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By Conor Lennon | September 16, 2024 | UN Affairs
As the world’s poorest nations struggle under the burden of debt, many are forced to spend more on repayments than on essential services like health, education, and infrastructure. This growing crisis will be a central focus at the upcoming Summit of the Future, where world leaders will discuss the urgent need to overhaul the international financial system to reduce inequality and improve lives globally.
Outdated Financial Structures
UN Secretary-General António Guterres emphasized on September 12 that the current international financial architecture is outdated and inadequate for addressing today’s complex global challenges. He called for significant reforms to support sustainable development, particularly in nations grappling with unsustainable debt that stifles economic growth and essential public services.
A New Bretton Woods Moment
In a policy brief published in May 2023, Guterres proposed a “new Bretton Woods moment,” referring to the historic 1944 conference that established the International Monetary Fund (IMF) and the World Bank. These institutions, initially created by just 44 countries, now have 190 members, yet decision-making power remains concentrated in the hands of a few developed nations. Guterres argues that the system is no longer fit for purpose in a world facing climate change, systemic risks, and extreme inequality.
He suggests that reforms should include increasing financial support to eradicate poverty, democratizing decision-making within the IMF and World Bank, and creating a new global body, akin to an “Economic Security Council,” to coordinate economic policies and respond to global crises effectively.
The Pact for the Future
These reform ideas will be a key part of the discussions at the Summit of the Future, where a new “Pact for the Future” will be adopted. This document, endorsed by UN Member States, represents a commitment to using global tools to address pressing challenges before they become unmanageable. The Pact focuses on bold actions to achieve the 2030 Agenda for Sustainable Development, with an emphasis on ending hunger and poverty, reducing inequalities, and addressing climate change.
The outcomes of the Summit will also help build momentum for the International Conference on Financing for Development (FfD4), scheduled to take place in Spain in June 2025, where further steps toward reforming the global financial system are expected to be discussed.
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