Global New Deal (Hansard, 20 May 2002)

§ Mr. Boateng

The Government remain focused on its long-term goal of helping to tackle global poverty and achieve the internationally agreed Millennium Development Goals (MDGs). These include halving the proportion of people living in extreme poverty, providing universal access to primary education, reducing child and maternal mortality and reversing the spread of HIV/AIDS, malaria and other fatal diseases.

To advance these goals the Government are promoting a significant increase in development aid from all donor countries and international institutions to build capacity and address the long-term causes of poverty in the poorest countries. To tackle global poverty the Chancellor has proposed a Global New Deal as a modern Marshall plan for the developing world. As part of the Global New Deal the Government have proposed an international development trust fund to pool contributions and build on the work of the World bank, IMF and the Regional Development banks.

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However, creating new channels for distributing aid would impose unnecessary costs and burdens on developing countries. We therefore believe that any additional aid from the international development trust fund should be distributed in a balanced way through existing bilateral, multilateral and civil society mechanisms used in supporting poverty reduction strategies in developing countries.

No specific target for ratio of overseas development assistance (ODA) to gross national income (GNI) has been proposed as part of the Global New Deal. However, the UK is committed to the target of raising ODA to 0.7 per cent. of national income, and has increased the budget for the Department for International Development by 45 per cent. in real terms between 1997–98 and 2003–04. Moreover, we have made clear that we will significantly raise the amount of our aid, and raise its share of national income, in our next spending round covering the years up to 2005–06.

There are no plans to propose that ODA from all Development Assistance Committee (DAC) donors below 0.4 per cent. of GNI is used to finance an international development trust fund. However, at the meeting of European Finance Ministers on 5 March 2002 the Chancellor of the Exchequer proposed that the European Union (EU) should commit to reach an ODA/GNI ratio of 0.39 per cent. by 2006. At the EU Council Meeting in Barcelona on 15–16 March 2002, just before the United Nations conference on Financing for Development in Monterrey, EU members committed to increase their collective ODA to 0.39 per cent. of GNI by 2006 as a step towards the 0.7 per cent. target. Within this, all member states would strive to attain at least 0.33 per cent. by 2006, with other member states above that ratio maintaining or improving their levels of aid.

Clearly the international community will need to debate how any additional aid flows are used to greatest effect in order to help developing countries tackle global poverty and achieve the internationally agreed Millennium Development Goals (MDGs). To that end the UK has consistently argued that resources should be focused on the poorest countries.

In terms of the prospective accountability of developing countries receiving assistance from such a fund a major step forward has been the establishment of the poverty reduction strategy process. It includes consulting widely with civil society and producing a Poverty Reduction Strategy Paper (PRSP) as a framework for IMF, World bank and other donor support. These PRSP's must be clearly linked to the MDGs and provide a budgetary framework to allocate Government revenue, aid and debt relief so that the impact on poverty reduction is maximised.

The Government believe that any lending conditions must be set so that we never return to a situation where countries build up unsustainable burdens of debt. So the very poorest and most vulnerable countries should receive investment help primarily in the form of grants to partner their soft IDA loans and all other low-income countries should be offered interest-free loans. Assistance to middle-income countries should be given via interest-reduced loans conditional upon implementing agreed poverty reduction strategies and engaging civil society.

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The extent to which an international development trust fund might have to leverage funds from international financial markets would depend on a wide range of factors, including donor contributions, interest rates, the total amount disbursed and the proportions and terms of any grants and loans within that total. If such a fund were to cease dispensing ODA in 2015 the total volume of ODA would then depend on other bilateral and multilateral ODA flows at that time.

The Government have not proposed a separate Global Health Deal but regards achievement of all the Millennium Development Goals in all developing countries as essential to combating global poverty.

Following the 2000 United Nations Millennium Summit, the United Nations is charged with the task of reporting on progress towards the millennium development goals at the global and country levels, coordinated by the Department of Economic and Social Affairs of the United Nations Secretariat and UNDP, respectively. Reporting is based on two principles:

1. Close consultation and collaboration with all relevant institutions, including the United Nations Development Group (including WHO and UNCTAD), other United Nations departments, funds, programmes and specialized agencies, the World bank, IMF and OECD, and regional groupings and experts; and
2. The use of nationally owned poverty reduction strategies, as reported in poverty reduction strategy papers, United Nations common country assessments and national human development reports, which emphasise a consultative process among the development partners.

An annual report is to be submitted by the UN that will chart progress, made or not made, in fulfilling the Millennium commitments, and highlight particular themes of special significance for that year. Every five years a comprehensive progress report will be submitted.