Reforming the international system has gained traction across the world as the world enters a multipolar order. From the United Nations Security Council to other UN bodies, the global system for many is unfair and servants of the few. Over the years, the call for an inclusive and fair international system and organizations has gained intensity as nations find alternative voices and choices.
Seen as instruments of some financers, some global financial institutions are said to be repressing developing nations under the pretext of credits and loans. The rise of BRICS nations presents nations with alternatives while countering a world dominated by few countries.
In the past few years, the call for creating alternative financial institutions has increased with the BRICS alliance now forming the New Development Bank. This presents alternatives for developing nations and competition for existing financial organizations.
Creating a more governing global partnership, governments worldwide still ask a more common question in relation to reforming some of the global ways of doing business. One is reforming the financial architecture of the globe. Nations found in Africa and others who are considered poor or developing countries have been voicing their discontent on how the world runs the show and how things are becoming hard.
In a more concise way, nations must know what they ask for. While the developed and the rich world is working to solve its own problems like health issues, climate change, and the like, the developing world like Africa is trying to answer some life and death queries like debt and development issues to exist as a nation.
The global financial structure, in many ways, is criticized for its functioning, and many nations from every corner of the globe have been asking for reforming those financial institutions in order to make them fair and serve every nation equally.
On many occasions, the above idea was also supported by some high-table officials. During the recent event, addressing the participants in a video message at the First Preparatory Committee meeting of the Fourth International Conference on Financing for Development, António Guterres, Secretary-General of the United Nations, said “Faced with sky-high debt burdens and costs of capital, developing countries have limited prospects of financing the Sustainable Development Goals.”
Members states of the United Nations coupled with international organizations are discussing ways to bring solutions for some global pressing issues.
The idea of reforming the financial architecture of the world, states from all walks of life must sit and look for sustainable solutions for those challenging issues.
Inclusion and fairness are some of the hardest questions to answer. It is a fact that some rich and powerful nations are stirring the financial world and nations that have smaller quotas in those organizations. Without creating a more conducive environment for every nation, it will be hard to ensure equality as the system lets the rich be richer and the poor be poorer.
In addition, the system regarding the debt system also needs to be revised. Nations that have borrowed from those global financial institutions are facing hard times. In such a way, nations are still crying for functional global financial reform.
In a recent event, finance and foreign ministers of states met to call for radical action to reform the international financial architecture, empower developing countries in international institutions, and channel trillions of dollars toward sustainable development in Africa and other developing countries.
In the Addis Ababa Action Agenda of financing development, United Nations Member States once again convened in Addis Ababa, Ethiopia, to renew the push for sustainable development financing and the Sustainable Development Goals (SDGs).
António Guterres, UN Secretary-General, stated during the conference “The Fourth International Conference on Financing for Development provides a unique opportunity to tackle these challenges head-on. It opens the door for world leaders to adopt ambitious reforms to deliver affordable long-term financing at scale – and deliver the SDG Stimulus. And it presents a unique opportunity to reform an international financial system that is outdated, dysfunctional and unfair.”
After four years of a series of global shocks – including the COVID-19 pandemic, geopolitical conflicts, and economic instability – the SDG financing gap for developing countries has ballooned to USD 4 trillion annually. The financing gap and accompanying debt challenges have worsened poverty and inequality, putting the world off track to meet international targets set in 2015. The challenges countries face in rising sufficient resources have laid bare structural flaws in the international financial architecture and accelerated calls for reforms.
“This meeting provided the opportunity to take stock of the steps we must take to fill the financing gaps and meet the development needs of all people around the world,” said Mr. Li Junhua, the Under-Secretary-General of the United Nations Department of Economic and Social Affairs (UN DESA), and Secretary-General of the FfD4 conference. “The ministers, experts, and other stakeholders that gathered here in Addis Ababa made clear that we cannot continue with business as usual and must dramatically reshape the international financial system to ensure investment where it is most needed.”
Ministers and global experts unveiled proposals for reforming the rules and governance of international taxation, and for addressing countries facing debt crises, including through new international mechanisms to resolve situations of sovereign debt default.
“The international financial architecture created nearly 80 years ago needs to be reformed to respond to the most pressing challenges of African countries in a more effective and inclusive manner,” said Mr. Claver Gatete, Executive Secretary of the United Nations Economic Commission for Africa. “African countries are taking a leadership role in pressing for changes to global tax and financial systems, and they are clear that the international system needs to better support their sustainable development aspirations.”
The Preparatory Committee meeting brought together representatives of at least 103 countries, including high-level representatives, as well as representatives of multilateral development banks, United Nations system entities and other intergovernmental organizations, the private sector, and non-governmental organizations. Almost 800 participants discussed the full range of financing issues, including debt, taxation, trade, private finance, development cooperation, technology, and data.
The five-day meeting was the first of four preparatory meetings to be held ahead of the Fourth International Conference on Financing for Development (FfD4) Conference taking place in Sevilla, Spain, in 2025, with a mandate from the UN General Assembly to support reform of the international financial architecture.
Subsequent sessions of the Preparatory Committee will be held in New York in December 2024 and in February and April 2025. A one-day inter-sessional multi-stakeholder hearing will also be convened in New York in October 2024 as part of the preparatory process for the Conference.
BY DANIEL ALEMAYEHU
THE ETHIOPIAN HERALD TUESDAY 6 AUGUST 2024
