Daily Archives: April 13, 2019

UNDP Development Chief Calls for Action on Debt, Climate, & Inequality As Developing Countries Face Volatile Global Outlook

13 April, Washington DC �Increased financing and bold leadership are needed urgently to tackle climate change, rising inequality, and surging debt, as increased risks and vulnerabilities threaten economic growth globally, said United Nations Development Programme (UNDP) Administrator Achim Steiner at the World Bank and International Monetary Fund (IMF) spring meetings today.

We still have a global financial and economic system that is not responding to the needs for the scale and type of finance that is required for sustainable development, he said in his statement on behalf of the United Nations, to the 99th Meeting of the Development Committee. He also emphasized this during the Meeting of Finance Ministers and Central Bank Governors of the G20, where he represented the UN. Bold climate action could trigger US$26 trillion in economic benefit by 2030, create more than 65 million jobs, and help 700,000 people avoid premature death. We need smart policies and investments now to bridge growing gaps not just in income, but in dignity, opportunity, and quality of life.

By 2050, financing transition to a low-carbon and climate-resilient economy will require investment of at least US$60 trillion. Steiner said that public finance clearly won’t be enough and it must be leveraged to mobilize more private finance.

He repeated these sentiments at the launch of the Finance Ministers Coalition for Climate Action, hailing their leadership and highlighting their central role in supporting national climate strategies. We do not have to choose between economic prosperity and action on climate. Both are possible. Just consider the breathtaking innovation and transformation in our energy and mobility sectors.”

Steiner also addressed the looming debt crisis many developing countries face. IMF-World Bank analyses find 40 percent of Least Developed Countries (LDCs) and low-income countries face debt distress or high risk of debt distress, particularly Sub-Saharan Africa.

Against the above backdrop, there is need for a comprehensive policy and programmatic support to the LDCs to ensure enhanced debt management and sound macroeconomic policies but also importantly, bringing development financing to scale, said said Steiner at a Ministerial Breakfast for LDCs. As an international community, we need to leverage our global presence, partnerships, knowledge and expertise to ensure that the countries we serve do not fall back into debt crises. Steiner reiterated these themes in his statement to 39th Meeting of the International Monetary and Financial Committee saying, Developing countries as a group have become more exposed to global finance. While this has provided much-needed access to finance, it has also left them more vulnerable and susceptible to contagion.

He also spoke about the need to address soaring inequality in a number of areas, Inequalities are prevalent in access to quality education, health, and technologies as well as vulnerability to shocks, among other areas. We also see persistent gender disparities across the world. Inequality limits people’s choices and opportunities and engenders political and social tensions and global inefficiencies.

This year, UNDP’s Human Development Report will focus on the critical issue of inequality in human development.

UNDP, as part of the UN Development System, advocates for leveraging existing or potential funding flows�internal, external, public, or private – to meet LDC needs. It also prioritizes advocacy for increased Official Development Assistance as catalytic funding for countries that need it the most including LDCs.

To help governments mobilize domestic resources, the OECD-UNDP partnership Tax Inspectors Without Borders Initiative, which held its board meeting on the sidelines of the spring meetings, assists countries in building tax audit capacity. It has so far supported some 50 programmes globally – 24 in Africa alone – mobilizing more than US$400 million in domestic revenues.

He emphasized during the G20 meeting the potential of innovation in financial technologies to advance inclusion and sustainability, referring to the on-going work of the UN Secretary-General Digital Financing Task Force of the SDGs, which he co-chairs. He concluded his message to the G20 noting that progress towards the 2030 Agenda is the path not only to improve living standards and protect our planet, but also to ensure human security.

Streamlined, strengthened cooperation

Alongside the Spring Meetings, UNDP and the World Bank signed two landmark agreements April 12 to strengthen and streamline cooperation.

The World Bank is a critical partner for UNDP, Steiner said. In the last two years, our vital partnership in Yemen has created emergency employment for 344,550 people, helping 2.4 million people from vulnerable households across the country buy essentials to survive and nearly 3.4 million access goods and services, such as water, food, health care, education, and roads.

UNDP and the Asian Development Bank (ADB) also signed a five-year memorandum of understanding to accelerate progress towards sustainable development in Asia and the Pacific.

