This paper has been prepared for the consideration of CEB by the Chair of HLCP as a result of the discussions held by HLCP at its meeting of 26 and 27 February 2009 on the impacts of the global financial and economic crisis. It reflects a revised version of the Issue Paper 1 prepared by the Chair of HLCP for that discussion, on the basis of a very rich set of contributions provided by CEB member organizations upon request from the Chair of HLCP to the respective Executive Heads. The compendium 2 of contributions received is also available to CEB.
In translating all above policy responses into development action, development policy in itself has to remain true to the values, commitments and objectives proclaimed internationally throughout the last two decades. The fundamental values and principles of development assistance and international cooperation must be honored and applied. Human rights need to be at the center of development assistance. Consistency across all organizations between the normative and the operational, remain crucial. Convergence of policies between the global, regional and national is key for success.
The world is in a global financial, economic and social crisis spreading and evolving at high speed. The channels of transmission are very rapid and multiple; from bank credit, finance and capital flows to a fall in demand affecting output, exports and prices, onto exchange rates, current account and fiscal positions. It is impacting upon the real economy and quickly becoming a global jobs crisis. All countries are affected by a severe global downturn characterized as the worst in over 60 years.
A coherent response by the multilateral system to the crisis is an ambitious task. CEB is well placed to mobilize such a response and make it "a source of strength for the system and each of its members, using it as an instrument for the highest level expression of system-wide coherence" as agreed in the CEB review.
The current crisis is global and originates in the developed world. Governments around the world are taking unprecedented action to avert the collapse of the financial system. Much of the focus to date has been on stabilizing financial markets, restoring credit liquidity and reactivating the economy. In a number of developed and emerging economies, financial rescue measures have been complemented with the announcement of aggressive fiscal measures in the form of lower taxes and higher government spending. The amount of the fiscal packages is often without precedent.
We, the United Nations System Chief Executives, are meeting at a time of the worst global financial and economic crisis since the Great Depression of the 1930's. What began as a collapse of the US sub-prime mortgage market has quickly spread through global financial markets impacting the real economy, undermining consumer and business confidence and triggering further contraction in demand. World trade is falling and commodity prices have declined sharply. The world faces multiple financial, economic and social crises compounded by vulnerability from earlier food and energy crises.
Discussions at HLCP grouped the several dimensions of the crisis and their impact in key policy areas, highlighting the connections within and across them. They also recognized the need to identify the gaps that have to be addressed. The eight key priority areas are:
Face à l‟éventualité que la communauté internationale affronte l‟une des menaces financières, économiques et sociales les plus sérieuses de notre temps, le Conseil des Chefs de Secrétariat des Organismes de l‟Organisation des Nations Unies pour la coordination (CCS) s‟est réuni pour analyser les divers aspects pertinents et se mobiliser pour prendre des mesures afin de faire face à l‟impact de la crise dans les domaines du travail de chacun de ses membres.
Beyond the various rescue packages put in place to recapitalize distressed banks and stabilize the financial systems as well as the fiscal stimulus to reactivate economic activity, global policy coherence within the multilateral system is also called for in a certain number of other areas of finance.
International trade is being seriously affected by falling income and decreasing demand, in particular in developed countries. Global trade negotiations are stalled and protectionism is looming. Protectionist moves could trigger a retaliatory spiral which could exacerbate the downward cycle. Resisting protectionism and avoiding an aggravation of the current crisis is an imperative today.
The intertwined impact of the financial turmoil on decreased consumer and business confidence as well as exports, is ultimately a downward spiral typical of a sustained recession, with less spending and less earning both domestically and internationally feeding back into each other, impacting severely on jobs and incomes. .
Facing such an acute economic downturn, there is a real risk that governments, business and other economic actors and multilateral agencies sacrifice their commitment to fight climate change and environmental degradation for economic survival and funding more immediate priori ties.
Hunger is on the increase across the developing world with tens of millions more people facing food insecurity and malnutrition. The economic downturn is exacerbating the impact of the food crisis, which brought the total number of hungry close to one billion - one in six persons - and with a child dying of hunger every six seconds. Food prices remain volatile and may spike again as droughts and floods and climate-related events affect harvests.
Social protection is in urgent need. The economic downturn is already having several implications in the provision of social services and social protection programmes, particularly in developing countries. Fiscal tightness arising from the need for economic stimulus packages to counterbalance the negative effects of financial constraints are already affecting the possibility of weak public structures to face the growing needs for safety nets, and ways of protecting the population from the effects of the major meltdown.
As the international community faces one of the gravest financial, economic and social threats in our lifetime, the UN System Chief Executives Board for Coordination (CEB) has come together to analyze the relevant aspects and mobilize for action to confront the impact of the crisis in the areas of work of each of its members.
Although not necessarily obvious at first sight, with a crisis now hitting the real economy and virtually all spheres of society, the world as a whole could rapidly become a much more dangerous place to live in. This, in turn, could exacerbate the overall impact of the crisis and hamper recovery plans, feeding back more humanitarian, security and social instability and leading the world into a worrying vicious circle.
