UN Secretary-General António Guterres says the global financial landscape is in need of major repair, with dozens upon dozens of countries in dire economic straits.
In a speech at the G7 summit in Japan, Guterres said that although organizations like the International Monetary Fund (IMF) are following the law and operating by the book, global financial rules themselves are unjust and immoral.
“The IMF allocated $650 billion in Special Drawing Rights – or SDRs [since 2020].
The G7 countries, with a population of 772 million people, received $280 billion. The African continent, with 1.3 billion people, received only $34 billion. And this was done according to the rules…
Around the world, 52 countries are in technical default, at high risk of default, or face extremely expensive market financing. Middle income countries, including many small island developing states – with few exceptions – do not qualify for concessional funding and have no access to debt relief.”
Guterres says the current global financial system, which was in large part created by delegates from 44 nations in Bretton Woods, New Hampshire back in 1944, is in need of a major update.
“The global financial architecture became outdated, dysfunctional and unfair…
It’s time to reform both the Security Council and the Bretton Woods institutions. This is essentially a question of redistributing power in line with the realities of today’s world.”
Within the current financial structure, Guterres says plenty can still be done.
He highlights a UN proposal that’s designed to combat climate change by offering a new debt-relief and financing mechanism for developing nations.
“We have proposed a Sustainable Development Goals (SDG) stimulus that would provide an effective mechanism for debt relief and scale up long-term and contingency funding.
If multilateral development banks would work together and changed their business models and approach to risk, they could leverage enormous amounts of private finance for developing countries at reasonable cost.”
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