Source: United Nations Development Programme

Politics Aside, Algeria Faces Huge Economic Challenge

PARIS The tens of thousands of protesters who have taken to the streets for an eighth straight week aren’t the only crisis roiling Algeria. Helping to drive the unrest in Africa’s largest nation�and posing a serious challenge to any future government� is the economy.

Two months of mass demonstrations continued Friday, as Algerians pushed for a broader overhaul of the country’s system, despite elections set for July 4 by newly appointed interim leader, Abdelkader Bensalah. The protests have been largely peaceful, although there were some clashes reported this time along with scores of arrests, and police used water cannons and teargas in the capital Algiers.

Bensalah, clear off, FLN clear off, protesters chanted, referring to Algeria’s ruling party.

But many are also calling for a fundamental reboot of the country’s ailing, energy dependent economy that has failed to diversify and deliver jobs to its majority-young population. The unrest, in turn, is adding to Algeria’s economic headaches, analysts say.

The economy is not in good shape, said Paris-based Algerian analyst Alexandre Kateb. The protests are the last straw, but the economic problems go deeper than that.

Critics have long accused a power elite surrounding former president Abdelaziz Bouteflika of mismanagement and corruption, arguing a large chunk of the wealth is pocketed by a privileged minority. But for years, Algeria’s oil- and gas-rich economy served as a salve for a restless nation, helping to bankroll housing and other social subsidies.

It may be one explanation, some say�along with the country’s devastating 1990s civil war�why the broader Arab Spring uprising of 2011 failed to take off in Algeria.

Falling oil prices

But plummeting oil prices several years later helped to thin wallets and sharpen grassroots anger. Today, more than one-quarter of people under 25 are unemployed, and many Algerians work in the country’s vast informal sector. Successive governments have failed to privatize and capitalize on promising sectors for development such as tourism and agro-industry.

Earlier this week, the International Monetary Fund downgraded the country’s 2019 forecasted growth to 2.3 percent, from a previous 2.7 percent last October.

The main motivation is still political, analyst Kateb said of the protests. But if the economic situation was better, probably the momentum would be less important. We would not have seen the magnitude of the protests that we see now.

In the immediate future, Algeria’s economic woes may take a back seat. Besides the popular uprising at home, the current rulers must also keep an eye on regional hotspots, including neighboring Libya.

From an interim government perspective, it’s just about maintaining stability and avoiding any real crisis beyond where we are at the moment, said Adel Hamaizia, a North Africa expert for London-based think-tank Chatham House.

But whoever comes in really has to finally lead an ambitious economic program,” he added, “which helps Algeria realize its potential, develop an independent private sector, diversify, and attract investment on the correct terms.

Those challenges are daunting. The ruling National Liberation Front or FLN party, in power since independence, has had little incentive to change a status quo that benefited them, many analysts say. Algeria’s business climate has been a turn-off for foreign investors. A case in point: a rule stipulating 51 percent of company shares must be owned by in-country nationals or businesses.

Although energy production continued to chug on during Algeria’s so called black decade of violence in the 1990s, further growth stalled. When he came to power in 1999, Bouteflika was credited for ushering in peace. At the beginning, analyst Kateb said, the former president also tried to reform the economy.

I think he really wanted to give more freedom to entrepreneurs, he really tried to privatize the system, Kateb said, adding subsequent financial scandals and the global financial crisis ended hope for change.

Inertia and bureaucracy

Kateb, who later served as an economic advisor to ex-prime minister Abelmalek Sellal, said subsequent reform efforts also stalled.

If you don’t change the whole functioning of the system, he said, whatever you do at the margins will be completely absorbed by this inertia and black hole of government bureaucracy.

If July elections go through as planned, Algerians will be strongly pushing for economic deliverables.

I’m sure the many of the slogans are going to be centered around anti-corruption, inclusive growth, economic justice, diversification, and job creation, said Hamaizia of Chatham House.

For the moment, there appear few clear candidates to champion such causes. Both the country’s ruling FLN and traditional opposition parties are largely discredited in the eyes of many Algerians.

Earlier this week, however, the interior ministry announced licenses for 10 new political parties, Reuters news agency reported, citing Algeria’s Ennahar TV channel.

