M A I N   N E W S

Build investor’s confidence: Sinha

Washington, April 21
Finance Minister Yashwant Sinha today urged the Development Committee of the World Bank and International Monetary Fund (IMF) to put in place an effective mechanism for ensuring a sustained investor confidence in and private capital flows to developing countries.

“The international community has an obligation to put in place mechanisms to address this critical issue’’ as in a market system, “the sudden, and in many cases, irrational reversals of investor confidence and private capital flows has had devastating effects on the poor,” Mr Sinha said in his address at a meeting of the committee here.

Expressing concern over the reduced private capital flows to developing countries, he said commercial bank lending to developing countries in 2001 dropped to 75 per cent of the 2000 figure.

International equity placements by developing countries fell by 72 per cent in 2001. Further, foreign direct investment (FDI) flows to such nations remain highly uneven, he said.

The bank’s analytical work on trade should help improve the prospects of the successful implementation of the Doha Development Agenda. Industrialised countries form 80 per cent of the market for goods produced by developing countries. The denial of market access and the continuance of high protection in labour intensive sectors by developed countries has to be reversed, said Mr Sinha.

Adequate resources for the financing for development, in particular, for education, health, housing, irrigation and infrastructure should be ensured.

Welcoming the recent additional commitments made by the European Union, the USA, Canada, he said this, however, had clearly fallen short of the required $ 50 billion additionality estimated by the high-level panel. Mr Sinha suggested that overseas development assistance (ODA) flows should be increasingly channelled through multilateral rather than bilateral channels. UNI