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Amb. Razali Ismail circulated the revised draft decision on initial financial commitments, flows and arrangements that incorporated the discussions held in Negotiating Group II and Plenary on document L.5. On paragraph 1 (concern about the low level of funding), the EC recommendation to include language from the Basis for Action section in Chapter 33 of Agenda 21 was accepted, as was the proposal by the G-77 that the inadequacy of financial resources was "a" and not "the" major constraint for Agenda 21 implementation. Paragraph 2 (the importance of a supportive international and domestic economic climate) was modified to include reference to special attention to countries with economies in transition, as mentioned in paragraph 33.6 of Agenda 21. Japan had difficulties with references to "debt cancellation" in paragraph 4 and Pakistan proposed a reformulation. Razali asked these two governments to discuss the paragraph with other delegations. Paragraph 5 was deleted, as its reference to economies in transition was added to paragraph 2.

Paragraph 6 (the role of UN agencies and international financial institutions) resulted in a debate on the phrase "without imposing conditionalities on developing countries." Developed countries called for the deletion of this phrase as it was not relevant to the paragraph, while the G-77 argued for its retention. Razali asked interested delegations to discuss this further. Paragraph 7 (OECD cooperation) was easily accepted. Paragraph 8 (the establishment of an intersessional working group) generated comments on the nature of the group's tasks, specifically on the monitoring of national policies and priorities in 8(ii) and the design of sustainable development strategies in 8(iii).

The afternoon session began with consideration of paragraph 10 (support for the working group). Japan was concerned about overloading the Secretariat and about budget implications if ad-hoc intersessional working groups were set up to discuss both technology transfer and financial resources. Morocco thought that the subsidiary body would have the same rights as the parent body. In paragraph 11 (information provided by governments related to financial aspects of monitoring implementation of Agenda 21), Iceland thought that information should relate to the programme areas of Agenda 21. Australia asked to return to proposed paragraph 10 bis on NGO consultations. Australia's text, modified by Colombia, Canada, and China, and supported by Brazil, called for consultations with representatives of NGOs and major groups under the relevant UN rules and procedures, ensuring equitable participation from all regions.

Paragraph 12 (information on implementation of Agenda 21) was agreed to without difficulty. In paragraph 13 (the GEF), Denmark, speaking on behalf of the EC, with strong support by Norway and the US, thought that reference to the linkage of global and local environmental issues should be deleted. Colombia, on behalf of the G-77, could not agree with the argument that the formulation of this linkage is outside the context of the paragraph. Paragraph 14 (programme budgets of governing bodies of UN agencies) was agreed to without difficulty.

Having completed its first reading of the draft decision, the Plenary then returned to the unresolved paragraphs. Paragraph 2 (supportive economic climate conducive to sustainable development) met with concern from Japan and Austria on domestic economic and financial policies. Pakistan said that there should be mention of debt relief for developing countries. The Russian Federation thought that paragraph 5 (economies in transition), which had been deleted, should be restored and paragraph 2 left as originally formulated by the Chair. Japan wanted a balance between internal and external financial flows. France, supported by Poland, urged adoption of the Chair's text. In paragraph 4 (debt relief), Pakistan called for adequate response to the problems of low and middle income countries.

Paragraph 6 (role of international financial institutions) was accepted on the basis of informal discussions during the lunch break. Activities at the national level were taken into account in paragraph 8 (intersessional ad hoc working group). Paragraph 10 bis on dialogue and interaction with NGOs was agreed to. Morocco, supported by Bolivia, expressed concern about unequal treatment of subsidiary bodies of the CSD in paragraph 11. France thought that any subsidiary body should add to the effectiveness and efficiency of the CSD. In paragraphs 12 and 13 on the GEF, Denmark commented that the GEF should not design funding activities. By the end of the afternoon, there was still no consensus on paragraphs 2 and 5 and on Morocco's concerns about travel for the governmental experts to attend intersessional meetings.

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