Analyst Kateb believes the country needs a technocratic government to steer through needed changes, at least over the next few years.

He believes there is no lack of talent to staff it, both in Algeria and abroad, where thousands of young professionals have flocked in recent decades for lack of opportunities at home.

Now they’re not really considered, Kateb said, and this has to change.

Source: Voice of America

Cholera surges, children in urgent need one month after Cyclone Idai slammed southern Africa – UNICEF

One month after Cyclone Idai devastated parts of Mozambique, Malawi and Zimbabwe, the United Nations Children’s Fund (UNICEF) appealed to the international community to help some 1.6 million children still reeling from its impact.

Children living in crowded shelters or away from their homes are at risk of diseases, exploitation and abuse, said Henrietta Fore, UNICEF Executive Director, who visited Mozambique’s busy port city of Beira immediately after the cyclone hit.

Citing one million children in Mozambique, followed by more than 443,000 in Malawi and 130,000 in Zimbabwe, UNICEF said that the needs of children remain massive, including for healthcare, nutrition, education and water assistance.

Since the cyclone hit Mozambique, cholera has surged in to 4,600 cases and malaria to 7,500 cases.

UNICEF said that any prolonged interruption to essential services could lead to disease outbreaks and spikes in malnutrition � where children are especially vulnerable.

The road to recovery will be long, asserted Ms. Fore. It is imperative that humanitarian partners are there every step of the way.

According to the UN Children’s Fund, over 200,000 homes were destroyed in Mozambique alone and because the storm demolished crops just weeks before the harvest, food security is precarious.

Meanwhile, as thousands of people remain in evacuation camps, UNICEF expressed particular concern over the more than 130,000 displaced children, mostly in Mozambique and Malawi.

We need to help children and families survive and then get back on their feet, stressed the UNICEF chief.

To support its humanitarian response for children and families affected by the storm and its aftermath in Mozambique, Zimbabwe and Malawi over the next nine months, UNICEF has launched an appeal for $122 million.

UNICEF response actions to date include:

Mozambique: Providing vaccines to immunize 900,000 people against cholera; distributing 500,000 mosquito nets to protect against malaria; and helping to restore Beira’s water supply for 500,000 people.

Malawi: Providing safe water to more than 53,000 people and toilets to over 51,000 people; in evacuation centres, provided child friendly spaces, water trucks, toilets, medicines, recreation kits and volunteer teachers.

Zimbabwe: Providing over 60,000 people with information to prevent waterborne diseases; distributing hygiene kits; rehabilitating water systems; restoring sanitation facilities; providing vital health and nutrition supplies; and, with partners, delivering psychosocial support to vulnerable children in child-friendly spaces.

Source: United Nations

Deadly Protests Erupt in Mogadishu Over Killing of Rickshaw Driver

At least five people were killed Saturday in Mogadishu during violent demonstrations staged by hundreds of drivers, who took to the streets of the Somali capital to protest the killing of a driver of a tuktuk, or motorized rickshaw, as well as road closures that hinder the city’s movement.

The protesters burned tires and chanted slogans against government security forces. Demanding justice and freedom for their businesses, they shouted, “Down with the civilian’s killers!”

At least two protesters were wounded as security forces tried to disperse them, witnesses said.

It was not clear whether the demonstrators were shot by police trying to contain the violence or by private security guards from local firms and businesses trying to protect their properties.

Most of the protests occurred near the main Bakara market on the south side of the city, while just a few kilometers away, the country’s parliament was debating the security situation in the capital.

Criticism of security forces

Opposition lawmaker Mahad Mohamed Salad, an outspoken government critic, accused the security forces of mishandling the protests and killing innocent civilians.

“A driver and a passenger and at least three other people who were protesting were killed by security forces. They were shot by the same security personnel who were meant to protect them,” Salad said.

The last few years, motorized rickshaws have virtually monopolized public conveyance in the city because of their mobility and the fact Mogadishu’s major roads have been closed by government soldiers to prevent al-Shabab car bombs.

Over the last three years, security forces have killed more than 20 tuktuk drivers in Mogadishu.

More than 20,000 young people directly or indirectly depend on the tuktuk business, said Mohamed Abdi, 19, a tuktuk driver. “If the government does not solve the challenges we face, our last resort might be forcing it in some way or another,” he said.

