A 'Monterrey Consensus' might replace the washington consensus.

• Author: Wabl, Matthias Georg
• Position: Official development assistance for developing countries - Brief Article - Statistical Data Included

The first major conference that has been undertaken by the United Nations in close partnership with the World Bank, the International Monetary Fund, the World Trade Organization, other UN agencies and representatives from civil society and the business sector stands to become a turning point in the fight to reducing poverty and improving living conditions in developing countries.

The Conference--formally known as the International Conference on Financing for Development (March 2002, in Monterrey, Mexico)--aims to establish more concrete actions rather than declarations. Its goals are to: increase private foreign direct investment (FDI) and official development assistance (ODA); fight corruption; reduce debt; grant better market access for developing countries; ensure sound macroeconomic policies; and strengthen international tax cooperation. However, there is no consensus among participants as to how these goals should be reached.

Donor countries, in particular the 22 member States of the Organization for Economic Cooperation and Development (OECD), insist that funds must be used more efficiently in aid-receiving countries to fight corruption and improve governance. Until developing countries improve their performance in these areas, many donor States would not increase their ODA substantially.

On the other hand, receiving countries claim that donors are not complying with several commitments made in previous Declarations. They ask for higher and faster debt reductions, whereas the World Bank sees economic growth as the more important factor. Developing countries demand more financial aid, since ODA has steadily declined, from 0.35% of national income in 1990 to 0.22% in 2000. This figure runs counter to the target adopted by UN Member States for an ODA of 0.7% of national income. In fact, only five of the 22 OECD donor States have met that target. Total ODA in 2000 amounted to $53.7 billion and, according to World Bank estimates, twice this amount would be needed annually to reach the development goals by 2015. Therefore, non-governmental organizations propose a legally binding international treaty to make donor countries comply with this goal.

The consensus on the draft document reached by the Prepatory Committee openly reflects these different approaches. The "Monterrey Consensus" recognizes that "a substantial increase in ODA will be required", but does not endorse the Secretary-General's call for doubling ODA from $53 billion to at...