UN Geneva - Multimedia Newsroom : UNCTAD Press conference

Monjo.

Good afternoon, everyone.

We are going to start this press conference

which will focus on the poorest countries in the world. They are 46

and they are the subject of the least developed countries. Report on

that is producing every year

we are under embargo until 4 p.m. this afternoon Geneva time

and without any further due, I'm going to give the floor to Rebecca Greenspan,

Secretary General

and Junior Davies will supplement her presentation.

He's the head of the analysis

and politics branch

And then we'll open the floor for question.

Thank you very much for joining us. And, uh SG you have the floor.

Thank you.

Thank you very much.

Members

of

the press, your friends dear colleagues

Well, today we present to you uncas

2023

leave developed countries report

the report is entitled

Crisis resilient Development, finance

crisis Resilient development, finance

which is an extremely

urgent

matter

our report

makes It makes it very clear.

Least developed countries are in a desperate situation

marked by covid the covid pandemic from which they have not yet recovered.

A cost of living crisis

which is hitting them disproportionately.

A climate crisis towards which they are completely exposed

and a debt burden

that

rising interest rates

are making totally unbearable.

So without exaggeration,

these developed countries

those at the very front line of sustainable development,

stand

on the precipice of a fiscal abyss.

The number speaks volumes,

and they speak with urgency.

So

import costs for basic food

searched

by 63%

over the last three years,

mounting a bill of $35 billion in 2022

63% surge.

That service

in LD CS

soar to

27 billion in 2021

a staggering 37% increase

from 20 billion

in the previous year.

Today, LD CS

are not only spending more on that service than on either health or education

on average, obviously,

but they they are spending almost twice as much on debt

than on health.

As we reported last year,

L DC face box

the highest burden in per capita terms to meet their energy transition needs

as well as the highest disaster costs if they don't transition in time.

So they are between a rock and a hard place.

Out of the 20 countries

most vulnerable to climate change,

17 are LC

at the time

at the same time, installed capacity in renewable energy needs to increase

by a factor

of

and see this comparison.

In most

in most advanced

economies,

the factor is 2.5 times

what we need to see

in the renewable energy

sector.

What is the factor in these developed countries?

25.

2.5 times in developed countries, 25 times increase

in least developed countries.

Indeed, a recent UN

sustainable development goal transitions costing exercise

shows that LD CS

face the highest per capita cost

to meet

their

sustainable development goals relative

to the base of their economies.

Just reaching the goals for social protection

and decent jobs would cost

an average of 45% of GDP

in LD CS.

So the question is,

where

where will the money come from?

Our report is devoted to answering that question,

but the premise for any real answer to it

is this.

LC are in a debt trap and only more debt

will not get the will not get them out of it.

If we don't understand that

we won't be able to find the solutions,

they will need

grants,

concessional loans and debt relief.

The three of them

LD CS need an important amount of resources from overseas

because the resources cannot come only from the mobilisation of domestic

resources. Obviously

there has to be a mobilisation and an effort

in mobilising domestic resources.

But we know that whatever they do, it won't be enough.

Many of the resources will have to come

from

be outside.

So

these resources

need to be

long run,

low cost, inaccessible

and of sufficient scale.

According to a novel,

you

uncut SDG costing methodology

LD CS face

and over $100 billion annual funding gap to meet their SDG

transition

needs.

And this is a number That is the first time that we put forward

the biggest gap.

Very interesting

is in education,

which amounts

to $57 billion for the energy transition.

LD CS face an annual funding gap of 13 billion,

so this immediately points to the the

very architecture of the international financial system.

The scale of the issue is so large for

these countries that only a multilateral solution will do.

However, the system we have either,

uh, the system we have is either

too small

or

not adapted to deliver. Why? I say too small.

Well, you know that we have been given this number that the World Bank today

is 1/5

1 5th

with respect to the global economy of what it was in 1960

1/5.

But the challenges are even bigger.

So

the system has to be recapitalized,

and we need to improve the,

uh, business model

of the

development banks of the whole network.

And

we need

flexibility to adapt to the realities of these countries.

So

as the title of the report says,

we do not have

a crisis. Resilient development finance system in place.

Why?

Well,

first of all, we have an issue of governance.

LD CS are absent from decision making processes on the amounts, rules,

mechanisms and institutions that determine international flows

of development finance to LD CS,

whether they are bilateral or multilateral, public or private.

ODAFD I or bank lending.