Another protester, Ali Nur, 22, was among hundreds of Somali migrants who were repatriated to Mogadishu from Libya months ago. He said this business was the only opportunity available to him, although it is dangerous and even deadly.

“We constantly face soldiers holding their guns improperly, and sometimes they aim their guns at us,” he said. “In several cases, they pull the trigger as they conduct security checks, killing an innocent tuktuk driver.”

Promise of justice

To try to calm the protesters, Mogadishu Mayor Abdirahman Omar Osman promised the government would bring the killer to justice.

“We are very sorry for what has happened and we promise that we will bring the soldiers who carried out the shooting to justice, and the same time figure out how to facilitate your businesses without compromising security,” the mayor said.

The Mogadishu drivers shared videos on social media that show their challenges, including government soldiers blocking the city’s main roads, as well as other soldiers who they say extort money from them.

But Saturday’s protests erupted after one such video showed a government soldier, who was manning one of the city’s security checkpoints, fatally shooting a young driver and a passenger.

The reason for the shooting was still unclear, but in prior shootings, government security officials have accused the young drivers of ignoring soldiers’ warnings and helping al-Shabab assassins to escape.

Source: Voice of America

39th Meeting of the International Monetary and Financial Committee

A dynamic and inclusive global economy is central to achieving the Sustainable Development Goals (SDGs). It is critical to address not only short-term risks – financial stress and volatility, high debt levels, escalating trade disputes and geopolitical tensions – but also longer-term sustainable development challenges, including tackling inequalities and climate change.

We still have a global financial and economic system that is not responding to the needs for the scale and type of finance that is required for sustainable development. Decisive policy action is needed to mobilize sufficient finance, including climate finance, and to align incentives with the imperative of advancing sustainable development, including by enabling a shift towards longer-term investment horizons.

In order to give visibility to these challenges and the collective action required to address them, the United Nations will seize the opportunity of a series of high-level events in September, including the SDG Summit, the High-Level Dialogue on Finance as well as the Climate Action Summit and looks forward to collaborating with the IMF.

Global Economic Growth Prospect

According to the United Nations World Economic Situation and Prospects 2019, global economic growth is expected to remain steady at 3 percent in 2019 and 2020, after expanding at 3.1 percent in 2018.

Whereas economic growth accelerated in more than half the world’s economies in 2017-18, it has been uneven across regions and countries. Economic activity continues to expand rapidly in most parts of East and South Asia, while in Africa, Latin America and the Caribbean, and Western Asia (home to half of the people living in extreme poverty) per capita GDP growth is on average significantly below 1.5 percent. While a modest recovery is projected in 2019, per capita incomes are still likely to remain stagnant or grow only marginally, impeding efforts to advance sustainable development. In particular, in the majority of least developed countries (LDCs), per capita GDP growth is significantly below levels needed to eradicate extreme poverty.

There are also increasing signs that global growth may have peaked. Since the beginning of 2018, the growth in global industrial production and merchandise trade volumes has been slowing. Growth forecasts have been revised downward, due in part to the negative effects of trade uncertainty and weakening financial market sentiment. At the same time policy uncertainty persists on multiple fronts, downside risks to growth forecasts remain high, and surveys show an overall weakening in business and consumer confidence.

Increased Risks and Vulnerabilities

Increasing downside risks and vulnerabilities threaten the sustainability of economic growth and the achievement of the SDGs.

Public debt has risen in many countries. Some middle-income countries are experiencing debt levels last seen during the debt crises of the 1980s. 40 percent of LDCs and other low-income countries are either in or at high risk of debt distress. Debt vulnerabilities in developing countries exist not only because of higher levels of debt, but also increased risks from a shift in debt composition, including variable interest rates and greater reliance on commercial debt. A more prominent role of non-traditional creditors and market-based financing also presents new challenges for debt crisis resolution.

The rise in public debt has been accompanied by an increase in corporate debt, particularly in middle-income countries. Further increases in global interest rates could create concerns for financial stability and in many cases for public debt sustainability as private liabilities often become public during crises. While debt levels in the majority of developing countries remain sustainable, the rise in the number of countries in or at high-risk of debt distress demands the attention of global policy makers.

