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14 January 2005

Remarks by The Rt Hon Gordon Brown MP, Chancellor of the Exchequer on transparency

The new deal we propose between developed and developing countries is grounded in responsibilities that we believe it is to the benefit of all to accept – rich countries and poor countries recognising that they have mutual obligations and indeed responsibilities to each other.

The new proposed plan – sometimes called a new Marshall Plan - would ensure that the richest countries complete 100 per cent debt relief, address our damaging trade barriers and offer additional aid as investment for the poorest countries through the creation of a new International Finance Facility.

But all have responsibilities.  No country has escaped poverty other than by participation in the international economy, focusing on macroeconomic stability and encouraging domestic and international private investment and transparency, with a clear sense of country ownership of their policies.

So the International Finance Facility is part of our general strategy to work with developing countries to build the capacity – the monetary and fiscal policies, the infrastructure, the support for trade and investment, all underpinned by openness and transparency – that they have stated is essential for their own development.

The next step is a full framework of transparency for both rich and poor countries that makes a reality of our mutual responsibilities and the need for accountability - and will be a boost for prosperity.

It is a plan that means we must all open our books, be fully transparent and each of us account for our actions for all to see.

For developed countries, there must be: 

  • a new honesty about the effects of developed country protectionism.  So our Government has been looking - and we must all look together - at the direct and indirect effects of agriculture and other protectionism and what must now be done to ensure a fair deal for the developing countries;
  • a new openness admitting that aid will never be fully effective when there is the tying of aid and that there is a need for openness to ensure that we maximise the value of aid as investment - with aid for, and seen to be for, the direct benefit of developing countries. Britain has untied 100 per cent of our aid and now we ask other countries to work in partnership with developing countries to deliver untied aid through governments where they can demonstrate accountability and that resources will be used for poverty reduction; and
  • a new determination to make the transparency initiative for extractive industries – for business to publish what they pay – work effectively and to extend it more widely.

This opening of the books and extension of transparency would make for greater prosperity through fairer trade, though greater value for money from aid and through addressing financial corruption.

There must also be an openness and transparency in not just some but all developing countries where it is right that the international institutions insist on monetary, fiscal and corporate rules and codes of conduct that ensure transparency; insist on action to root out corruption wherever it is found; and insist on greater accountability to their own people.

It is because we insisted on transparency in our debt relief initiative, agreeing that what was written off in debt interest payments had to go to education, health or poverty reduction, that the debt relief initiative has been more successful than previous initiatives in ensuring spending goes to public services and not to wasteful projects.

And as I said yesterday we are extending that transparency in our new debt relief proposals.  The countries who will benefit from our new debt initiative will have to be transparent in showing that their resources are used for poverty reduction.
 
To ensure the effectiveness of transparency – as has been proposed and is being implemented by President Mkapa – there should be reforms in public finance management, in the legal sector and in the area of public service down to the local level.  And I believe similar reforms that promote open government should be adopted by all developing countries.

We will propose to the international financial institutions that we extend the surveillance of countries and the open publication of assessments vital to transparency.  In return we believe that the IMF and World Bank should themselves be open and transparent in their policymaking and promote further transparency of payments in their allocations of finance. We must also establish stronger mechanisms for tracing and repatriating illicit assets.

The Africa Commission will focus on governance and transparency and look at how we can provide resources to improve implementation of existing conventions on corruption and bribery and support African efforts to prevent corruption and money laundering.

So our case is that prosperity will be advanced by transparency.  And that in these practical ways all governments should commit themselves to being transparent in their relationships and dealings with each other. 

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