Commonwealth backs reformed global financial architecture
Finance ministers from Commonwealth countries have called for a systemic reform of the global financial architecture to enhance access to development financing for vulnerable countries.
Their call for reform came at the Commonwealth Finance Ministers High-Level Working Group Meeting in Washington D.C. on April 14.
At the inaugural Commonwealth Finance Ministers High-Level Working Group Meeting held on the margins of the 2023 World Bank Group and International Monetary Fund Spring Meetings, finance ministers discussed national fiscal policies, measures for financial sustainability, eligibility criteria for development finance and potential reforms required for a more equitable financial architecture.
In their call, ministers stressed that any reforms must increase funding and consider the realities of vulnerability when allocating support to help vulnerable countries invest in resilience and achieve sustainable development.
Commonwealth Secretary-General Patricia Scotland said this would be key to the attainment of socio-economic development goals.
“Our world faces overlapping, interlinked and accelerating economic, security and environmental challenges. They entwine and accelerate to amplify existing inequalities, threatening stability, resilience and development prospects.
“The need for ambitious, systemic change has never been greater. As the Commonwealth family, representing one-third of humanity, we are joining forces to call for reform of the global financial system to deliver an architecture that is multi-dimensional, fit-for-purpose and adaptive to emerging and existing challenges, with a view to building long-term resilience and achieving sustainable development,” Scotland said.
In a keynote address at the working group meeting, Barbados Prime Minister Mia Mottley said it is clear that current systems have not been working.
“One sure thing is that the status quo is not working for us. The continued discriminatory treatment between the global north and the global south really cannot continue, especially in a poly-crisis … The time is now for action and to ensure that the global financial system is fit for purpose,” Mottley said.
The working group meeting also gave ministers an opportunity to focus on the urgent need to influence the global financial architecture, which, they said, is still underpinned by fiscal rules and conditions deemed unfit to meet the needs of the current global economic landscape and overlapping challenges.
Eligibility criteria for accessing concessional finance are based on sole metrics of gross national income per capita, which mostly disregards national vulnerabilities.
However, according to a statement released by the Commonwealth, recent overlapping crises have exposed and provided evidence of countries’ susceptibility to external shocks.
It further says the traditional rules and governing conditions for access to international development finance are no longer relevant in this era of interlocked and overlapping crises.
The Commonwealth Secretariat paper, titled ‘Fiscal Policy Options for Resilient and Sustainable Development’, considers the multi-dimensional vulnerabilities and socio-economic development challenges faced by countries and recommends several fiscal and policy reforms to facilitate more resilient and sustainable development outcomes.
Speaking at the meeting, Ruth Kattumuri, Senior Director of the Commonwealth Secretariat’s Economic, Youth and Sustainable Development Directorate, said single-handed approaches to tackling problems would not work.
The ministers have since agreed that India should be the chair, with Nigeria as the deputy chair, of the Finance Ministers Working Group for a Commonwealth Call for Reform of the Global Financial Architecture.