Ramaphosa urges developed nations to support financial system reform

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President Cyril Ramaphosa has urged developed nations to back efforts aimed at reforming the financial system.

During an interview with SABC on the sidelines of the UN General Assembly in New York, President Ramaphosa voices his concerns about institutions such as the IMF and the World Bank, stating that they are not sufficiently addressing the challenges faced by developing countries.

Exclusive Interview with President Cyril Ramaphosa: 

Divide between Global North and South

Earlier as keynote speaker at a High-Level Meeting on Financing For Development on the margins of the United Nations General Assembly in New York, President Ramaphosa warned that the failure to act on commitments to support development was deepening the divide between the Global North and South.

He has taken the developed world to task for not meeting development finance commitments to the Global South including on the key principle of common but differentiated responsibilities in the climate adaptions and mitigation space.

Ramaphosa emphasised the crucial need for solidarity, urging developed nations to fulfill their agreed commitments, which include capacitating the annual $100 billion Green Climate Fund to support adaptation and mitigation efforts in developing countries.

“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. The mandates of multilateral development banks must be reframed to respond to the needs of developing economies. 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 developing economy countries.”

He called on developed economies to meet the 0.7% of their Gross National Income towards Official Development Assistance but also addressed the need for greater systemic change.

“The international tax system must reflect the diverse needs and capacities of both developed and developing economies. More innovation is required to enable the private sector to play a greater role in addressing the finance gap. This includes a new approach to blended finance with a focus on the developmental impact of investments that are effected around the world. Credit ratings of developing economies, and African economies in particular, need to be based on economic fundamentals and not on subjective assessments.”

‘Frustration understandable’

With a key message of intent from among others, the leadership of the World Bank.

President of the World Bank, Ajay Banga says, “The Global South frustration is understandable. In many ways, they are paying the price for the prosperity of others. But the truth is, we cannot endure another period of emission intensive growth. We have to find a way to finance a different world, one where climate is resilient. Pandemics are managed. Food is abundant and poverty is defeated. The remarkable declaration that emerged from the recent G20 leaders meeting in New very clearly acknowledges this truth. It puts the World Bank at the center of the search for solutions. I feel that pressure and responsibility every day. It is one that the team at the World Bank is not taking lightly.”

The UN Secretary General Antonio Guterres’s push for an SDG Stimulus of $500 billion annually to provide affordable long-term financing for investments in sustainable development and climate action also appearing to gain traction here.

“The SDG financing gap has become a chasm, estimated at $3.9 trillion US dollars a year. Developing countries face borrowing costs up to eight times higher than developed countries – a debt trap. And one in three countries around the world is now at high risk of a fiscal crisis. Over 40% of people living in extreme poverty are in countries with severe debt challenges. There have been some good-faith efforts to help developing economies survive this financing crisis, including the G20 Debt Service Suspension Initiative and the distribution of Special Drawing Rights by the International Monetary Fund. But they are not enough,” Guterres explains.