Information Note 3
Financing for Development and Eastern Europe:
(Fact Sheet by UNDP, Regional Support Centre, Bratislava
Questions and Answers
1. What is the Financing for Development Conference?
At the Millennium Summit in 2000, Heads of State and Government agreed to convene a high level inter-governmental event on financing for development, in recognition of the obstacles facing developing countries in mobilizing resources to finance their sustained development.
The Financing for Development (FfD) process is being undertaken based on a broad partnership between the UN, other international institutions, civil society, and the business sector, which is an unprecedented feature. This is the first time that the UN is working in close cooperation with the Bretton Woods institutions, the WTO, and the business community.
The FfD Conference will be a crucial event in agreeing on a strategy to better and more innovatively mobilize resources for development. The agenda for the process addresses six broad areas: mobilization of domestic financial resources; mobilization of international private resources for development such as foreign direct investment and other private flows; trade; increasing international financial cooperation for development through official development assistance; debt relief; and better coordination of international monetary, financial and trading systems so as to better promote development and limit instances of excessive financial volatility.
2. What difference can the FfD process make to mobilize resources for development?
The Conference offers the unique opportunity to forge a new global deal and to: 1) consolidate broad-based policy coherence on the crucial role of domestic policies and governance; 2) provide an impetus for the mobilization of ODA and other resources to complement national efforts to achieve sustainable growth and reduce poverty; and 3) strengthen multilateral action on the basis of partnerships, coordination and efficient use of resources.
The FfD is the the first practical step forward on the road to the Millennium Development Goals (MDGs); and an important opportunity for a "compact" between developed and developing countries, entailing mutual commitments to mobilize resources for development, in general, and for the MDGs, in particular.
The FfD process, provides an excellent opportunity to recommit & revitalize Official Development Assistance (ODA) and to advocate for all developed countries to strive to achieve the UN target of 0.7 percent of GNP for ODA.
3. What are the Millennium Development Goals?
The UN Secretary General has designated the Administrator of UNDP, Mark Malloch Brown, to be the "scorekeeper" and "campaign manager" for the Millennium Development Goals, - and to spread awareness about the MDGs within the UN system and across the world and to make them an integral part of the UN system’s work in the field.
The Millennium Development Goals include: Halving extreme poverty and hunger, achieving universal primary education and gender equity, reducing under-five mortality and maternal mortality by two-thirds and three-quarters respectively, reversing the spread of HIV/AIDS, halving the proportion of people without access to safe drinking water and ensuring environmental sustainability. They also include the goal of developing a global partnership for development, with targets for aid, trade and debt relief. The target for the goals is 2015.
Progress towards the goals has been mixed. Some countries are on track for some goals but none of the goals are likely to be reached at the current rate of global progress. The reasons are many, but they often include insufficient and inefficient public spending, crippling debt burdens, inadequate market access in developed countries, and declining official development assistance.
4. Who are the new donor countries in Eastern Europe
The countries in Central Europe and the Baltic States are often referred to as emerging or new donor countries. These countries include: the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia.
5. Why are the countries in Central Europe and the Baltic States important new players in the framework of the FfD event
As a consequence of the relatively high GNP and growth rates of the Central European and Baltic States as well as their enhanced inclusion into the global community of countries in the North the countries are expected to also contribute financially to meet internationally agreed development goals through among other things development cooperation.
In view of the expected EU membership of the countries in the medium-term, the donor community increasingly sees them as "graduating" countries and has started to phase out bilateral activities in most of the countries
Even though the assistance provided is at present relatively small by international standards the Central Europe and Baltic countries are committed to becoming donor countries and most of them have already taken important institutional and political steps in this regard. The countries are in the process of reviewing their development assistance activities and preparing new national development cooperation programmes.
The increasing involvement by these countries in international development cooperation, bilaterally as well as multilaterally, represents new financing for development and partnership opportunities. This involvement reflects an important commitment in view of the last decade’s trend of decreasing resources for ODA.
6. What drives this process of change?
The reform process of the Central European and Baltic countries and the economic growth of the countries have led to an increased focus on their role in the global economy, including that of a donor country. This process has partly been driven by the present and envisaged future memberships in international bodies such as the OECD and NATO as well as the EU accession process. It is, however, also driven by a moral commitment, acknowledged by all countries, to transfer resources for development and poverty reduction.
7. How much assistance have the Central European and Baltic States received during their transition process?
During the last decade net official assistance provided to the Central Europe and Baltic countries amounts to more than US$ 18 billion. The major donors have been the European Commission, World Bank, the UN system, as well as a wide range of bilateral donors. The assistance was directed to provide financial support and policy advice to the economic and democratic reform processes of the countries. It helped these countries to build their capacities and institutions for market economy and democratic government.
In addition to the assistance provided by the "traditional" donor countries and multilateral institutions, non-government donors such as the Soros Foundation have also provided significant assistance to these countries.
8. How is UNDP cooperating with the new donor countries in Central Europe and the Baltic States
UNDP has provided assistance since 1998 to the formulation of the countries’ development cooperation policies. This support has been catalytic in terms of raising awareness on development cooperation in general and criteria for effective assistance in particular. With the help of UNDP the process of change was initiated in the countries towards modernizing their development assistance activities. UNDP has provided advice on preparing initial policy papers on future development cooperation, assistance in preparing national development cooperation programmes, and in helping to build national capacity for the management of such programmes.
UNDP is also offering its services as a development partner to the countries for transfer of knowledge and transition experience to other countries in the Eastern Europe and CIS region as well as developing countries in other regions. New, innovative partnerships are being explored between UNDP and the Central European and Baltic countries. The Czech Republic has partnered with UNDP and is channeling a portion of its development assistance through UNDP. As an example, the Czech Republic is cooperating with UNDP on the implementation of a project supporting local governments in Central Asia, where UNDP facilitates the sharing of Czech knowledge and experience in the area of local government reform.
* *** *
For more information, please contact Sandra Pralong, UNDP/RBEC Communications Officer,