Developing countries as a group have become more exposed to global finance. While this has provided much-needed access to finance, it has also left them more vulnerable and susceptible to contagion. The protracted period of abundant global liquidity and low interest rates in the aftermath of the 2008 crisis has fueled a potential build-up of financial fragilities across both the developed and developing economies. Despite the financial market corrections seen in 2018 and early 2019, high-risk behaviour remains a concern in global financial markets.

Heightened trade tensions also pose a significant risk to the global growth outlook through several channels, including a slowdown in investment, higher consumer prices and a decline in business confidence.

As fiscal and monetary policy space has narrowed considerably across the world, any crisis or external shock could have severe and long-lasting implications for growth and socioeconomic conditions. Countries with large macroeconomic imbalances and high levels of external debt are particularly vulnerable.

Opportunities for Financing Sustainable Development

Mobilizing sufficient financing remains a major challenge in implementing the 2030 Agenda for Sustainable Development. Investments that are critical to achieving the SDGs remain underfunded. While interest in sustainable financing is growing, the shift towards long-term investment horizons and sustainability is not happening at the required scale or speed.

The 2019 Financing for Sustainable Development Report, produced by the UN Secretariat in collaboration with the IMF, World Bank Group, World Trade Organization, UNCTAD, UNDP and over 50 other agencies of the United Nations system and partner international organizations (the Inter-agency Task Force on Financing for Development), recognizes the scale and urgency of the challenge.

Despite growing risks, we see opportunity for revisiting national and global approaches to sustainable finance. Five key messages emerge from our joint analysis:

First, the multilateral system is under strain in a rapidly changing global environment. This is forcing the global community to revisit existing multilateral arrangements. As we address the challenges, we open the door to making multilateral institutions fit for purpose for sustainable development. For example:

the crisis of the multilateral trading system is also an opportunity to revamp and make it fit for purpose for sustainable development;

challenges in sovereign debt restructuring, in part due to new instruments and non-traditional creditors, have sensitized the international community to gaps in the existing architecture;

increasing vulnerabilities have underscored the importance of strengthening the global financial safety net;

the digitalisation of the economy has fuelled the debate about the design of the international tax system that could help address inequities;

growing market concentration, including in the digital economy, has underscored the need to better monitor this trend and manage its socio-economic implications.

Second, and in response, rather than retreating from multilateralism, the international community must strengthen collective action to address global challenges.

Third, global approaches need to be complemented by national actions. Member States can operationalize integrated national financing frameworks to support national development strategies. These frameworks should respond to the realities of a changing global landscape (for example digitalization and falling wage share).

Fourth, achieving sustainable development and combatting climate change requires a long-term perspective. Yet, both public and private incentives are short-term oriented.

Fifth, we must harness the potential of financial innovations to strengthen development finance. However, as such innovations do not eliminate financial and sustainability risks, policymakers and regulators need to strike a balance between managing emerging risks and enabling experimentation and innovation. This is why policy and regulation is a key focus area for the work of the UN Secretary-General’s Task Force on Digital Financing. The Task Force, which brings together policymakers, regulators, entrepreneurs and other experts, is exploring how to harness the power of new financial technologies for the achievement of the SDGs.

Importance of Tackling Inequalities

Despite the enormous potential of globalization and technological progress, far too many people have not shared the gains and are being left behind. Income inequality has increased in about half of the countries around the world over the last three decades. Wealth is also becoming more concentrated. Meanwhile global growth in real wages is only 1.8 per cent, the lowest since 2008.

Inequalities are prevalent in access to quality education, health, and technologies as well as vulnerability to shocks, among other areas. We also see persistent gender disparities across the world. Inequality limits people’s choices and opportunities and engenders political and social tensions and global inefficiencies. This year UNDP’s flagship Human Development Report will focus on the critical issue of inequality in human development.

The imperative of reducing inequalities is enshrined in the 2030 Agenda and its central pledge of leaving no one behind. Achieving the SDGs for all requires a systems approach to sustainable development, and coalitions of actors that co-create and jointly apply integrated solutions. Tackling inequality requires partnership � governments, the private sector, and civil society working together. National policies will need to address the falling wage share and growing vulnerabilities. These policies include designing the right labour market reforms as well as investments in human capital and social protection systems. While many policies can be implemented at the national level (e.g., fiscal policies or regulatory frameworks), others require international efforts, such as in tax cooperation and monitoring trends in market concentration.

