UN Secretary-General António Guterres today called for a sweeping reform of the international financial system so that low-income countries vulnerable to climatedisasters can receive adequate funding from wealthier countries.
Speaking at a conference in Geneva on reconstruction efforts following the devastating floods in Pakistan, Guterres said that the international financial system has been skewed in favor of wealthy countries and must be reformed to ensure a more equitable distribution of resources.
“It is very clear that the current system is biased,” he told reporters in a harsh critique of what he called “a morally corrupt global financial system.”.
“The system was devised by a group of wealthy countries and, of course, primarily benefits wealthy countries.”
Guterres made these remarks alongside Pakistani Prime Minister Shehbaz Sharif, who said that Pakistan needs 8 billion from the international community over the next three years to support recovery efforts following the floods that killed at least 1,700 people, the displacement of millions more, and the destruction of critical infrastructure.
“We need a new debt architecture, and we must ensure that debt relief is effectively provided by the system even to middle-income countries facing very difficult, including suspension of payments,” Guterres added.
The International Monetary Fund, whose delegation met with Pakistan’s finance minister on the sidelines of the conference, has not yet approved the release of 1.1 billion which was originally scheduled to be disbursed last November, with the result that Pakistan has foreign exchange reserves sufficient to cover only one month’s worth of imports.
Expressing disappointment at the inaction of international lenders and the negligible level of investment to address climate emergencies, Guterres called for countries’ vulnerability to be taken into account when major financial institutions provide financing below market interest rates.
“We must redesign our financial system so that it takes vulnerability into account—and not just GDP—when decisions are made regarding concessional financing for countries around the world,” said the UN Secretary-General.
