A/HRC/23/37 $1,138 billion in illicit financial flows (mainly through tax evasion, capital flight and corruption).68 The slow rate of repatriation of stolen wealth has compounded the problem. 63. As the global financial crisis has demonstrated, such dependence can make these countries vulnerable to sudden changes in the availability and affordability of funds and give rise to high debt and foreign financial obligations.69 In turn, this can impact governments’ abilities to meet basic social expenditures as well as the sustainability of their debts. 64. While the Independent Expert recognizes the benefits of truly productive foreign investment, he considers that developing countries should make more efforts to utilize the resources that they already have in order to reduce their vulnerabilities. This requires mobilizing domestic resources through improved tax revenue collection (including revisiting tax incentives for foreigner investors); ensuring that local capital is invested within the country; monitoring and regulating financial transfers to prevent speculation, asset stripping, illicit capital flight and tax avoidance; encouraging genuinely productive long-term investment; increasing transparency concerning revenues from multinational corporations exploiting national resources; and enhancing international cooperation to ensure the return of stolen assets. D. Reforming the international financial system 65. In order to reduce vulnerability of poor countries to exogenous shocks and limit the incidence of debt crises, it is imperative that the global financial system is fundamentally restructured. Such reform should aim at the establishment of a more inclusive and equitable system in which decision-making is shared beyond a few States. In the Independent Expert’s view, no equitable and durable solution to the debt problem can be provided by non-inclusive forums in which only a handful of States participate. It is therefore important that all States participate in efforts to reform the international financial architecture. In this regard, it is worth recalling that in Monterrey, Mexico, in 2002, the international community declared its commitment to “promoting national and global economic systems based on the principles of justice, equity, democracy, participation, transparency, accountability and inclusion.”70 As the only inclusive institution with sufficient global legitimacy, the United Nations is best placed to lead efforts to reform the international financial system. 66. Reform of the international financial architecture should also include redefining the role of the international financial institutions, notably the World Bank and IMF, which are the most important creditors, to ensure that their policies and programmes place human rights and people at the core. There is also a need for these institutions to abandon their practice of attaching intrusive policy conditions (based on a “one-size-fits-all” model of development) which have largely proved disastrous for many poor countries so that countries should be allowed to freely make their own development policy choices. 71 68 69 70 71 EURODAD, “Debt in the downturn: New loans and new rules proposed to help impoverished countries through critical times. Is this the right response?” Discussion paper (30 September 2009), pp. 13-14. Dev Kar and Sarah Freitas, Illicit Financial Flows from Developing Countries: 2001-2010 (Washington, D.C., Global Financial Integrity, 2012); see also A/HRC/22/42. Tim Jones, The state of debt: Putting an end to 30 years of crisis (London, Jubilee Debt Campaign, May 2012), p. 42. The Monterrey Consensus on Financing for Development (2002), para. 9. See Guiding Principles on Foreign Debt and Human Rights (A/HRC/20/23, annex), paras. 73-83. 19