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United Nations Secretary-General Antonio Guterres on Wednesday said the international financial system is “morally bankrupt” as it favours the rich countries, and he expected India's involvement in reforming it.
The developing countries received "very little from the financial instruments of recovery" as they tried to recover from the Covid-19 pandemic, and some of them are facing debt distress, he observed.
Speaking at an event at the Indian Institute of Technology Bombay, he said India's upcoming presidency of the G20 grouping will be an opportunity to bring the values and vision of the developing world to the top table of the global economy.
“The international financial system is morally bankrupt. It was devised by the rich to serve the interests of the rich. It is the moment to change it,” he said. “That is why I also encourage India’s engagement in deep reform of the global financial architecture which favours those that conceived it, and it is terribly detrimental to the interests of the developing countries, especially the least developed countries,” he said.
Interesting coincidence
It was an interesting coincidence that the G20 presidency of Indonesia will be followed by that of India, Brazil and South Africa, Guterres said. For the first time in history, thus, four key developing countries will lead the G20 in succession, he pointed out. India will take over the presidency of the G20 for one year from December 1.
During this period, India is expected to host over 200 G20 meetings, beginning in December 2022. The G20 Leaders' Summit is scheduled to be held on September 9 and 10, 2023, in New Delhi.
“It is an opportunity that cannot be missed to make our international, economic and financial relations which are extremely unfair. There is an opportunity to deeply reform institutions, procedures, regulations and norms to make sure we have a world economy for all and not only a world economy for the rich,” he said.
He counted on India's support in mobilising G20 countries around debt relief, the top 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.
Resource inequality
Post Covid-19 pandemic, there is an inequality of resources available for economic recovery. Guterres said. As much as $16 trillion were mobilised for recovery, he observed. The United States and Europe "printed money" but most developing countries could not do that because that would cause their currencies to "go down the drain," Guterres said.
“So the truth is that the recovery from the pandemic was largely concentrated from the financial point of view in the developed countries. Developing countries have received very little from the financial instruments of recovery. And the result is that because of their dramatic impact in their societies, they need to support people which has led to a dramatic increase in their debt," he said.
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