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Delivering the Monterry Consensus: A Commonwealth Action Plan

London, September 2002

Introduction

1. The consensus reached at the March 2002 International Conference on Financing for Development in Monterrey, Mexico, and reaffirmed at the World Summit on Sustainable Development in Johannesburg in August 2002, marked an important milestone in the process of global development. It created a new development partnership based on mutual accountability between developed and developing countries, and a new global commitment to achieve real improvements in growth and global poverty reduction, as expressed in the Millennium Development Goals (MDGs), with mechanisms for monitoring progress and actions of all parties. It recognised that the starting point must be country owned development strategies based on good governance and sound policies and institutions; that for all countries trade is a key source of growth and developing countries need better access to global markets, with the WTO Development Agenda agreed in Doha in 2001 marking an important step forward; and that development partners need to harmonise their policies, operations and practices in support of national strategies and plans, and to do so with substantial increases in resources - from both private and official sources - if the MDGs are to be met. There have been several recent and welcome announcements of such increases, but there is much still to do. It was also recognised at Monterrey that developing countries need to build capacity, to strengthen the key institutions needed for development; that there should be a stronger focus on results in development, and better monitoring of progress and actions; and that there is a widely felt need to strengthen the voice and representation of developing countries in international institutions.

2. These development themes are of key importance to Commonwealth countries. Some 665 million people in the Commonwealth live on less than $1 a day. This makes the Commonwealth home to more than half of the world's poorest people. The seven countries in the world most affected by HIV/AIDS are in the Commonwealth, and more than two thirds of all women and children with HIV/AIDS are Commonwealth citizens. In some Commonwealth countries less than 35 per cent of children complete primary school.

3. Moreover the consensus reached in Monterrey is very much in the Commonwealth tradition of mutual support and co-operation between advanced and developing countries, recognition of interdependence between rich and poor countries, and support for the universality of good governance, democracy and participation. It also owes much to past Commonwealth contributions, for example in building global support for debt relief.

4. The challenge now is to translate the Monterrey consensus into an effective and implemental action plan, both globally and country by country in a way that progress can be measured and tracked, with appropriate benchmarks. The Commonwealth has this year undertaken a series of regional civil society consultations on the theme "delivering the Monterrey consensus". These consultations stressed the need for development to be people centred, with special attention to the needs of women and children, and placed in a human rights perspective. Informed by these consultations, and as a contribution to the global task of implementing Monterrey we have agreed the following three part action plan for the Commonwealth. We will review progress in the Commonwealth towards meeting the Millennium Development Goals and implementing the Action Plan set out for the Secretariat at our next meeting. We will review progress on the entire Action Plan at our meeting in 2005.


I. Actions and Commitments by Member Governments

5. All Commonwealth countries commit themselves to democracy and good governance, and to following sound economic, social and structural policies and to creating and strengthening the institutions needed for economic growth and sustainable development. They also commit themselves to creating a world with less division between rich and poor, and ensuring that the benefits of new technologies are available to all countries.


6. Developing country members of the Commonwealth commit themselves in particular to:

• Devise and implement national development and poverty reduction strategies setting out priorities for policy and institutional reform, and promoting macroeconomic stability, economic liberalisation properly sequenced with other necessary reforms, and a more equitable distribution of income and wealth. The process should be transparent and involve wide consultation to ensure broad public support.
• Develop and use appropriate measures and systems to monitor progress, and to focus expenditure more effectively on the delivery of desired outcomes and to achieve a sustainable revenue base.
• Reform and strengthen public expenditure and financial management processes, so that spending is directed effectively at key development priorities with proper accounting, reporting and auditing.
• Develop policy frameworks that encourage domestic and foreign private sector investment, and take other necessary action to promote domestic saving and investment.