The 46 LD CS combined account for only 4% of the voting rights of the World Bank.

Only 4%

of the voting rights of the World Bank.

And this 46 LD CS you correct me, junior, but is 1 billion people we are talking about?

Yes. So It's 1/8 of the

of the of the,

uh total population of the world.

Similarly,

due to their small quotas of of the International Monetary Fund,

LD CS received less

than 2.5% of the general location of SDRS,

the ones that were allocated in 2021. Yes.

So from the 650 billion SDRS that were emitted,

the L DC received 2.5%.

So moreover, the system we have is simply too small.

That's the second reason

I, I said

the number of the World Bank

the same happens with the liquidity.

You you know the IMF can provide in crisis liquidity in a year

what rich country central banks can print in a day.

The Bretton Woods quota system is outdated

and too often blames the victim in a world of global systemic shocks.

And we lack a multilateral mechanism to deal with that

even as we desperately

need one.

They have been,

uh, attempts. And they are very, uh, really very welcome. You know,

there was the SSD I there was a AAA agreed by DG 20.

We have

the common framework and now we have the round table in the IMF. These are

good steps in the right direction, but they are certainly not enough.

The second thing

a

is

on the debt issue. As I said before

that

there is no sense of urgency.

And the problem we have

is that according to our data and I,

I hope you have seen

the world of debt,

uh, publication that we did in the GCRG.

But we give this number that we have kept repeating

3.3 billion people in the world

live in countries that are spending more

in servicing the debt

than either on health or education.

So how are we going to meet the SDGS

if the basic needs cannot

be financed

by these countries? And as I said before in the report, we, uh, we, uh, establish

that the LD CS are

spending

twice as much in service of the debt than on the on the health sector.

All of these issues are connected

as foreign investment drive up

the multilateral development banks under invests

an emergency liquidity is lacking.

Capital costs

for these countries go up, and these countries are forced

to get into more expensive debts.

So as debts mount, they crowd out development, spending and investment

in a vicious cycle of squeezed fiscal and policy space

and faults

growing worse year by year.

So maybe

there is this resistance to characterise what is happening as a debt crisis.

But what we are saying

is that what we have is a development crisis,

because these countries face impossible choices.

So this is the problem we face. Systemic problems require systemic solutions.

Our report proposes

many of them.

I will highlight very quickly. Five first

official development assistance for the LD CS.

We need to live up to the commitments that have been

made internationally

right now,

if the

commitments the targets will be met,

they will generate additional flows of 63 billion

in 2021. 63 billion.

But remember, what was the gap

that we said we had

for the LD CS 100 billion?

So if we will live up to the commitments of OD A,

we already will have 60% of what we need.

So

you know, it's true that this is very expensive for the LD CS,

but it's not very expensive for the world.

These are not huge amounts of money

for the international community.

They are very difficult to be financed by the LD

CS because they don't have the resources to do it.

But imagine

we could.

If we live up

to our commitments,

then we will have more than half of the problem solved.

Second multilateral development banks

The MD BS must reform in line with the secretary general's proposed

SDG stimulus programme,

which calls for a 500 billion US D

increase in annual disbursements,

a figure

that was supported by the years G 20 expert group on the M DB Reform

that was chaired by Larry Summers.

To achieve this, MD BS boards must agree

on balance sheet optimisation plan

plans and most importantly, on a new general capital allocation.

And obviously we are also in favour of the recycling of the SDRS through the MD BS.

Sir, climate finance,

climate finance needs

to become simpler and more transparent,

reversing the current situation of complexity and high costs that LD CS are facing.

A spaghetti bowl of regulation only helps those who can afford

the most expensive lawyers something that the LD CS cannot.

Money needs to flow southward.

We have a $6 trillion

sustainable fund market

at the global level,

but much of that

goes. Most of it goes to developed countries

and less than 1% of it

goes to LC.

Fourth central banks.

L DC Central banks can play a role in ensuring

that finance flows are consistent with climate resilient development.

But this can only be done if they work in tandem

with the structural transformation of LD CS.

So far, Bangladesh is the only L DC

that has engaged in climate

central banking.

Our report provides a novel and unique framework for LD.

C's government decision making on climate central banking.

Allow me to, uh, to add here that advanced economies central banks

also have an important role to play.

Rising interest rates are really

hurting highly indebted developing countries.

Every high

has massive collateral damage.

