Sal
Cabo Verde
Deputy Secretary-General's video message to the 2023 African Caucus Meeting
Statements | Amina J. Mohammed, Deputy Secretary-General
Statements | Amina J. Mohammed, Deputy Secretary-General
Excellencies,
Ladies and Gentlemen, dear friends,
I am honoured to join you today, albeit virtually.
Discussions on the modalities and mechanisms to finance economic development in Africa are pertinent and timely. The “system” or international financial architecture is discussed in the IFIs, the G20, the Paris Summit, and the UN – and have led to a shared understanding that we cannot continue with business as usual.
Recent global shocks, particularly impacting African nations, stress-tested the institutions and instruments that grew out of the second world war. Seventy-five years later, it is long overdue to create an international financial system that is fair, inclusive and just, and that is able to act as a global safety net in times of crisis.
Challenges on the African continent, where 37 countries are considered in debt distress or at high risk, and where the World Bank estimates the composition of debt as 23 percent bilateral, 33 percent multilateral and 44 percent commercial creditors, include limited fiscal space in already strained national budgets, and high borrowing costs from an increasingly complex and opaque lending community.
Yet, there is huge potential on the Continent. Some of the most innovative proposals are born here – such as the African Development Bank’s initiative to rechannel Special Drawing Rights to MDBs to enable leveraging and access to liquidity to countries in need.
The Secretary-General has put forward concrete proposals to create the institutions and mechanisms that will enable growth and prosperity that, include:
First, increasing the voice and participation of developing countries in the IFIs. Enhancing governance can be done in different ways, delinking paid-in capital from voting rights and lending allocations, or double majority voting to encourage consensus decision-making.
Second, immediately setting up a debt workout mechanism to make the Common Framework work better, while, in the medium term creating an inclusive and representative debt resolution mechanism to ensure transparent, sustainable and affordable long-term lending.
Thirdly, IMF and credit rating agencies need to improve debt sustainability analysis and credit ratings, while both creditors and debtors must update the principles of responsible borrowing and lending to reflect the changing environment.
Fourth, to strengthen the global safety net, we need to revamp the SDRs so that they are issued more automatically and counter-cyclically in response to shocks. And allocated based on needs and vulnerabilities.
Fifth, address the short-term volatile private financial system through resetting regulations to address risks from both bank and non-bank financial institutions, address tax incentives and reduce greenwashing through standards and practices that place SDGs and climate at the heart of markets.
And lastly, making international tax cooperation fully inclusive and more effective, simplifying rules and adopting a higher global minimal corporate income tax rate than the current 15%.
These proposals, if implemented, are concrete ways that allow developing countries, including those on the African Continent, to grow and prosper, centered around the SDGs and climate action.
There is great potential in Africa, and I wish you the utmost success with your discussions. Thank you.
Ladies and Gentlemen, dear friends,
I am honoured to join you today, albeit virtually.
Discussions on the modalities and mechanisms to finance economic development in Africa are pertinent and timely. The “system” or international financial architecture is discussed in the IFIs, the G20, the Paris Summit, and the UN – and have led to a shared understanding that we cannot continue with business as usual.
Recent global shocks, particularly impacting African nations, stress-tested the institutions and instruments that grew out of the second world war. Seventy-five years later, it is long overdue to create an international financial system that is fair, inclusive and just, and that is able to act as a global safety net in times of crisis.
Challenges on the African continent, where 37 countries are considered in debt distress or at high risk, and where the World Bank estimates the composition of debt as 23 percent bilateral, 33 percent multilateral and 44 percent commercial creditors, include limited fiscal space in already strained national budgets, and high borrowing costs from an increasingly complex and opaque lending community.
Yet, there is huge potential on the Continent. Some of the most innovative proposals are born here – such as the African Development Bank’s initiative to rechannel Special Drawing Rights to MDBs to enable leveraging and access to liquidity to countries in need.
The Secretary-General has put forward concrete proposals to create the institutions and mechanisms that will enable growth and prosperity that, include:
First, increasing the voice and participation of developing countries in the IFIs. Enhancing governance can be done in different ways, delinking paid-in capital from voting rights and lending allocations, or double majority voting to encourage consensus decision-making.
Second, immediately setting up a debt workout mechanism to make the Common Framework work better, while, in the medium term creating an inclusive and representative debt resolution mechanism to ensure transparent, sustainable and affordable long-term lending.
Thirdly, IMF and credit rating agencies need to improve debt sustainability analysis and credit ratings, while both creditors and debtors must update the principles of responsible borrowing and lending to reflect the changing environment.
Fourth, to strengthen the global safety net, we need to revamp the SDRs so that they are issued more automatically and counter-cyclically in response to shocks. And allocated based on needs and vulnerabilities.
Fifth, address the short-term volatile private financial system through resetting regulations to address risks from both bank and non-bank financial institutions, address tax incentives and reduce greenwashing through standards and practices that place SDGs and climate at the heart of markets.
And lastly, making international tax cooperation fully inclusive and more effective, simplifying rules and adopting a higher global minimal corporate income tax rate than the current 15%.
These proposals, if implemented, are concrete ways that allow developing countries, including those on the African Continent, to grow and prosper, centered around the SDGs and climate action.
There is great potential in Africa, and I wish you the utmost success with your discussions. Thank you.