Special high-level meeting of the ECOSOC
with the BWIs, the WTO and the UNCTAD
Statement of Ambassador Shigeki Sumi
Permanent Mission of Japan
April 27, 2009
(Global Financial and Economic Crisis)
1. General Remarks
The financial crisis has evolved into a world-wide economic crisis and is now hitting hard the most vulnerable people around the world. Indeed, this unprecedented turmoil presents the UN system with a moment of truth. The entire world is watching to see whether we can come up with a solution and what we can do for the most vulnerable people and countries. In this regard, my delegation believes that this year's high-level meeting is of special, even potentially historic, importance.
2. Development Assistance
(1) Implementation of ODA commitments
First and foremost, it is crucially important for all donors to honor their existing ODA commitments despite the economic difficulties they face. We must not allow the progress being made toward achievement of the MDGs to be reversed. In this regard, Japan's Prime Minister Mr. Taro Aso declared earlier this year that Japan will strive to continue to increase its ODA despite severe fiscal conditions. Last month, on the occasion of the TICAD Ministerial Follow-Up meeting in Botswana, Japan's Minister for Foreign Affairs, Mr. Hirofumi Nakasone announced that Japan would honor its pledge to double its ODA for Africa by 2012.
(2) Effective and efficient use of financing for development
We have to face the reality that all the sources of the financing for development, be they public or private, are strained because of the crisis. Closer coordination among donors, as well as effective and efficient usage of financing for development, is therefore all the more important. Equally important is enhancement of ownership and capacity development of developing countries. But what is most important is that we take a participatory approach, drawing strength from a wide range of stakeholders from developing countries, donors, and emerging economies to international organizations, private foundations, business sector and civil society.
3. Fiscal and financial measures
In order to achieve the recovery of the world economy, every country should take all fiscal and financial measures. In the case of Japan, in the belief that restoration of our own economic vitality is our foremost responsibility as the second largest economy of the world, the Government has just announced a package totaling about $ 570 billion, which is in addition to the US $ 750 billion stimulus package already being implemented. Internationally, just as leaders agreed in London, it is important that economic policies be conducted cooperatively and responsibly with regard to their impact on other countries.
4. Financial supervision and regulation
We should continue to work toward strengthening international regulation and supervision of the financial sector, including hedge funds and credit rating agencies. It is also important not to retreat into financial protectionism, by introducing measures that constrain worldwide capital flows, especially to developing countries.
Given Japan's own experience with injecting public funding into financial institutions, it is our view that it is necessary to have a clear and objective framework and a rigorous assessment of the assets of any such institution. Also, rescued financial institutions must be required to present a clear roadmap to recovery.
5. International Financial Institutions
(1) Reform of international financial institutions
No institution is without flaws. We are fully aware of the problems and criticism of the international financial institutions (IFIs). It is equally clear, however, that IFIs and multilateral development banks (MDBs) are not the cause of the current crisis. Instead of just criticizing them, we should appreciate the prompt measures taken by IFIs and MDBs in response to the current crisis.
It is important to steadily work towards the substantial strengthening of the IFIs, particularly the IMF. It is equally important for all relevant countries to expedite the conclusion of the amendment of the Articles of Agreement of the IMF that was adopted by the IMF Board of Governors in April 2008 and strengthen its resource base, including through a quota increase, as soon as possible.
Japan supports the governance reform taking place at the IMF and the World Bank. It welcomes the recent decisions on this subject, including the frontloading of the reform schedule. We believe that this reform should be carried out so that the governance structure of these institutions will reflect changes in the world economy. At the same time, it should be carried out in such a way that confidence is maintained in the market.
(2) Provision of liquidity, regional efforts
We cannot overemphasize the importance of a practical and prompt response to the crisis. We disagree with the argument that a new credit facility should be established instead of pouring money into a problematic IMF. As the Economist magazine pointed out, "When the house is burning down, you concentrate on putting out the fire, not on preventing future ones." It is crucial to promptly provide liquidity to emerging economies and developing countries suffering severely from the global credit crunch. It is based on this understanding that the Government of Japan pledged to provide US $ 100 billion to the IMF as early as last November, and signed the lending agreement with the fund this February.
There is no question about the importance of regional efforts. Japan is working hard to treble the resources of the Asian Development Bank, with a view to strengthening its capacity to help Asian countries affected by the crisis, and also contributing to the increased availability of emergency liquidity by strengthening the Chiang Mai Initiative.
6. Fight against Protectionism
Free trade is the very basis for sustained growth of the world economy. Likewise, reinvigorating world trade and investment is essential for restoring global growth. No country should repeat the historic mistake of engaging in protectionism. In this regard, all countries should refrain from raising new barriers to investment or trade in goods and services.
In an effort to facilitate trade by developing countries suffering from the credit crunch, the Japan Bank for International Cooperation has launched a trade finance initiative in cooperation with the Asia Development Bank and the International Finance Corporation that is approximately $ 1 billion in scale. Japan is also supporting environmental investments in developing countries, mainly in Asia. The financial support the JBIC provides under this initiative will be around $ 5 billion over the next two years.
7. Human security
Finally, as an overarching principle, let me stress the importance of human security. The very speed with which the crisis has spread and its ripple effects demonstrate that a wide range of problems are mutually intertwined and relentlessly threaten the livelihood of vulnerable people. This crude reality of today's globalized world attests to the importance of the human security approach.
On the basis of this understanding, which solidified after we witnessed the severe damage inflicted on the people of Asia during the monetary and financial crisis of 1997, the United Nations Trust Fund for Human Security was established in March 1999. In the face of this worldwide economic crisis, all partners and actors should join hands to build societies where people are protected from threats against their lives, livelihood and dignity and are empowered to realize their full potential. This is exactly what human security is all about.
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