7. Advanced and high income country members of the Commonwealth will open their markets to exports from developing countries, and continue to enhance the quantity and quality of their official development assistance (ODA) in support of effective national development and poverty reduction strategies. In particular they commit themselves to:

• Building on steps already taken, to extend the benefits of trade liberalisation for all by further opening their markets to exports of goods and services from developing countries and reducing trade-distorting subsidies.
• Implement increases in ODA volumes already announced, and make further progress to meeting the UN target of 0.7 per cent of GNP, and meeting the UN target of 0.15 per cent of GNP for aid to least developed countries (LDCs), as confirmed at the Third UN Conference on LDCs; including by, wherever possible, setting out plans for increases in their development assistance over the course of their public expenditure planning horizons.
• Commit resources to assisting in completing the financing of IDA 13.
• Encourage and support NEPAD, as a means to secure poverty reduction and growth in Africa, through good economic and political governance and substantially increased and more effective resource mobilisation. 
• Work globally to win support for higher aid volumes from other countries.

8. Recognising that improvements in the effectiveness and quality of aid can be as important as increases in volumes, Commonwealth donors further commit themselves to implement the following nine point framework for enhanced aid effectiveness:

• Focus their aid where it will do most good, in support of countries with the greatest levels of poverty, and which are building sound governance, policies and institutions, and implementing credible strategies for development and poverty reduction.
• Work in close partnership with each other, other donors and development agencies, and the country itself, to align their support behind country strategies and budget cycles. 
• Deliver aid more flexibly and with greater long-term predictability, and work to create the conditions under which a substantial increase in the level and proportion of aid is given in the form of budget and sectoral support. 
• Provide assistance to help countries build the institutional capacity needed to absorb and make most effective use of higher volumes of aid.
• Provide advice and other appropriate assistance to countries with poor governance, policies and institutions, to help build the capacity and policies needed to make effective use of support; including through support for peace building and economic reconstruction in countries emerging from conflict.
  · Recognise the need for grant finance in many of the poorest and debt burdened states. 
• Recognise in their aid programmes the special vulnerabilities and needs of small developing states.
• Work with others to implement quickly global initiatives to harmonise donor operational practices and requirements, including implementation of the recommendations of the DAC Task Force on Donor Practices by 2004, and making a success of the 2003 High Level Forum on harmonisation.
• Work towards the untying of all development assistance, through bilateral action and by implementing and extending, where possible, the agreements reached through the OECD/DAC.

II. Commitments to Act Together in International Institutions and Fora

9. By forging consensus across its diverse membership, Commonwealth countries can have more influence and impact in global fora than acting separately. All Commonwealth countries therefore commit themselves to work together and with others to:

