Reform the international financial architecture – President Ramaphosa

Thursday, September 21, 2023

President Cyril Ramaphosa has called for the reform and strengthening of financial architecture where developing countries participate equally in the decision making process of the international economic order.

The President said he welcomes the numerous initiatives to assist the most pressing needs of countries in dire stress. These include the Food Shock Window, Resilience and Sustainability Trust and the G20 Common Framework for Debt Treatment.

“However, sustainable and inclusive growth requires that more be done. We must strengthen and reform the international financial architecture. Developing economy countries must participate equally and meaningfully in the decision-making process of the international economic order,” he said. 

President Ramaphosa was delivering remarks at the High-Level Dialogue on Financing for Development Summit on the margins of the United Nations General Assembly in New York, USA.

The statesman told world leaders that humanity is confronted with the convergence of a climate crisis, recession, increasing conflict, environmental degradation, rising food insecurity, deepening poverty and unacceptable levels of hunger.

He highlighted that when the 2030 Agenda for Sustainable Development was agreed upon, the overarching principle was that the most vulnerable would receive the support they needed.

“Yet, at a time when solidarity was needed most, agreed international commitments were not honoured. Principles such as common but differentiated responsibilities are not being respected.

“Four decades since the right to development was established by the United Nations as a human right, the failure to act on commitments to support development is deepening the divide between the global north and south. 

“The Addis Ababa Action Agenda provides concrete plans for supporting development and we again call on our partners to support these plans,” the President said. 

President Ramaphosa further called for the mandates of multilateral development banks to be reframed to respond to the needs of developing economies. 

He emphasised that “we must assert the principle of country ownership”.

“Multilateral development banks should support projects and programmes that are aligned to the development priorities and climate commitments of these countries.

“The international tax system must reflect the diverse needs and capacities of both developed and developing economies,” he said. 

The President added that more innovation is required to enable the private sector to play a greater role in addressing the finance gap. He said this includes a new approach to blended finance with a focus on the developmental impact of investments. 

He underscored that credit ratings of developing economies, and African economies in particular, need to be based on economic fundamentals and not on subjective assessments. 

Public finance is critical for development

President Ramaphosa said developed economy countries need to fulfil their commitment to contribute at least 0.7 percent of their gross national income towards official development assistance. 

They also need to fulfil their commitment to mobilise $100 billion a year to tackle climate change. 

“As South Africa, we therefore welcome the recommended actions contained in Secretary-General’s Report on ‘Our Common Agenda’. In the interests of our common progress and the survival and prosperity of future generations, we must act now.

“South Africa encourages all world leaders, global institutions and private sector partners to work together to address the current crises, close the finance divide, reduce inequality, eradicate poverty and make sure that no-one is left behind,” he said. –