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16 October 1996

A serious constraint on the development efforts in LDCs is their external debt burden which remains exceptionally high, particularly in Africa. At the end of 1994, the total debt stock of LDCs stood at US$128 billion, an estimated 71% of their combined GDP. The members of the Board welcomed recent initiatives taken to alleviate the debt problems of the heavily indebted poor countries (of the 41 countries in this category, 29 are LDCs). The LDCs emphasised, however, that the effectiveness of these initiatives would depend on the nature of the eligibility criteria and the flexibility with which they are applied.

A number of LDCs have made strong efforts to attract foreign direct investment (FDI) through the liberalisation of their economies and the provision of enhanced investment incentives. This notwithstanding, the level of FDI inflows has not been encouraging.

In addition, there is a continuing decline in the share of official development assistance (ODA) going to LDCs. In 1994, ODA flows to LDCs were less than half the aid targets set at the Paris Conference.

Helping LDCs overcome the risks of further marginalisation also calls for enhanced access to expanding global markets. This requires efficient production structures capable of meeting increasingly exacting demands in terms of quality, cost, and delivery on international markets. These requirements contrast sharply with the salient characteristics of the LDCs´ export sector: a lack of diversification and shortages of entrepreneurial and managerial skills, technological capacities and trade supporting services. Many speakers stressed that the integration of the LDCs into the world economy would require concerted action by these countries and the international community.

As part of the reorganisation of UNCTAD, it is envisaged that a trust fund for LDCs be established to facilitate the start-up of new activities in UNCTAD and to help LDCs meet the challenges of, and draw benefits from, the globalization of the world economy.

Cross-section of statements

The representative of Bangladesh, speaking on behalf of the LDCs, stressed that in spite of the wide-ranging socio-economic and political reforms they had implemented, LDCs had remained economically vulnerable. Their endeavours needed to be supplemented by international support measures. Donor countries and the multilateral financial institutions should consider debt cancellation for all LDCs, irrespective of their level of indebtedness. The speaker expressed the hope that the restructuring of UNCTAD would not reduce its capacity and resources to deal with LDC matters in a comprehensive and effective manner.

The representative of Ethiopia stated that many of the constraints facing the LDCs were of a structural nature. In 1995, higher commodity prices had boosted export earnings and provided an important stimulus to growth in many LDCs. There was concern, however, that such improvements in the terms of trade might only be transitory.

For the representative of Sudan, UNCTAD should continue to closely follow the implementation of the commitments of the Uruguay Round Agreements in favour of the LDCs, analyse the impact of the Round on individual LDC economies and make proposals on ways and means to implement the commitments in their favour. It should also provide technical assistance to those countries to strengthen their negotiating capacities and ability to implement and derive benefits from the results of the Round.

The representative of Japan saw the intensification of South-South cooperation as an additional means of export promotion for developing countries, particularly LDCs. He pointed out that Japan´s ODA to LDCs in 1995 had increased by 9.3% over 1994.

The representative of Norway stated that his country would continue to fulfill its obligations to the targets of the Paris Programme of Action, allocating at least 0.2% of its GNP as ODA to LDCs. He emphasized that the real test of the reorganisation of the UNCTAD secretariat was the degree to which LDC issues would be integrated into the four new divisions.

The representative of Ireland speaking on behalf of the European Union, recalled that the EU currently accounts for about half of world ODA to the LDCs. The EU is also the LDCs´ major trading partner, accounting for over one third of their exports and offering roughly three-quarters of their preferential export markets. UNCTAD ought to probe deeper into the reasons why LDCs continue to lag behind in relation to FDI flows. The speaker looked forward to the speedy implementation of measures taken to resolve the debt problems of those countries.

For the representative of China, the development performance of LDCs has fallen a long way short of the objectives set in the Programme of Action. Referring to the external debt problems of the LDCs, he said that there had been considerable progress, but that the measures taken were still far from meeting those countries´ needs.

The representative of Bangladesh stated that the opening-up of his country´s economy, along with the liberalisation of trade, had been the cause of an increasingly adverse balance of payments, with a consequent negative effect on the exchange rate and on development. Despite a very liberal investment policy, the flow of FDI had been most disappointing. Bangladesh cautioned about attempts to introduce new issues on the multilateral agenda such as labour standards, competition policy, environmental standards or investment regulations, within the ambit of WTO.

The representative of the Russian Federation stated that despite the enormous difficulties of the transitional period, his country would continue to cooperate with LDCs, and revive its economic relations with them. He expressed the complete support of the Russian Federation for UNCTAD´s efforts towards sustainable development of the LDCs and welcomed, in principle, the idea of the establishment of a trust fund, to further work on these countries.

For more information, please contact:
Carine Richard-Van Maele, Press Officer
T: +41 22 907 5816/28
F: +41 22 907 0043
E: amanda.waxman@unctad.org.


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