The Secretary-General and President of the General Assembly on Monday led the clarion call for urgent reform of the global financial system, notably how to approach debt relief on behalf of the billions of citizens living in the developing world.
Addressing a high-level meeting of the General Assembly on debt sustainability, António Guterres outlined the crippling impact of debt on developing economies.
“No example of the international financial architecture’s failure is more glaring than its handling of debt. The last four years have been nothing short of a debt disaster,” he said.
He noted that the burden of servicing external debt leaves many countries with little to invest in their own people.
Startling figures
According to UN figures, in 2023, global public debt reached $313 trillion, with the situation particularly alarming in developing economies.
Over a fifth of the tax revenue in 25 developing countries went towards servicing external debt, while extremely high borrowing costs left countries with about 3.3 billion people in total – around 40 per cent of the global population – spending more on interest payments than on health or education initiatives.
“Instead of a safety net, developing countries are faced with an outdated, dysfunctional, unjust system that isn’t meeting their needs,” he added.
Convened by the President of the General Assembly, the debate on debt sustainability and socioeconomic equality for all, marked the first high-level discussion as part of the world body’s first ever Sustainability Week.
Other highlights include dedicated discussions on sustainable transport, tourism and energy.
© UN-Habitat/Kirsten Milhahn
An informal settlement in Bangladesh’s capital, Dhaka.
Worsening inequalities
Also addressing the General Assembly, Dennis Francis, President of the body’s 78th session, emphasized the worsening inequalities between richer and poorer nations.
“By 2030, an estimated 600 million people will still remain impoverished – indicative of the glacial pace of ‘progress’ that falls far short of our SDG goals,” he said, noting that 10 per cent of the world’s population owns 76 per cent of the global wealth.
And while, the world is on track to see its first trillionaire by 2030, it will take another 229 years to eradicate poverty.
“It is clear that the gap between the wealthy North and the Developing South is widening, increasingly limiting the life chances of people living there,” he said.
He outlined the impact of such disparities on youth, women, persons with disabilities and those living in rural areas.
“If nothing is done to correct this situation, they will literally be left behind, denied from enjoying the fruits of development and ignored. Clearly, this is neither acceptable nor sustainable,” Mr. Francis warned.
Need for lifeline
Secretary-General Guterres underscored the need for a lifeline so developing countries can pull themselves out of the “quicksand of debt”.
He said the SDG Stimulus programme which he proposed last February, must now be brought “to life”.
The Stimulus aims to secure $500 billion annually in extra financing from the world’s most developed nations, to meet the 2030 Agenda for Sustainable Development.
“We must dramatically scale-up affordable, long-term financing, primarily through Multilateral Development Banks (MDBs),” he said, also urging global creditors to explore “debt pauses” for vulnerable countries and for international financial institutions to help them restructure their debt.
Reforms needed
Alongside, the global financial architecture requires “wholesale reform”, he said, notably their approach to debt.
This included enhancing debt transparency, scaling-up lending in local currencies and developing new debt instruments.
“Above all, we must increase developing countries’ representation across the system and every decision that is made. They need a seat at the table. They deserve a seat at the table,” Mr. Guterres said.
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António Guterres perfectly encapsulates the urgent need for a complete overhaul of the global financial system. The staggering statistics on debt burden in developing countries highlight the inequality and inefficiency of the current architecture. It’s time for bold and decisive action to address this pressing issue affecting billions of lives worldwide.
As a citizen of a developing country, I strongly believe that urgent reform of the global financial system is crucial. The burden of servicing external debt is preventing our government from investing in the well-being of our people. The current system is outdated and unjust, and it’s time for a comprehensive overhaul to ensure a more equitable economic structure.
As an economist, I strongly believe that urgent reform in the global financial system is imperative to address the crippling impact of debt on developing economies. The alarming figures presented by the UN underscore the urgent need for a new approach that prioritizes the well-being of people over profit.
António Guterres made a compelling case for urgent reform of the global financial system. The impact of debt on developing economies cannot be ignored. It’s time for a comprehensive overhaul to address the crippling debt burden faced by millions around the world.
Does the article mention any specific proposals for the global financial overhaul, or is it more focused on highlighting the current challenges?
The article primarily emphasizes the urgent need for reforming the global financial system, particularly addressing debt relief for developing countries. While specific proposals may not have been outlined, the focus is on highlighting the pressing challenges faced by billions of citizens in the developing world.
How can we ensure fair debt relief without further straining the economies of developing countries?
To ensure fair debt relief without further straining the economies of developing countries, a multi-faceted approach is crucial. This should involve restructuring debt terms, promoting sustainable economic growth, and ensuring transparency in financial assistance. By working collaboratively with international financial institutions, governments can mitigate the burden of debt while fostering long-term development.
The Secretary-General and President of the General Assembly are absolutely right in pushing for urgent reform. The crippling impact of debt on developing economies is undeniable, and the current system is clearly failing many countries. It’s time for a global money makeover to prioritize investment in people rather than burdening them with overwhelming debt.
António Guterres clearly articulates the urgent need for reform in the global financial system, especially in addressing debt sustainability for developing economies. The staggering figures presented by the UN highlight the detrimental impact of excessive debt on countries, depriving them of crucial investments in their people. It’s time for a comprehensive overhaul to provide a fair and just financial architecture for all nations.
As a financial analyst, I strongly agree with the urgent need for reform in the global financial system. The crippling impact of debt on developing economies is evident, and it’s time for a change. The alarming figures mentioned by António Guterres highlight the pressing need for action to ensure a more sustainable and just financial architecture for all nations.