A policy mix is key

and fifth and lastly, loss and damage.

We will be discussing this in cop 28

so the new loss and damage fund can play a pivotal role for L DC.

If adequate,

additional funds are made available primarily in the form of grants

with transaction cost and lead times kept at a minimum,

and if disbursements start,

start quickly, the loss and Damage fund

can become the missing puzzle piece

in the whole international financial architecture.

We are only one month away from cop 28

in closing. Let me be clear about something

in action is a choice.

There is more than enough wealth in the world to meet

the sustainable development goals and to get the LD CS out

of their fiscal hole.

It is not about lacking resources. It's about priorities.

The clock is ticking

and we cannot afford to hesitate. Thank you.

Thank you very much. SG, um

you know, Davis, you have the floor and we'll take questions from, uh,

from the floor and online, of course,

over to you.

Good afternoon. Thank you very much.

Secretary General, for that very comprehensive presentation of the report

the least developed countries report

entitled Crisis Resilient Development Finance.

I

think you covered the report extremely well.

So I will just say one or two points just to complement what the Secretary General

said.

The report shows that there are severe interlock

challenges at both the domestic and international levels,

constrict

the fiscal space

of LDCs and that,

in a way creates blockages to pathways to

a more sustainable growth and development pathway.

In many ways, this report

focuses largely on fiscal policy.

We do that by looking as SG very, very well highlighted the

impact of the poly crisis, particularly the impact

of the recent conflict

in

Ukraine, the impact of COVID-19,

the recurrent climate crisis we've seen that has

had a very deleterious impact on the GDP

growth performance of LDC since 2019.

And we've also seen that it has led since 2020 to an increase in poverty,

an extra 15 million people now

extreme poverty.

We look at the issue of external aid primarily because LDCs

are still very dependent or very highly dependent on it.

But because also the modalities of that have changed, and in ways which

have increased

the loan components of the ODA

that is provided

rather than the grant component, which is diminishing over time.

In addition to which, of course, as the SG said,

ODA

commitments are not being met

fully in the report. We show some of the economic implications of that in terms of the

financial flows through ODA

that LDCs have in a sense, foregone in terms of opportunity cost.

I

think the same is true for climate finance. In many ways,

we've proposed in the report

that there needs to be an LDC

specific climate goal, which is akin to the one that we see

on

ODA.

There needs to be more access to grants, more funding for climate adaptation,

and we want to see the implementation of a loss and damage fund,

which we think could be pivotal for LDCs

that provides adequate additional funds that are made available

primarily in the form of grants or concessional finance.

the international community can help widen fiscal space, I think, in probably

the

fiscal space in

LDCs in probably three key ways. Firstly, it can do so by financing. Needs to be

can make this financing available at the required scale

that LDCs need.

It can deliver that finance through more appropriate low cost

instruments,

and this needs to be underpinned by an international

financial architecture that is adapted to the LDC specific

needs in line with the principles of aid effectiveness.

I

think when we began this report,

we began with the idea in mind,

given the range of discussions that are taking place

currently about reform of the international financial architecture,

the UN Secretary general's policy brief that was launched.

Talking to these matters

just 34 months ago,

we we we got when we began this report, we were thinking,

what

what could be done

through the international financial architecture that could make LDC

seem more relevant

to the system and better address their needs?

And in some ways, that was the starting point from which

we began to think about this issue which led us to focusing. I guess, primarily on

issues around

fiscal space.

I think in

practical terms I would just say two more things in practical terms.

I think this means that climate finance

should be additional and it needs to be an additional

form of development finance and needs to be distinctly so.

And

we would argue very strongly that ODA

goes back to perhaps more traditional modality,

which was in the form of providing grants and highly concessional loans

rather than the current practise.

I don't think I have much more to add because I think the S's

presentation was very comprehensive. I

leave

it

there,

thank you very much.

We

are now going to take questions.

I don't see any in the room, but We have a lot of people connected.

A lot of journalists.

Um, I would like

to Gabrielle

Tetro.

Sorry.

Reuters. Can we unmute Gabrielle?

Uh, yes.

My question is for Secretary General Greenspan.

Um, you were in Moscow last month for some talks with Russian officials regarding

unimpeded access to grain. Uh, I'm asking because it's related to obviously,

um, developing countries and the least developed countries as well.

Is there any progress on

on those talks and any more contacts planned?

Um, regarding efforts to revive this deal. Thank you.

