Make international financial system responsive for poverty reduction

The Press Trust of India, - India has called for making the international financial system more responsive to the needs of developing countries to enable them to meet the Millennium Development Goals for poverty reduction.

Addressing a United Nations committee Wednesday, Indian delegate Raghunath Jha expressed concern that net transfer of resources to the developing countries remained negative for the seventh year in succession reaching "alarming" level of 248 billion dollars last year and net inflow of Foreign Direct Investment (FDI) fell to its lowest levels since 1996.

Besides, official flow from multilateral development and financial institutions continued to decline. And there is a significant shortfall in the Official Development Assistance compared with the commitment made by developed nations at the Monterrey conference, he said.

"The increases in ODA, thus far, are mostly reflected in debt forgiveness, crowding out the development aid," he added.

Stressing that economic growth depends on the rate of investment, Jha said without achieving higher rates of growth, the developing countries would not be able to meet the Millennium goals or other commitments.

In this context, he said, effective surveillance to promote stability through enhanced resilience of countries to economic shocks and markets is the key crisis prevention. Another important dimension, Jha said, is the development of multilateral financial institutions' facilities in contingent situations to help countries which are otherwise well managed but might face potential problems.

"This will infuse confidence in the market and minimize the contagion risks arising out of imperfect and uncertain private market flows," he added.

Copyright 2004 , 13 october, The Press Trust of India