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Introduction
This paper has been prepared for the consideration of CEB by the Chair of HLCP as a result of the discussions held by HLCP at its meeting of 26 and 27 February 2009 on the impacts of the global financial and economic crisis. It reflects a revised version of the Issue Paper 1 prepared by the Chair of HLCP for that discussion, on the basis of a very rich set of contributions provided by CEB member organizations upon request from the Chair of HLCP to the respective Executive Heads. The compendium 2 of contributions received is also available to CEB.
International cooperation for development
In translating all above policy responses into development action, development policy in itself has to remain true to the values, commitments and objectives proclaimed internationally throughout the last two decades. The fundamental values and principles of development assistance and international cooperation must be honored and applied. Human rights need to be at the center of development assistance. Consistency across all organizations between the normative and the operational, remain crucial. Convergence of policies between the global, regional and national is key for success.
The crisis and its consequences
The world is in a global financial, economic and social crisis spreading and evolving at high speed. The channels of transmission are very rapid and multiple; from bank credit, finance and capital flows to a fall in demand affecting output, exports and prices, onto exchange rates, current account and fiscal positions. It is impacting upon the real economy and quickly becoming a global jobs crisis. All countries are affected by a severe global downturn characterized as the worst in over 60 years.
The way forward
A coherent response by the multilateral system to the crisis is an ambitious task. CEB is well placed to mobilize such a response and make it "a source of strength for the system and each of its members, using it as an instrument for the highest level expression of system-wide coherence" as agreed in the CEB review.
The need for an international coordinated response
The current crisis is global and originates in the developed world. Governments around the world are taking unprecedented action to avert the collapse of the financial system. Much of the focus to date has been on stabilizing financial markets, restoring credit liquidity and reactivating the economy. In a number of developed and emerging economies, financial rescue measures have been complemented with the announcement of aggressive fiscal measures in the form of lower taxes and higher government spending. The amount of the fiscal packages is often without precedent.
Annex: CEB communiqué
We, the United Nations System Chief Executives, are meeting at a time of the worst global financial and economic crisis since the Great Depression of the 1930's. What began as a collapse of the US sub-prime mortgage market has quickly spread through global financial markets impacting the real economy, undermining consumer and business confidence and triggering further contraction in demand. World trade is falling and commodity prices have declined sharply. The world faces multiple financial, economic and social crises compounded by vulnerability from earlier food and energy crises.
Key areas for policy coherence
Discussions at HLCP grouped the several dimensions of the crisis and their impact in key policy areas, highlighting the connections within and across them. They also recognized the need to identify the gaps that have to be addressed. The eight key priority areas are:
La crisis financiera mundial y su impacto en las tareas del sistema de la ONU
Face à l‟éventualité que la communauté internationale affronte l‟une des menaces financières, économiques et sociales les plus sérieuses de notre temps, le Conseil des Chefs de Secrétariat des Organismes de l‟Organisation des Nations Unies pour la coordination (CCS) s‟est réuni pour analyser les divers aspects pertinents et se mobiliser pour prendre des mesures afin de faire face à l‟impact de la crise dans les domaines du travail de chacun de ses membres.
Finance
Beyond the various rescue packages put in place to recapitalize distressed banks and stabilize the financial systems as well as the fiscal stimulus to reactivate economic activity, global policy coherence within the multilateral system is also called for in a certain number of other areas of finance.
Trade
International trade is being seriously affected by falling income and decreasing demand, in particular in developed countries. Global trade negotiations are stalled and protectionism is looming. Protectionist moves could trigger a retaliatory spiral which could exacerbate the downward cycle. Resisting protectionism and avoiding an aggravation of the current crisis is an imperative today.
Employment, production and aggregate demand
The intertwined impact of the financial turmoil on decreased consumer and business confidence as well as exports, is ultimately a downward spiral typical of a sustained recession, with less spending and less earning both domestically and internationally feeding back into each other, impacting severely on jobs and incomes. .
Environment
Facing such an acute economic downturn, there is a real risk that governments, business and other economic actors and multilateral agencies sacrifice their commitment to fight climate change and environmental degradation for economic survival and funding more immediate priori ties.
Food security
Hunger is on the increase across the developing world with tens of millions more people facing food insecurity and malnutrition. The economic downturn is exacerbating the impact of the food crisis, which brought the total number of hungry close to one billion - one in six persons - and with a child dying of hunger every six seconds. Food prices remain volatile and may spike again as droughts and floods and climate-related events affect harvests.
Social services, empowerment and protection of people
Social protection is in urgent need. The economic downturn is already having several implications in the provision of social services and social protection programmes, particularly in developing countries. Fiscal tightness arising from the need for economic stimulus packages to counterbalance the negative effects of financial constraints are already affecting the possibility of weak public structures to face the growing needs for safety nets, and ways of protecting the population from the effects of the major meltdown.
Foreword
As the international community faces one of the gravest financial, economic and social threats in our lifetime, the UN System Chief Executives Board for Coordination (CEB) has come together to analyze the relevant aspects and mobilize for action to confront the impact of the crisis in the areas of work of each of its members.
Humanitarian security and social stability
Although not necessarily obvious at first sight, with a crisis now hitting the real economy and virtually all spheres of society, the world as a whole could rapidly become a much more dangerous place to live in. This, in turn, could exacerbate the overall impact of the crisis and hamper recovery plans, feeding back more humanitarian, security and social instability and leading the world into a worrying vicious circle.
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