KINGSTON, Jamaica, CMC – The United Nations Secretary-General, Antonio Guterres, Monday called for an end to the “moral” problem, which he used to describe the “injustice” in the existing world economic order.
“We are today facing, when we look at the present international financial architecture, a moral problem, a power problem, and a practical problem,” Guterres, who held talks with Jamaica’s Prime Minister, Andrew Holness, told a news conference.
The UN Secretary-General referring to the moral problem, reminded journalists that during the coronavirus (COVID-19) pandemic, “vaccines were not evenly distributed.
“You all remember that Europe, the United States, and other rich countries were able to pinch billions to support their economies after COVID, the recovery of their economies to support their populations.”
He said because inadequate care was taken, leading to increased inflation, developing countries are now feeling the brunt of their policies.
“Then, because there was a huge global liquidity problem, the IMF was able to issue special drawing rights (SDR),” he said, noting that some countries like Europe received US$180 billion. In contrast, the African countries, three times the population of Europe, received 34 billion.
“There is something fundamentally wrong in the rules because these are the rules in the system which allow for the injustice to take place,” he said, noting small island developing states “do not face adequate countries debt relief mechanisms and do not face the possibility of access of concessional funding at the level that is necessary because they are considered to be middle-income countries…
“This is an injustice because small island developing states, in particular, have a high level of vulnerability because of the structure of their economies, their geographic location, their size, and the enormous impact they suffer from climate change.”
“So there is a profound moral problem in the international financial system. And there is a power problem.
The Bretton Woods institutions were created after the Second World War; Jamaica was not independent at the time, and most African countries were not separate at the time, and the structure of what was created …with minor adaptations in the last decades, reflects the power relations that existed after the Second World War.
“They are outdated, and so the system is unfair and dysfunctional. The system needs reform to adapt it to the realities of the global economy,” Guterres said, noting that power problems are always difficult to solve.
He said, in addition, the international community is faced with several practical issues, and “even with the current situation, much more could have been done, and much more should be done about a better link between climate and finance.”
He said if the multi-lateral development banks change their business models and a new approach to risks, “and they can use their resources to leverage massive excess to private finance at reasonable costs for developing countries, much more can be done in new instruments…for example, swaps for debts…
“So there are a lot of things that can be done if there is the political will to do so even if we will not be able to solve…the moral problem and the power problem,” he said, adding, “We are determined to correct this, and this is the reason for my visit.”
A UN statement issued before his arrival here said that during their meeting, the Secretary-General and the Prime Minister would discuss a wide range of issues, including the impact of the climate crisis in the Caribbean and the upcoming mid-term review of the global framework for disaster risk reduction.
They will also discuss Jamaica’s leadership in reforming the global financial architecture so that developing countries, including middle-income countries, can restructure and sustainably manage debt and access technology and finance at affordable rates to invest for growth and inclusive, sustainable development.
Jamaica is the co-chair of the Group of Friends on Financing for Development alongside Canada.
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