United Nations Secretary-General Antonio Guterres said on Wednesday that the international financial system was “morally bankrupt” because it favors rich countries, and he expected India to get involved in its reform.
Developing countries have received “very few stimulus financial instruments” as they try to recover from the Covid-19 pandemic, and some of them are facing debt overhang, he observed.
Speaking at an event at the Indian Institute of Technology, Bombay, he said India’s upcoming G20 Presidency will be an opportunity to bring the values and vision of the developing world to the top of the Mondial economy.
“The international financial system is morally bankrupt. It was designed by the rich to serve the interests of the rich. Now is the time to change it,” he said. “That is why I also encourage India’s commitment to a profound reform of the global financial architecture which favors those who designed it, and which is terribly detrimental to the interests of developing countries, in particular the least developed countries,” he said.
It is an interesting coincidence that Indonesia’s presidency of the G20 is followed by that of India, Brazil and South Africa, said António Guterres. Thus, for the first time in history, four major developing countries will successively lead the G20, he said. India will take over the G20 presidency for one year from December 1.
During this period, India is expected to host more than 200 G20 meetings, starting from December 2022. The G20 Leaders Summit is expected to be held on September 9-10, 2023 in New Delhi.
“This is an unmissable opportunity to make our international, economic and financial relations extremely unfair. There is an opportunity to fundamentally reform institutions, procedures, regulations and standards to ensure that we have a global economy for all and not just a global economy for the rich,” he said.
He counts on India’s support to mobilize G20 countries around debt relief, the senior UN official said. Many developing countries are in or near debt distress and require multilateral action, including the expansion and extension of the G20 Debt Service Suspension Initiative, the UN Secretary General said.
After the Covid-19 pandemic, there is an inequality in the resources available for economic recovery. Guterres said. No less than $16 trillion has been mobilized for stimulus, he observed. The United States and Europe have “printed money”, but most developing countries could not because it would cause their “currencies to fall”, said António Guterres.
“The truth, then, is that the recovery from the pandemic has largely been financially concentrated in developed countries. Developing countries have received very few stimulus financial instruments. And the result is that because of their dramatic impact in their societies, they have to support people, which has led to a dramatic increase in their debt,” he said.