Uh,

What the Secretary General has said and has been very

firm on it is that we will continue to work

to get Ukraine

and Russian exports of food in the case of Ukraine food and fertilisers

in the case of Russia to global markets.

And those consultations are in that, uh, in in,

in, in in with that objective, we will continue to work

to make it possible for the food and

fertilisers from Russia and the food exports from Ukraine

get into the global markets.

Because precisely as you said,

this is extremely important for the food security of the world.

And that's what we are. Continue doing?

Thank you.

I'm checking online.

I don't see

any hands up

in the room.

The

Yes, uh, we have, uh, Ravi can

Can we unmute Ravi over to you? Ravi?

Uh,

I just want to I I'm sorry I come a bit late for this meeting.

Uh, so

I don't know what has been said before,

but, uh, my general question is this that the

impact on the LD CS

uh, given the interest rate increases in the US

and the doubling of the debt payments

and the serious economic and fiscal crisis

Uh uh,

What exactly is the kind of macroeconomic situation we have

with the LD CS who are unable to pay their debt? Thank you.

It's both to the Secretary General And to, um that, uh, L DC expert.

Thank you, Robbie. Uh,

yes, Uh, the situation is bad. As

as you can, as you can imagine what

the first thing is that,

uh, according

to,

uh to to the research and the modelling of the Federal Reserve of the US.

Every point

of increase

in interest rates

from their part

means a 0.8% decrease

in growth perspectives for the developing countries in a period of three years.

So if you think that the interest rates have more than

kin to pole,

you know have been multiplied by around five.

If you do the math,

you will get a staggering

number in terms of the impact in the developing countries.

This is not our research. This is I am citing

the research quoting the research of the Federal Reserve.

Now,

right now,

what we see is not that the necessarily

that the interest rates will continue to rise,

but that they will stay

high for a long time.

So the effects on the developing countries is, in a way,

what we call the double burden, so

it will affect their growth perspectives.

It

has meant for many of the developing countries,

uh, devaluation of the currency because of the strength

of the dollar.

And so domestic prices have gone up.

And so you have, uh, you know, a a phenomenon of imported inflation

in these countries. And what is one of the,

uh, commodities that has gone up more, uh, dramatically foot.

And so you have the most vulnerable being affected even further

Now,

when you think so,

where the sources of a of growth and the sources of finance will come from.

And then

you look at trade and you say, Well, maybe trade.

But the truth is that trade is

slowing down. Trade

is

growing

by

half of the pace the global economy is growing.

So you remember that at the beginning of the century,

what we had is a very dynamic trade. Trade was growing much more than,

uh than the economy than GDP. And so trade was one of the engines of growth.

But this is not happening in this decade.

So the dynamism for the economy is not coming from trade

now.

So we go and look at the investment.

What is happened with foreign investment and maybe investment

is coming to these countries and and so we,

uh that that could be a source.

But

for LD CS

uh,

you know, I hope you remember this number.

Uh uh, I. I think that I'm right, but I will check it.

LD CS received from foreign direct investment 16% less in 2022 than in 2021.

So foreign direct investment is going down is not going up.

So where

is the finance and sources of growth

going to come from.

We said in the report in the Africa report

that

maybe there is here an opportunity because many of the LD CS are commodity dependent

and they are very rich in raw materials.

And part of this wealth in raw materials are the raw materials needed

for the energy transition.

So maybe if we plan well, if we have the right policies

inside the countries and if we have as an

objective not to sell just the raw materials,

but to add value to the raw material and

to negotiate much better at the international level,

there is an opportunity there that maybe we can tap on.

That's one,

but the other

is that

you know, the resources for the

investments that we need to do for the SDGS will

have to come a lot from the international community.

So countries have to do the work. Yes, nobody can do that for them.

They have to do to do to have the right policy, uh, in place. They have to be stable.

They,

uh they have to be able to have a long term vision.

Yes,

but at the same time,

we will need the financing to come from it. And that's why we look at the

international financial architecture will look

at the multilateral development banks.

And we look at the commitments on OD A and loss and damage that,

uh, you know, come from the wealthier countries in in the world. The mix

is the solution.

Only one thing won't work.

The mix is the solution because if the

what the the the network of the multilateral development banks comes in,

then they can have instruments to scale up private investment

to de risk

the perception of risks of the private sector. And

is the combination that will

be the, uh, the

the right way to go

in the, uh, wealth investment report

that we launched some weeks ago? It's interesting.

