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United States Commitment to the 2002 Monterrey Consensus

The 2002 Monterrey Consensus identified six leading actions, or "pillars," in support of "Financing for Development." The Consensus notes commitments made by countries to increase development financing. This Fact Sheet notes a few of the many examples of progress made by the U.S. Government Foreign Assistance Programs since 2002.

The six "pillars" are:

What progress has been made by the U.S. Government under each pillar?

Pillar 1: Mobilizing Domestic Finance.

The U.S. funds many programs to mobilize domestic finance. Examples include:

• Improved Public Finance in Egypt, El Salvador and Kosovo. Egyptian tax revenue increased to 2.5% of GNP in 2006. Assisted Kosovo to institute a new tax system with uniform low rates to spur growth.
• Financed public infrastructure through partnerships with private domestic finance sources for a container port and a 964 KM road in Peru.
• Land tenure reform in Madagascar and Afghanistan to spur bank lending based on secure title to property.
• Technical assistance to governments to facilitate bond issuance for local development, and work with investors to increase availability and transparency of bond informa-tion.
• Kazakhstan program which created a $700 million market for residential and commercial mortgages.
• Africa Focus: U.S. government is mak-ing major contributions to meet the Monterrey Consensus goal to expand the loans available to private African companies. Moving closer to the Monterrey Consensus goal of loans approaching the value of 1% of individual African country GNP.
• Funding to nine countries including Benin, Nigeria, Rwanda, Kenya for an anti-corruption initiative to build civil society and increase governmental transparency and accountability.

Pillar II: Mobilizing Foreign Direct Investment and other private flows.

The U.S. helps developing countries to make their economies more attractive to foreign investment. Examples include:

• U.S. foreign direct investment in Sub-Saharan Africa grew from $6.9 billion in 2000 to $9 billion in 2007.
• Overseas Private Investment Corporation private equity funds have mobilized $2 billion of investment capital for Africa.
• The Millennium Challenge Corporation has committed $6.7 billion to 35 countries worldwide, including 18 countries in Africa. MCC assistance promotes poverty reduction through economic growth and builds investor confidence in the governance of MCC partner countries.
• President Bush created in 2007 "Africa Financial Sector Initiative" to strengthen financial systems, e.g. providing technical assistance in loan analysis to increase lending to the African private sector, and training for central banks.
• The U.S. Treasury Department is working with African governments, such as Ghana on a debut $750 million sovereign bond issuance to help access international capital markets.
• Forged over 600 public-private alliances which leveraged $6 billion of private funding to $2 billion of government funds to build infrastructure.

Pillar III: International Trade.

President Bush has called upon countries to complete the Doha trade round by the end of 2008. The United States remains committed to trade as a source of wealth creation and innovation.

• The United States is the world's largest importer of goods from developing coun-tries, with 2007 imports totaling $573 billion.
• The United States has invested $6.6 billion since Monterrey in trade capacity train-ing, and is working in 70 countries to deliver trade assistance to help developing countries deliver on trade agreements and benefit from trade opportunities.
• The United States has cultivated public-private partnerships to promote trade, in-cluding, work with Rwandan farmers and Starbucks to improve coffee farming and commercialization. Rwandan coffee is now sold in 5,000 Starbucks stores around the world.

Pillar IV: Increasing Official Development Assistance.

The U.S. pledged to increase ODA from year 2000 levels by 50% by 2006.

• The U.S. met this target 3 years early in 2003 and has more than doubled ODA since Monterrey.
• In 2005 at the Gleneagles G8 Summit, the U.S committed to double assistance to Africa between 2004 and 2010. The U.S. is on track to meet this target.
• Created the Millennium Challenge Ac-count to fund countries that govern justly, in-vest in their people, and promote economic freedom.
• The United States, along with other G20 nations, has encouraged the World Bank and other multilateral development banks to use their full capacity in support of their development agenda.

Pillar V: External Debt.

The U.S. works within a broad multi-lateral framework on developing country debt issues, with a focus on the shared responsibility of debtors and creditors to work out debt problems.

• The United States has worked with other donor nations, the International Mone-tary Fund, the World Bank, and regional de-velopment banks on the Multilateral Debt Relief and Highly Indebted Poor Countries Initiatives which will provide up to $140 billion of debt relief to developing countries.
• 23 countries have completed the Highly Indebted Poor Countries Initiatives process and qualified for final reduction of debt; an additional 32 countries have begun to receive debt relief as a result of progress made on economic policies and poverty reduction to start receiving debt relief; over $68 billion in debt relief has been committed under the program.
• The United States has also worked with the World Bank to increase its use of grants rather than loans for the poorest coun-tries, in order to further relieve them from the risks of debt distress.
• African partner countries government expenditures on poverty reduction have in-creased by more than one-third, from 7% of GDP in 2002 to 9.5% in 2007.
• Over the same period, debt service payments have decreased from 3% of GDP to 1.75% GDP, a 42% reduction in 5 years.

Pillar VI: Systemic Issues.

As part of the consensus framework, the U.S. committed to address systemic issues of the international monetary, financial and trading systems affecting developing countries. The United States, along with G20 members pledged to:

• Help emerging and developing econo-mies gain access to finance in current difficult financial conditions, including through liquidity facilities and program support.
• Ensure that the IMF, World Bank and other multilateral development banks have sufficient resources to continue playing their role in overcoming the crisis.
• The G20 countries are also committed to advancing the reform of the Bretton Woods institutions, and developing and emerging economies, including the poorest countries, should have greater voice and rep-resentation in those institutions.
• The G20 action plan includes an ex-ploration of ways to restore emerging and de-veloping countries' access to credit and resume private capital flows, including those for infrastructure development.

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