The international financial system biased against Africa — Nana Addo
Speaking in turn before the United Nations General Assembly on Wednesday, September 21, in New York, the President said “these are the wild lessons we have had to learn, as the world has come out of the grip of the coronavirus for rising energy and food prices and a global increase in the cost of living The need for system reform is dire.
Stressing that “our world is currently in the wrong place”, he recalled an observation by the World Bank which described the global economy as “enduring its deepest downturn since 1970”.
As the world faces a devastating global economic pandemic, pushing Africa into its worst recession in half a century, President Akufo-Addo said a slump in productivity and incomes, increased pressures on spending and spiraling public debt confronted the continent relentlessly.
“As we grappled with these economic challenges, Russia’s invasion of Ukraine erupted upon us, making an already difficult situation worse. feel this war directly in our lives in Africa. Every bullet, every bomb, every shell that hits a target in Ukraine hits our pockets and our economies in Africa,” he said.
Describing global inflation as “enemy number one this year”, President Akufo-Addo noted that “it has reached a 40-year high in the United States and the United Kingdom in recent months. There are record inflation in the euro zone. Several African countries have inflation rates three to four times higher than they were just two years ago.”
In Ghana, the president noted that “we are experiencing the highest inflation in 21 years. High food costs are hurting the poor the most, especially the urban poor.”
The fallout from the rise in interest rates by central banks around the world to fight inflation, the president says, has been severe beyond borders, as global investors pull money out of economies developing to invest in bonds in the developed world.
This, he explained further, led to depreciating currencies and increasing borrowing costs; meaning that African economies must raise and spend more of their own currencies to service external debt in US dollars.
“It has become clear, if ever there was any doubt, that the international financial structure is significantly skewed against developing and emerging economies like Ghana. that would ease pressures on their economies are closed to small nations,” he said.
To make matters worse, President Akufo-Addo noted that “credit rating agencies have been quick to downgrade economies in Africa, making it harder to service our debts. The Africa Etiquette as an investment risk is little more than a fulfilling prophecy created by the bias of the international money market, which denies us access to cheaper borrowing, driving us deeper into debt.”
History, the president stressed, “will judge us harshly if we do not seize the opportunity to make the changes that will allow us to deal with the many problems we face.”