Uh, Robbie, please check this because it is an interesting

thing. They demonstrated that in energy projects,

if you have public government

resources,

multilateral development, banks, resources and private sector resources,

actually the cost of capital goes down 40%.

And so you can make a lot of projects

a viable and profitable

if you can lower capital cost in 40%.

Yes. So

this is what we are trying to do. We are trying to say look,

is true that these countries can

do better in terms of policy and stability, but at the same time, if they

don't have the support of the international community,

what we want to happen won't happen because they don't have

the fiscal space

and the macroeconomics

at the global level. Not because they did

They did anything wrong just because of cascading crisis.

Just because of systemic shocks.

Don't allow them to get out of the debt trap and the fiscal trap.

Thank you very much. Um,

I have, uh, Nina

Larson from a FP online

over to uni now.

Yes, Uh, thank you for

my question. Uh,

I had a question

for the secretary General.

also on the the Black Sea grain deal.

I was wondering how, uh you think that, um,

the collapse of that deal specifically has impacted the L DC.

If you have any sort of, uh, calculation on that

and also you're saying, I mean,

there's a lot of international support that is needed for the L BC, but, um,

as you mentioned, the world is in crisis or

tension.

Yes, the the sound is very bad.

Can you repeat the second part of the I understood the first part,

but the second part of the question II I couldn't hear.

Ok, Can you hear me better now?

Or is it?

Yes.

OK, the second part of my question was

just about the need for international support. Um, at a time when the world is,

uh, in crisis and the tensions are, uh, diverted elsewhere,

especially right now with the Gaza War.

Uh, I'm just wondering how concerned you are or how, uh, likely you think it is that,

uh,

the international community will be able to step up and actually focus on the LD CS

in their time of need. Thank you.

Yeah. Thank you. Thank you very much.

Well, uh, with respect to the, uh,

black C grain initiative and and the effect of the withdrawal of, uh,

Russia from from the deal,

Um, what we have seen in the market

is more volatility.

Uh,

the prices, uh, did spike at the beginning, but, uh

uh, they have become stable. Uh, more, more.

They have shown a downward a downward trend

since then,

Uh, with some

hiccups. Uh, specially because of what is happening in the Middle East.

Uh, but prices did not go up,

uh, as they were at the beginning

of the war in Ukraine.

And this is because, uh,

the aggregate volumes that are getting to the market are enough right now.

The problem is the uncertainty. And that's why is the volatility

And the other problem is the transaction costs.

What we have seen is that the transaction costs have gone up.

You know, shipping, insurance, uh, servicing, uh, that that has gone up.

and the distribution

has changed. And, uh, in this case,

uh, although at the aggregate level,

uh, the volumes are

fine. And especially Russia is having one of the largest harvest

in its history.

Uh,

and, uh,

Ukraine has been able to continue exporting through the corridor

that they have opened and also through the solidarity lanes.

So volumes are not suffering so much,

but transaction costs are suffering. Uncertainty is there,

and volatility is there. Uh,

and the the The important thing here is that we need to get to,

um an understanding of the importance of the Black Sea for the trading system,

with respect to food and

with respect to food security and that trading area has to be secured.

Uh, with respect to,

uh if the world will look at the L DC,

given all the emergencies and, uh,

in crisis that we are living through,

you are absolutely right in asking that question. And I don't have the answer.

What I

definitely no

is that we need to raise awareness of what is happening in these countries

because people are suffering

and they will suffer much more

if they are not paid attention to.

And every crisis that happens everywhere will hit them

without them having anything to do with the crisis,

it will hit them because if the conditions of the international

a level will get worse.

The first to the first victims, uh, economic visit

victims will be the LD CS and the vulnerable countries.

So it's our duty in the UN is our duty in a T A

to raise awareness of the needs of these countries. And as I said before,

is not that we are talking about quantities

that cannot be met by the international community.

They could be met

and they will

do or make all the difference for this 1 billion people that lives in the

thank you very much.

I

think it's a good conclusion for this press conference.

As I don't see any additional question,

I will just remind you that we are under the embargo until, uh,

until 4:04 p.m. three PM GMT GMT. Yes.

So thank you very much. You can come back to us if you need any clarification.

The team behind uh,

Davies is available for clarification and

more to say on this report if you need.

And

we see you soon. Thank you.

Thank

you.

UNCTAD Press conference - 07 November 2023