To fight the ongoing financial crisis across the world, Prime Minister Sheikh Hasina suggested on Tuesday (September 19, 2023) that the world financial system needs essential changes.
Speaking at the High-Level Roundtable on "Towards a Fair International Financial Architecture" held here at UN Headquarters, she proposed five ideas for restructuring the financial system.
The key points are:
First, it`s important for Multilateral Development Banks (MDBs), International financial institutions (IFIs), and private lending organizations to realign their objectives and raise more money for Sustainable Development Goal (SDG) implementation and climate change mitigation.
Second, more money must be given to developing nations in the form of grants, preferably in larger amounts, and at low-cost, concessional rates.
Third, disaster clauses should be included in all financing agreements to enable weaker nations to withstand shocks during crises;
Fourth, creditors must work coordinately and be transparent in order to prioritize fair and practical debt reduction options; and,
Fifth, rather of using quotas, SDR borrowing limitations should be determined by vulnerabilities and needs, backed by simple lending procedures.
“We recognise that the international financial architecture needs urgent reforms. But agreement on the nature and extent of the reforms remains lacking. Political will is important,” Hasina said.
She mentioned that international public finances are found to be costly and out-of-reach.
“We try to stay clear of high-interest-rate loans to avoid debt distress. Bangladesh has never defaulted on its loan repayment, and we hope to maintain that record,” she said.
Agreeing with the UN Secretary General that the global credit rating system must be reviewed, she said that the current rating system further restricts access to funds for many low- and middle-income countries.
“The limits on their voting rights, quotas, and representation in MDBs and IFIs also undermine their bargaining power,” she said.
Sheikh Hasina said it is critical for the international financial architecture to be inclusive and representative of the Global South.
“Development narratives from countries like Bangladesh demonstrate that we can do our part. It is time for the international financial system to respond to our expectations,” she said.
Noting that Bangladesh has long been credited for its sound macro-economic management, the PM said, “Our economy grew by 8.15pc just before the pandemic.”
She said the country’s economy was put under stress due to the Covid pandemic and Ukraine war.
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