Key Note Speech by Hon. Barsaman Pun, Minister of Finance

Nov 30, 2011

Key Note Speech by Hon. Barsaman Pun, Minister of Finance of Nepal at the Side Event on Aid and development effectiveness in the least developed countries for the implementation of the Istanbul Programme of Action, Busan, South Korea, 30 November 2011 Excellency, EU Commissioner, Dr Arjun Karki, International Coordinator, LDC Watch Distinguished participants, Ladies and Gentlemen,
  1. At the outset, let me extend a warm welcome to you all for attending this important side event on aid effectiveness and LDCs. I also would like to express my sincere appreciation to the OECD for making this event possible. We appreciate OHRLLS for making necessary works for convening this event. May I take the opportunity to also thank LDC Watch Coordinator Dr. Arjun Karki for his support to this process.
  2. In our view, this side event is perfectly timely as it is taking place on the sidelines of the High-level Event on Aid Effectiveness. It is more so at a time when the LDCs, their development partners and other relevant actors are in the process of integrating and implementing the Istanbul Programme of Action, collectively adopted in May this year.
  3. We all have acknowledged that the LDCs represent the poorest, most vulnerable and weakest segment of the international community. At the same time, they possess enormous resource potentials for achieving global progress and prosperity. It is for this reason that we all have political, moral and economic imperatives to effectively address our special development needs thereby contributing to promoting international peace, prosperity and sustainable development for all.
  4. We are also fully aware that the LDCs are the most off track in the achievement of the MDGs. They are at the bottom of the HDI rankings. They still have limited capacity to overcome their economic vulnerability, structurally transform their economies, and build resilience against internal and external shocks. Some LDCs further lack adequate governance capacities and institutions and have huge reconstruction tasks, especially those LDCs that are emerging from conflict.
  5. We deeply appreciate development partners for providing us with the consistent support to our development efforts over the years. It has grown to about 0.10 per cent of GNI in 2010. However, we have witnessed limited results from such support, as it was felt inadequate in scope and scale to achieve the specific development needs of the LDCs. In the aftermath of the several crises, our limited development gains have been reversed. We need to give greater priority and targeted support for the LDCs in order to ensure greater development impact of aid around the world.
  6. The Istanbul Plan of Action (POA) has already set an ambitious target of enabling half the number of LDCs to meet the criteria for graduation by 2020. Productive capacity building is our high priority together with supporting human development and building resilience from crises. That cannot happen with a business-as-usual approach. Therefore we need to stress on the following.
  7. Firstly, in the context of aid effectiveness and its development impact, we fully recognize that quality of aid is as important as the quantity. Accountability of delivering on commitment and scaling that up to deal with entrenched poverty and crises are crucial for the LDCs. On an average, almost half of the development work in LDCs is directly dependent upon ODA. That level of dependence is not there among other countries. Therefore, we have a higher stake in the LDCs than in other countries. Current economic crisis in the western countries should not be an excuse not to fulfil the commitments. Our countries are lurching from one crisis to the other all the time, with devastating effects on livelihood of a large number of people.
  8. Secondly, the principle of national leadership and ownership is fundamental to aid effectiveness. There is an imperative need for development partners to use our country systems, with due priority for programmes in support of activities managed by the public sector. This will contribute to enhance our institutional and absorptive capacities, allow for necessary policy space and flexibility and eventually enable our Governments to take charge of full responsibility of our development process. Catalytic and Developmental state should be supported by donor countries as explained in its recent report by UNCTAD.
  9. Alignment should be reinforced so that donors could provide aid more in the form of direct budget support through the national budgetary system or with sectoral approach. That can help strengthen our role in the budgeting process, budget implementation, financial reporting and auditing and help build our capacity.
  10. Harmonisation is equally critical for us, as we do not want to waste our meagre resources for coordination all the time, including the fragmentation of our programmes. This approach will also serve to promote a uniform set of reports using the same financial management systems. 11. Finally, mutual accountability is at the heart of development effectiveness of aid. In this context, donors support is essential to ensure effective implementation and follow-up of all the agreed commitments including those that have been made in IPOA. We should collectively and regularly monitor the delivery of commitments and their effective utilisation. New aid architecture should ensure monitoring mutual accountability and assessment of results on the ground.
  11. In LDCs' case, partners should ensure regular review, reporting and monitoring through verifiable indicators of agreed actions and aid commitments in all 8 priority areas of the Istanbul Plan of Action. The Istanbul Plan of Action should be fully integrated by the partner countries' cooperation strategy. This means that our partners should also carry out regular independent evaluation or external audits of their own commitments.
  12. Before conclusion, let me stress here that one of the major issue before us is how we ensure coherence among all the supports provided by our development partners. ODA, trade investment, debt, technology transfer and capacity building all should move in tandem. We should not have them working at cross purposes. South-south cooperation is also assuming greater importance now than ever before. We hope that with South-South cooperation as a complement to the North-South cooperation and emerging countries, we can overcome our challenges. Likewise, the role of Civil Society is crucial to ensure development effectiveness of aid and its effective monitoring to ensure results which are visible and measureable.
  13. Finally, development is first and foremost responsibility of the nation states themselves. However, in a globalised and integrated world, international cooperation is in the enlightened interest of us all. In this context, with enhanced quality and quantity of aid, supportive trade measures and aid for investment as an addition to Official Development Assistance (ODA) and debt relief measures, we are certain that we can bring about sustainable and rapid development in all LDCs. We have a great opportunity to do so now than at any time in the past. Working in partnerships along these lines, the development partners and the LDC Governments can certainly bring about the greater development impact of aid on the LDCs. This will contribute to reduce poverty and deprivation and promote sustainable and equitable development in the most vulnerable countries of the world. I think that is what aid effectiveness is is all about.
  14. Thank you!