paris finance summit guterres calls global financial architecture ‘outdated and unjust’
Speaking at the Summit for a New Global Financing Pact in Paris on Thursday, UN Secretary-General Antonio Guterres raised concerns over high debt and exorbitant borrowing costs not allowing developing countries to revive their economies.
Several countries in Africa were spending huge sums on debt repayments that could have otherwise been allocated for desperately needed healthcare, Guterres said, adding more than 50 countries were currently either in default or “dangerously” close to it.
“Doing nothing is simply not an option”
He highlighted the need for a debt relief mechanism that helps poorer nations with payment suspensions, lower rates and longer lending terms – eventually making borrowing more affordable for them.
The UN chief called for an end to fossil fuel subsidies and increased climate adaptation funding for vulnerable countries. Additionally, he also asked for developing countries to have increased access to liquidity via the International Monetary Fund’s Special Drawing Rights.
“Doing nothing is simply not an option,” Guterres warned delegates to the Paris Finance Summit. He stressed these measures would support global justice – helping beat hunger and poverty, supporting investments in health and education, and uplifting developing economies.
No Solution Without Reform
Clearly, the international financial architecture built in the aftermath of WWII isn’t serving its purpose to provide a safety net for developing countries, the Secretary-General warned. He called the architecture “outdated, dysfunction and unjust”.
Guterres stressed the system is no longer capable of addressing the needs of the 21st-century world – a multipolar world marked by growing systemic risks, geopolitical tensions, and deeply integrated economies and financial markets.
Calling for serious reforms, the UN chief said the ‘outdated’ financial system worsens inequalities, not allowing the poorest countries to access the credit and debt support they need and deserve. He gave the example of Europeans receiving nearly 13 times more than Africans, under current rules for Special Drawing Rights to weather recent crises.