“The time is now, something’s happening, and there’s a lot of hope in the air.” This phrase, slipped in by the prime minister of a West African country on the side-lines of the summit for a new global financial pact, organised in Paris on 22 and 23 June, encapsulates a collective sentiment.
At a time when the Global South is having to cope with an avalanche of crises and their consequences, some 50 heads of state and government, representatives of international financial institutions, as well as players from the private sector and civil society, are debating the solutions to be implemented so that vulnerable countries do not have to choose between the end of the month and the end of the world.
‘A new Bretton Woods’
At the forefront of these measures is an in-depth reform of multilateral development banks (MDBs), led by the World Bank (WB) and the IMF, which is attracting an increasingly broad consensus. Invited to speak at the opening ceremony, the UN Secretary General kicked off the conference to great applause.
“We need a new Bretton Woods,” Guterres said. “The architecture of the international financial system was built in the aftermath of the Second World War. Three quarters of the world’s states did not yet exist. 80 years on, the system is outdated, dysfunctional and profoundly unfair. The system perpetuates inequality.”
The reform of international financial institutions has been on the table since the end of 2022. The aim is to improve their governance, in particular, by giving the major emerging countries a greater role, to make them more effective and to broaden their remit by more clearly integrating climate change financing issues.
Increasing financing capacity
“Nine months ago, no one was talking about reforming MDBs, and this is already a great step forward,” said the prime minister of Barbados, Mia Mottley, before telling us after her speech that she was convinced that “in a few months’ time, the Bretton Woods institutions will have evolved”.
Proof that reform is on the agenda, the first plenary panel of the Paris summit was devoted to the subject. “The World Bank needs to be faster and more efficient,” said Janet Yellen, US Secretary of the Treasury. Without suggesting a complete overhaul of the system, she recalled the decision to increase the financing capacity of the WB and the regional banks by $5bn a year over 10 years.
At the same round table, Ajay Banga, the new president of the World Bank, “proposed giving vulnerable countries a break from debt repayment, so that they can focus on what matters”, and spoke of the introduction of “insurance for governments for development projects”, a major first step towards reform.
Africans won’t leave without real reforms
However, the representatives of developing countries still fear that these promises will go unheeded. “We have to stop making grand speeches and start taking action,” said Mohamed Bazoum, president of Niger. “Tinkering and patching up are no longer an option.” His Ethiopian counterpart Abiy Ahmed said: “We Africans will not leave without real reforms.”
However, it seems unlikely that any announcements to this effect will be made at the Paris summit, with reforms more likely to be finalised at the IMF and World Bank Annual Meetings in Marrakech in October.
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