Barbados’ push to get reform of the global financial system is getting strong support from one of the world’s most powerful and advanced economies.
During a joint press conference at Ilaro Court on Tuesday evening, France’s Minister of State for Development, Franchophonie and International Partnerships Chrysoula Zacharopoulou reiterated her country’s support for reform of the global financial system.
She recalled that President of France Emmanuel Macron had announced last year that his country would be hosting a conference in June this year to help develop a new global financial pact, with a focus on using the Special Drawing Rights (SDR) to guide finances to developing countries.
She noted that France had identified four topics on which progress was needed and was in discussion with the Barbados Prime Minister on what else could be added.
“First of all, providing budgetary space and liquidity to vulnerable countries deals with the debt treatment, SDR allocation, but also with the overall evolution of the World Bank and other multilateral development banks.
“Second, supporting the development of [the] local private sector in the most vulnerable countries, to foster quality jobs and ensure long-term growth.
“Third, finding ways to scale up investment in green infrastructure in order to accelerate the green sustainable transition and last but not least, we need to identify new ways to raise additional financial resources to address increasing needs such as climate adaptation and loss and damage,” she explained.
Admitting that the objectives were ambitious, the French minister said to achieve them would require a “collective engagement”, as she indicated that the upcoming June summit must be “as inclusive as possible”.
SDRs are International Monetary (IMF) reserve assets, which are used to assist vulnerable countries experiencing severe debt crises due to shocks including impacts from climate crisis and a pandemic. Developed countries are allowed to allocate their SDRs to developing countries, which can be used to assist in debt payment to the IMF.
Indicating that France and the European Union have made major contributions towards the fight for international solidarity and global justice, Zacharopoulou pointed to the decision taken by France last year to reallocate some US$100 billion worth of SDR to the world’s most vulnerable countries, as part of a G20 initiative.
In March last year, France announced reallocation of about 20 per cent of its share, or some US$4 billion, and has committed to reach 30 per cent this year.
Zacharopoulou, who is the first French minister to visit Bridgetown on official business, was on a one-day trip to the island for talks with Prime Minister Mottley and other members of her administration ahead of the upcoming June meeting in Paris to negotiate the financial pact.
Lauding Mottley for her “huge” contribution to global awareness around climate justice and the need for increased financing opportunities for vulnerable states, the French minister said France shared Barbados’ assessment regarding the major global challenges.
“Most importantly, we share your determination expressed in your Bridgetown Agenda to address the root causes of these challenges,” she said.
Meanwhile, Prime Minister Mia Mottley warned that countries can no longer sit by and do nothing to help address the issue of the climate crisis, which she warned was resulting in increased poverty and food insecurity for developing nations.
“We live in a world that is threatened by too many things now for us to even contemplate remaining still,” said Mottley, as she described the support from France as critical.
“This is not just about climate, but it is also about our continued determination to claim development for our people. If we allow the threats of climate and the pandemic and the violence and of the digital divide and of food insecurity to crowd out the traditional ambition of development as captured by the Sustainable Development Goals, then our people will come to suffer and regrettably, the world is going to become a very inhospitable place for us to live,” said the Prime Minister.
She suggested that the global financial institutions were not adequately meeting the needs of developing countries, declaring that middle income countries were at risk of pauperization because of the climate crisis, the pandemic and other exogenous shocks including rising oil prices and inflation.
“To that extent, we therefore need to change how these institutions respond to us,” she declared.
Mottley said the global financial pact is to ensure that developing countries are able to get the required fiscal space to respond to the issues.
“We need to look and see how we can use legal clauses to be able to provide the space for us”, as she pointed to Barbados’ decision to insert natural disaster clauses, which suspends the country’s debt payment for two years in the event the island is hit by a natural disaster.
She noted that increases to insurance and reinsurance rates results in underinsurance and uninsurance among the population, requiring government’s intervention. She recalled that in Hurricane Elsa’s case, 90 per cent of the houses that were damaged were people below the poverty line and 95 per cent of those people were uninsured.”
Thanking France for its commitment regarding the SDR, Mottley said “If we can get more countries doing the same thing, then we would begin to have a pool that can be used to amplify the resources of the multilateral development banks, whose access to resources need to be amplified significantly.
“And we believe not just from public money from governments, but we believe that where there are global threats as well, we need to see where other sources of money can come from,” said Mottley. (MM)
