UN-led organisations call for overhaul | The Daily Star
12:00 AM, April 11, 2019 / LAST MODIFIED: 12:06 AM, April 11, 2019

GLOBAL FINANCIAL SYSTEM

UN-led organisations call for overhaul

Unless national and international financial systems are revamped, governments will fail to keep their promises on critical issues such as combating climate change and eradicating poverty by 2030, said a new report.

Sixty-plus international organisations, led by the United Nations and including the International Monetary Fund, the World Bank Group and the World Trade Organization, jointly sounded the alarm in the 2019 Financing for Sustainable Development Report, said the Economic Commission for Asia and the Pacific (ESCAP) in a statement yesterday.

The international organisations find some good news: investment has gained strength in some countries and interest in sustainable investing is growing, with 75 percent of individual investors showing interest in how their investments affect the world.

And yet, greenhouse gas emissions grew 1.3 percent in 2017, investment in many countries is falling, and 30 developing countries are at high risk or already in debt distress. At the same time, global growth is expected to have peaked at around 3 percent.

“Changing the current trajectory in financing sustainable development is not just about raising additional investment. Achieving global goals depends on supportive financial systems and conducive global and national policy environments,” the report said.

The report warns that creating favourable conditions is becoming more challenging. Rapid changes in technology, geopolitics, and climate are remaking the economies and societies, and existing national and multilateral institutions -- which had helped lift billions out of poverty -- are now struggling to adapt.

Confidence in the multilateral system has been undermined, in part because it has failed to deliver returns equitably, with most people in the world living in countries with increasing inequality.

“Trust in the multilateral system itself is eroding, in part because we are not delivering inclusive and sustainable growth for all,” said António Guterres, secretary-general of the UN, in his foreword to the report.

“Our shared challenge is to make the international trading and financial systems fit for purpose to advance sustainable development and promote fair globalisation.”

The international agencies recommend concrete steps to overhaul the global institutional architecture and make the global economy and global finance more sustainable.

It called for supporting a shift towards long-term investment horizons with sustainability risks central to investment decisions; revisiting mechanisms for sovereign debt restructuring to respond to more complex debt instruments and a more diverse creditor landscape; revamping the multilateral trading system; addressing challenges to tax systems that inhibit countries from mobilising adequate resources in an increasingly digitalised world economy; and addressing growing market concentration that extends across borders, with impacts on inequality.

At the national level, the report puts forward a roadmap for countries to revamp their public and private financial systems to mobilise resources for sustainable investment. It introduces tools for countries to align financing policies with national sustainable development strategies and priorities.

The ESCAP has produced a complementary report on “Financing for Development in Asia and the Pacific: Highlights in the Context of the Addis Ababa Action Agenda, 2019 Edition”.

Among other findings, the ESCAP report emphasises the importance of raising public resources to finance urban infrastructure development in a context of breakneck urbanisation and enhancing capacity-building efforts in the area of infrastructure financing and public-private partnerships.

The ESCAP report also underlines the need to scale up investment and international development cooperation to facilitate the attainment of the Sustainable Development Goals in the region.

“In a region as diverse as ours investment needs vary considerably. Least developed countries need to invest the most at 16 percent of GDP while South and South-West Asia have an investment need of 10 percent of GDP to reach the goals by 2030,” said Armida Salsiah Alisjahbana, under-secretary-general of the UN and executive secretary of the ESCAP.

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