The international financial architecture inherited from the post-war period is no longer sufficiently adapted to deal with the widening of inequalities, the climate challenge, the erosion of biodiversity and the public health challenges that mark the 21e century. The responses provided by the international community today are fragmented, partial and insufficient. On the one hand, the concessional resources deployed by development institutions do not deliver their full potential, particularly in terms of impact, co-financing and adequacy to needs. On the other hand, the increase in financing conditions and the increase in indebtedness are hampering investment in developing countries and do not give them the means to face the challenges they are facing.
Yet international solidarity is more essential than ever in a context of proliferating crises, which further weaken the poorest and most vulnerable countries. To enable the most exposed countries to emerge from the COVID crisis, to deal with the consequences of Russian aggression in Ukraine on their food and energy security and to finance the very high cost of climate transition and the consequences of the events extreme climatic conditions, a change of scale is necessary.
The international financial system inherited from Bretton Woods is reaching its limits, while two major risks weigh on the future of our planet: first, insufficient support for the development and protection of global public goods, due to a lack of mobilized resources, and above all, a risk of geopolitical fragmentation, at a time when we need effective multilateralism and enhanced cooperation more than ever.
Many G7 and G20 countries, organizations and associations share this observation with France and wish to convey this same conviction: we must act quickly and together to correct the imbalances and injustices caused by these fractures. We know that we can count on our Canadian ally, who is strongly committed to ensuring mobilization on this issue, particularly within the framework of the United Nations Secretary-General’s advocacy group on the Sustainable Development Goals and the initiative on financing for development in the era of COVID-19 and beyond.
We are therefore calling today for an overhaul of our software and a funding shock. Together, we must develop our international financial system so that it is more responsive, fairer and more united in order to fight against inequalities, finance climate transition and the protection of biodiversity, and bring us closer to achieving the objectives United Nations Sustainable Development.
This is the objective of the Summit for the new global financial pact, which will be held in Paris on 22 and 23 June. This summit aims to be inclusive — each country, each sensibility, each proposal must be able to express itself.
This summit is part of a positive dynamic: the launch of the reform of the World Bank, the Indian presidency of the G20 and that of Brazil to come, the mid-term review of the objectives of sustainable development, the commitments made during the COP are all reasons for hope to continue this momentum. And tangible solutions have already been initiated: the Paris Club and the G20 have launched a debt treatment initiative, and France plays a pivotal role in the implementation of coordinated solutions within this “common framework”.
We proposed and obtained the mobilization of 100 billion dollars of special drawing rights from the IMF for the benefit of the most vulnerable countries. All countries that can must now take part in this effort. Several multilateral development banks have begun to respond to G20 requests by implementing initial capital optimization measures to increase their lending capacity.
But today we need to go further, drawing inspiration, for example, from the Bridgetown Initiative, a set of innovative solutions led by Barbados, to deal with the climate vulnerability that affects many developing countries and middle income.
We are going to carry out a program of reforms of the development banks and the IMF to better finance the countries that need it the most and to better meet global challenges. It is a program to improve existing instruments and capital and to promote approaches to support the poorest and most vulnerable countries. It is also the desire to mobilize more private financing through guarantee and risk-sharing mechanisms in order to redirect financial flows to these countries with the aim, in particular, of supporting the local private sector and sustainable infrastructure. This presupposes a stronger mobilization of our instruments, new and innovative financing, public and private.
To be more effective, our international financial institutions must be able to commit even more than they currently do to work better together, while mobilizing more private savings. To be more inclusive, we must, above all, give a stronger voice to vulnerable countries in international forums.
The Summit for a New Financial Pact will bring international financial issues to the fore; the presence of many Heads of State and Government will provide the necessary impetus to achieve the necessary changes.
We do not have to choose between the fight against poverty, the fight against global warming and its consequences, and the protection of biodiversity. Just transition is the only answer.