By J Nastranis
NEW YORK, 30 April 2023 (IDN) — With clock ticking for the Sustainable Development Goals (SDGs), the United Nations Secretary-General António Guterres and the Barbados Prime Minister Mia Amor Mottley have called for urgent action to transform the broken global financial system, for a large-scale SDG Stimulus package to invest in SDGs, and stressed the need for reform of the international financial architecture.
“The international financial architecture is short-sighted, crisis-prone, and bears no relation to the economic reality of today,” said the UN Chief.
“The world is running out of time to fix its international financial system that is broken, outdated, infested with short termism and downright unfair,” declared the Barbados Prime Minister.
According to the 2023 Financing for Sustainable Development Report, 52 low- and middle-income developing economies, comprising more than 40 per cent of the world’s poorest people, are either in debt distress or at high risk of debt distress.
Taking a step forward under the ‘Bridgetown Initiative’, announced in July 2022 in the Barbados capital city, they launched at the UN headquarters in New York the ‘Bridgetown Initiative 2:0’. Participants in the gathering on 26 April included experts from academia, civil society and national governments, they considered concrete actions to advance immediate game-changing steps and longer-term reform.
Deliberations highlighted the incompetence of the current international financial system, in view of developing countries facing debt overhangs, higher borrowing costs and limited access to liquidity in times of crisis. In turn, developing economies cannot fund progress on the SDGs, including climate adaptation, if they are borrowing at up to 14 per cent while also paying more than 20 per cent of revenue for debt servicing.
“Too many countries are being prevented from fighting the climate crisis and from creating decent opportunities for billions of people—their citizens. If countries cannot access the finance they need at rates they can afford, the world will lose the battle, not simply the countries.
“What is good for the North is good for the South, East and West! This is the best development strategy for the people of the developing world. This is the best development strategy for the planet,” said the Barbados Prime Minister.
Consequently, the world now faces two options: either we proceed with the status quo, which will lead to a decoupling of the international financial system from developing economies, or we can adapt the current system to the present world. Against this backdrop, discussions focussed on six key action areas designed to leverage concrete steps to support all developing countries:
1 – Provide immediate liquidity support including re-channelling at least $100 billion of unused Special Drawing Rights through the IMF and multilateral development banks.
2 – Restore debt sustainability today and in the long-term and support countries in restructuring their debt with long-term low interest rates.
3 – Dramatically increase official sector development lending to reach $500 billion annual stimulus for investment in the SDGs (SDG Stimulus).
4 – Mobilize more than $1.5 trillion per year of private sector investment in the green transformation.
5 – Transform the governance of international financial institutions to make them more representative, equitable and inclusive.
6 – Create an international trade system that supports global green and just transformations.
The meeting also advanced preparations for key finance events in 2023, including the Paris Summit on a “New Global Finance Pact” on 22 and 23 June.
On 9-10 September Group of 20 Leaders’ Summit will meet in New Delhi. The SDG Summit will take place on 18-19 September in New York and High-level Dialogue on Financing for Development during the UN General Assembly high-level week.
Marrakech, the capital of Morocco, will host the Annual Meetings of the International Monetary Fund-World Bank Group from 9 October to 15 October.
From 30 November to 12 December, UN Climate Change Conference (COP28) will convene in in Dubai, the United Arab Emirates.
These events will ultimately feed into the Summit of the Future and the Biennial Summit on the global economy in 2024 and inform the Fourth Finance for Development Conference in 2025. [IDN-InDepthNews]
Photo From left to right: Special Envoy to the Prime Minister of Barbados, Professor Avinash Persaud; Barbados’ Prime Minister Mia Amor Mottley; and UN Secretary-General António Guterres at the meeting at the UN Headquarters in New York. Credit: Barbados‘ Prime Minister’s Office.
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