• Build a consensus with the World Bank, IMF, UN and other international agencies in support of the new global framework for enhanced aid effectiveness set out above, with donor support co-ordinated and aligned behind priorities set out in effective country driven development and poverty reduction strategies, and increasingly channelled through support for countries' medium term budget frameworks.
• Urge the World Bank, IMF and other donors to provide simplified and streamlined support to improving public financial management in developing countries, in order to assist them to make timely progress in achieving appropriate international standards and codes. 
• Make the case in all international fora for more and more effective development assistance. This includes support for global campaigns such as the UNDP's MDG Support Programme, and further consideration of mechanisms, including the proposed International Development Financing Facility, to lever resources from the international capital markets to meet the need for a $50 billion annual increase in ODA.
• Seek to ensure that on exit from the HIPC debt relief process no country is left with an unsustainable burden of debt. This will require actions by debtor countries in implementing good policies and good debt management; at the IMF and World Bank in implementing the HIPC framework; and by official creditors and donors in providing sufficient bilateral debt relief and financing, and help with building debt management capacity. It will also require action by donors, official creditors and the international institutions to protect HIPCs from actions of predatory private sector creditors.
• Ensure that countries exiting from HIPC continue to get the quantity and quality of financial support needed for investment and growth, and help them to prevent a relapse into unsustainable debt, including as a result of events outside their control.
• Support NEPAD, which is a good example of implementing the Monterrey approach, providing front loaded technical assistance to strengthen capacity, translating aid commitments into reality, and encouraging participating governments to engage with the private sector and civil society in developing and implementing their national strategies.
• Encourage developing countries and international institutions to treat education and health as priority sectors, but with all global initiatives based on and supporting country level strategies, on the lines of the Education for All initiative. Recognise the need for donors to provide adequate finance for the Global Health Fund for HIV/AIDS, TB and Malaria.
• Support appropriate private sector initiatives aimed at promoting foreign direct investment and capital flows to developing countries.
• Work in the IMF, World Bank and other fora to reduce national and global vulnerability to financial crises by building capacity in all Commonwealth countries to implement the appropriate codes and standards, on a transparent and universal basis, taking account of individual country circumstances; and through stronger, more transparent and more independent surveillance which also covers the impact of major industrial country policies on the prospects of developing countries. 
• Support ongoing work in the IMF and elsewhere to develop a more transparent and predictable framework for resolving financial crises when they occur, through: the introduction of collective action clauses in international debt contracts; the development of a new global sovereign debt restructuring mechanism; and access to the IMF for the necessary financing. 
• Support action to counter money laundering and financing of terrorism, including implementation of UN Resolutions and internationally accepted codes and standards.
• Support the development of new, creative and economically sound mechanisms for attracting private investment to the least developed and small and vulnerable developing countries; and more generally help small developing countries strengthen their advocacy in all relevant fora.
• Support moves to strengthen governance in global economic and financial institutions, by appropriately enhancing the participation, voice and representation of developing countries in decision-making in the international financial institutions, and in the development and implementation of standards and codes.
• Work in the WTO to deliver the Doha Development Agenda; including ensuring that market access is improved and advanced country perverse and trade distorting subsidies are phased out, particularly in agriculture.
• Work to support these same ends and to resist the pressures of protectionism in all other fora in which Commonwealth countries are represented; and to support regional integration, and assistance to the ACP countries in negotiating economic partnership agreements with the EU.

III. A Programme of Action for the Commonwealth Secretariat

10. Commonwealth countries call on the Secretariat to assist in the implementation of these objectives and commitments, building on its areas of comparative advantage, and within its mandate and financial resources, in particular by focusing its activities in the following areas.

• Facilitating the sharing of experience and knowledge between member countries - including in areas of governance (including corporate governance), legal systems, social responsibility and democracy.
•  Taking forward the Technical Theme of the 2002 Commonwealth Finance Ministers Meeting "Managing Resources for Development", in particular by reforming the management of public financial resources.
• Contributing to the process of defining effective and sustainable national development and poverty reduction strategies by acting as a trusted partner, for example, by providing assistance on legal, governance and public service reform, public expenditure management and related gender issues. 
•  Facilitating dialogue between governments, the private sector and civil society; and continuing and building on the Secretariat's own co-operation with the Commonwealth Foundation and engagement with civil society begun in the recent consultations on "delivering the Monterrey consensus". 
• Using the NEPAD framework for Secretariat work in supporting Commonwealth countries in Africa, paying special attention to encouraging participatory processes. 
• Working with the World Bank, IMF and the UN to promote a more co-ordinated approach to defining and assessing good practice in public expenditure management.
• Strengthening its advisory work on debt management, including the management of domestic debt.
• Continuing to facilitate dialogue to ensure that regulatory standards and codes are transparent and universal in their application. 
• Strengthening the Commonwealth Association of Tax Administrators, to enhance its role in capacity building, providing advice, and building good practice in tax administration.
• Working with the Commonwealth Business Council (CBC) in implementing the 16 point Commonwealth Action Plan on Investment, endorsed by Commonwealth Heads of Government in March 2002, to enhance private sector investment flows to developing countries; and exploring with CBC ways to facilitate public-private partnerships for investment in infrastructure and public services.
• Building on the Secretariat's special role in small states, implementing the action plan endorsed in March 2002 by Commonwealth Heads of Government in Coolum.
• Helping member countries on trade issues by strengthening capacity, at both national and regional levels, for trade policy formulation, negotiation and implementation. 
• Continuing to facilitate IFI assistance to Commonwealth countries, to monitor its effects, and to support developing countries to increase their capacity to influence IFI policymaking.