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In his introductory statement, the Chair, Dr. Lin See-Yan (Malaysia), noted that it is a year since this CSD intersessional ad hoc working group on finance started its work and we now have to move the process forward and give the framework some body and substance. He asked delegates to give priority in their statements to the following five areas: 1) how can we best reinvent ODA, especially in conjunction with private capital flows? 2) how can we best strengthen the mandate of the Bretton Woods and other international financial institutions to give high priority to financing sustainable development? 3) how can we best proceed and focus attention on the timeliness and feasibility of examining a global environmental user charge or tradeable permits? 4) how best can we encourage governments to give priority to design effective incentives to reduce pollution based on the polluter-pays principle? and 5) how best can we fully utilize and develop the matrix of policy options to facilitate the formulation of optimum strategies for financing Agenda 21?

JOKE WALLER-HUNTER, Director of the Division for Sustainable Development, presented the unedited version of the Secretary-General's Report on Financial Resources and Mechanisms, which provides an overview of current issues and developments. In the follow-up to Rio, the CSD approached the issue of finance from the perspective of the need to monitor commitments and the development of policy options. In this respect, ODA, the role of the private sector and international financial institutions, and debt relief were stressed. One of the innovative approaches to mobilizing resources indicated are tradeable permits. There is need to discuss economic instruments as well as how to integrate the financing of the sectoral and cross-sectoral issues. The report presents a comprehensive picture of the potential role of economic instruments in both developing countries and countries with economies in transition and makes an attempt to address the matrix approach to resource mobilization. The Working Group needs to advise the CSD on how to overcome the problems of: international policies; financial flows, especially on how to increase ODA level to the UN target of 0.7%; external debt; the role of the Bretton Woods institutions with regard to sustainable development; increasing the knowledge base on tradeable permits; the matrix approach; and promoting cooperation and partnerships in national reforms.

After delegates adopted the agenda (E/CN.17/ISWG.II/1995/1), the Chair invited the hosts of the two preparatory meetings to brief the Working Group. The representative from the Czech Republic noted that the conclusions of the Prague meeting would be distributed. Japan gave a brief report on the Second Expert Group Meeting on Financial Issues of Agenda 21, which was the continuation of the 1994 Kuala Lumpur meeting and was cosponsored by Japan and Malaysia, in collaboration with the DPCSD and UNDP, in Glen Cove, New York, from 15-17 February 1995. The main features of the discussion were international financial flows and innovative international mechanisms, mobilization of domestic resources, and the matrix approach. Experts noted that private capital is the largest segment of international financial flows. Acknowledging the vital role of ODA, the expert group discussed leveraging to maximize benefits of ODA resources through joint ventures, co-financing and other sources. Donors and recipient countries need to explore new approaches to increase the effectiveness of ODA and to make progress in reaching the UN target of 0.7% of GNP for ODA. Participants agreed that the CSD should strengthen communication and partnership with the governing bodies of the international financial institutions (IFIs). The expert group also discussed an environmental user charge on air transport, joint implementation, trade in CO2 permits, and other issues.

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