António Guterres, the Secretary-General of the United Nations (UN), expressed his support for the reform of both the U.N. Security Council and the international financial system.
He emphasized the need to align these institutions with the current realities and challenges of the world at a press conference in Hiroshima, Japan, where he attended the Group of Seven (G7) summit.
“My message to G7 leaders is clear: while the economic picture is uncertain everywhere, rich countries cannot ignore the fact that more than half the world – the vast majority of countries – are suffering through a deep financial crisis.”
Our international financial architecture is outdated, dysfunctional and unfair.
It's time to think seriously about the reform.
— António Guterres (@antonioguterres) May 20, 2023
“The global financial architecture is outdated, dysfunctional and unfair,” Guterres said. “In the face of the economic shocks from the COVID-19 pandemic and the Russian invasion of Ukraine, it has failed to fulfill its core function as a global safety net.
“There is a systemic and unjust bias in global economic and financial frameworks in favor of rich countries, which is naturally generating great frustration in the developing world.”
António Guterres highlighted the disparity in economic recovery between rich and developing countries in the aftermath of the pandemic. He pointed out that wealthy nations were able to implement expansionary monetary and fiscal policies, essentially printing money and spending extensively to overcome the economic challenges.
“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… pic.twitter.com/kBGWDufLLF
— BitKE (@BitcoinKE) June 2, 2023
However, many developing countries, burdened with significant debts, were unable to pursue the same approach. If they had done so, their currencies would have devalued, exacerbating their financial difficulties, he said. This disparity in policy response underscores the need for more equitable and inclusive approaches to address the economic impact of global crises.
He insisted that the Bretton Woods system and the Security Council reflect the power relations of 1945 and need urgent reform.
“What I believe is clear. It’s that there is a growing conscience in developed countries – and I felt it in the G7 – that not enough is being done, both to reform outdated institutions and, at the same time, to … remove the frustration of the Global South [Latin America, Asia, Africa, and Oceania] by an effective policy of solidarity with the Global South,” the UN secretary-general concluded.
Kenyan President, William Ruto, has called on reforms to the international financial system which he blames for charging African countries and the global south 100 times more for development finance.
“The experience with climate change and the Covid-19 pandemic should make us understand the need to eliminate the North-South divide, and that boundaries are irrelevant. For our Eurobonds, Kenya pays 10% interest, while some countries pay up to 15%, but nations in the Global North borrow at interest as low as between 0.1 and 0.5 per cent,” the Kenyan President said.
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