In our pledge to leave no one behind, SDG 16 highlights the importance of strengthening institutions and governance. With the IMF’s new Framework for Enhanced Engagement on Governance, we see stronger synergies for partnerships at the global, regional and country levels. The four elements of the IMF’s Framework link strongly with the UN system’s work in the fight against corruption. Fighting corruption requires concrete actions through a concerted effort of all sections of society. In this regard, the UN system would like to highlight the importance of further strengthening of collaboration with the IMF to accelerate the anti-corruption agenda globally.

The Urgency of Climate Action

The urgency of climate action cannot be overemphasized. We have a rapidly shrinking window of time to accelerate action or we risk our planet into catastrophic consequences. We need to cut emissions in half by 2030 and reach zero-emissions by 2050, while significantly increasing adaptation and strengthening resilience to the already changing climate.

The Paris Agreement put the world on a pathway for ambitious collective action. Nationally Determined Contributions (NDCs) are an unprecedented opportunity to transform our development pathways at an unparalleled scale and pace across all societies. It requires scaling up usage of a wide range of innovative technologies, massive shift in behavioral change and, importantly, in investment patterns across all sectors. Between now and 2050, achieving NDCs and financing the global transition to a low-carbon and climate resilient economy will require an investment of at least US$ 60 trillion. It is clear that public finance is not sufficient and must be used strategically to mobilise increased volumes of private finance.

The leadership of Finance Ministers is critical to guide fiscal policy decisions and investments into the right trajectory. This includes fostering an enabling environment to unlock much-needed private capital at scale and a people-centred approach to support just transition and equitable share from the proceeds of green growth climate action. It is encouraging to see increasing leadership on this, particularly for developing countries.

The role of Development Finance Institutions in support of this effort is also essential, especially in contributing to provide stable and predictable climate finance flows to developing countries. It is key to ensure that support to access, blend and catalyse finance � while also ensuring that the modalities selected to deliver this finance are in line with existing development effectiveness principles and do not divert funds away from the countries and societies most in need.

Going forward, we need to continue to place high priority on policy packages that support the implementation of ambitious NDCs, such as carbon pricing, reform of energy subsidies, mandatory disclosure of climate-related financial risks, accelerated investment in sustainable infrastructure, and supply chain transparency. These policy packages must consider poverty reduction, as well as gender equality and social inclusion, as key criteria.

At the United Nations, we are committed to work closely with the Bretton Woods Institutions to strengthen our support to Ministries of Finance to create enabling environment for investment, mainstream climate action across relevant national financial planning and integrate market-based instruments to sustainably scale up private sector investment.

We firmly support the new Coalition of Finance Ministers for Climate Action and the Helsinki Principles launched this week. This important initiative demonstrates a stronger commitment and leadership of Finance Ministers to address climate challenges, in particular in mobilizing a whole-of-government approach to raise ambitions and accelerate the implementations of the national climate targets defined in the NDCs.

To support efforts to implement the Paris Agreement and to increase ambition and climate action, the United Nations Secretary-General will bring world leaders from government, finance, business, and civil society to the Climate Action Summit on 23 September 2019. The Summit will be a critical opportunity to accelerate climate action and raise ambitions to meet the ultimate goal of the Paris Agreement to keep the global temperature below 1.5 degrees Celsius.

United Nations Collaboration with the IMF

The UN appreciates its continuing partnership with the IMF in supporting countries progress towards the SDGs and welcomes the IMF’s recent work on SDG costing, increased focus on women’s empowerment and strengthened engagement in fragile settings.

Our collaboration on financing for the SDGs includes our joint analytical work for the Financing for Sustainable Development Report of the Inter-Agency Task Force on Financing for Development (IATF). We also work closely with the IMF, World Bank and OECD in the Platform for Collaboration on Tax.

Looking ahead, the UN looks forward to enhanced engagement with the IMF to help drive sustainable development progress for countries and people around the world.

Source: United Nations Development Programme