This week, exactly 20 years ago, world leaders adopted the United Nations Monterrey Consensus. They are committed to “Facing Development Finance Challenges” with a global response and creating an inclusive and equitable global economic system.
Consensus includes the critical recognition that in a globalizing interdependent world economy”National development efforts should be supported by a favorable international economic environment“. This is the birth of the United Nations Funding for Development (FfD) process, which is now – 20 years after its inception – more important than ever.
The Covid-19 pandemic has exacerbated the core issues that Funding for Development was designed to address, including soaring inequality both within and between countries and genders, and lack of public resources to combat poverty and finance sustainable development.
The pandemic follows a decade of skyrocketing public and private debt globally. It increased debt vulnerability in most countries, leading to the highest level of global debt in half a century. More than half of low-income countries are or are at risk of falling into poverty.
Very limited fiscal space, particularly in the global south, is undermining prospects for addressing key challenges such as the climate crisis and the achievement of the Sustainable Development Goals. The pandemic is also a stark reminder of why truly global solutions are needed to address key economic challenges such as large-scale international tax evasion and illicit debt and unsustainable.
The 20th Anniversary of Funding for Development is an important time to remind governments of the commitment they have made in providing such solutions.
For example, world leaders in the Monterrey Consensus emphasized that: “To promote fair burden-sharing and reduce moral hazard, we welcome consideration by all stakeholders of the international debt settlement mechanism, in appropriate forums, to engage debtors and creditors coming together to restructure unsustainable debts in a timely and efficient manner“.
A global debt settlement mechanism – under the auspices of the UN – remains a central part of the solutions that civil society organizations are calling for. So why do we still not have such a mechanism to this day – 20 years after Monterrey?
The hard fact of the matter is that the ambition and will to cooperate, which governments demonstrated in Monterrey, began to fade shortly after the summit. In particular, developed countries continue to discuss economic issues at non-inclusive forums such as the G20, OECD and the Paris Club, where most developing countries cannot participate equally.
In the years that followed, many complementary government initiatives, groups, and forums continued to take shape and replicate in the capitals of wealthy nations around the world. In Orwellian style, forums outside the United Nations are sometimes named as “global forums” or “inclusive frameworks”. But global is exactly what these forums don’t.
The United Nations remains the only body in which all nations can participate on a truly equal basis, and developing countries have repeatedly called for it to be the place where global economic governance takes place. Ironically, rich countries often respond to these calls with the argument that this would be a duplication of processes taking place in non-inclusive bodies.
The hard lessons that led to the Monterrey Consensus are still valuable, which is that non-inclusive decision-making leads to an incoherent, unfair and inefficient global economic system and contests. unending political power between nations. And although the impact of the breakdown of global economic cooperation is hardest to feel in developing countries, the cost is being paid by people around the world.
A good example of the cost of failed cooperation is international taxation. Hundreds of billions Every year dollars are lost to the public budget due to the blatant failure to prevent large-scale tax avoidance by multinational corporations and wealthy elites.
The most recent changes to global rules – including new minimum corporate tax rules – were made possible by the so-called “Inclusive Framework” led by the OECD. Again, this leads to an outcome that is not only ineffective, but also includes a strong bias against interests of the poorest countries.
More than a third of the world’s countries have never participated in the OECD-led negotiations, and four of the developing countries that have joined have decided not to support it. Result document. Global tax administration is also currently facing a very familiar problem, as it seems impossible to achieve anything nearly universal with the implementation of the new rules.
The result will be a global tax system that continues to be a patchwork of thousands of bilateral and multilateral treaties, various standards, and a range of more or less innovative unilateral tax solutions. In other words – an inefficient mess that will continue to cost countries billions of dollars due to international tax evasion and lack of fairness.
Especially given the effects of the Covid-19 crisis, it’s clear that this is unsustainable. A number of specific proposals for equitable and inclusive global solutions to these problems have been tabulated. This includes civil society proposals specific to a debt settlement mechanism and a United Nations Tax Conventionthat build ancient call of developing countries.
What we need now is the political will, and especially the richest countries need to show the will to really cooperate in a truly inclusive forum.
As we mark the 20th anniversary of the Monterrey Summit’s collaborative spirit, civil society organizations are call attend the Monterrey+20 Summit on Financing for Development to negotiate and adopt global solutions to face development financing challenges.
The spirit of Monterrey is the will to engage in truly global collaboration to address the economic and financial challenges we face. It’s high time to bring that spirit back.
Pooja Rangaprasad as Director of Policy, Funding for Development, Association for International Development (SID); Tove Maria Ryding is Tax Justice Coordinator, European Debt and Development Network (Eurodad)
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