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Review monetary system to tackle global crisis

PM urges world leaders

Published : 20 Sep 2023 10:25 PM

Prime Minister Sheikh Hasina on Wednesday stressed the need for reorganising international financial mechanism to address the ongoing global economic crisis.

She came up with the importance at a high-level roundtable titled “Towards a Fair International Financial Architecture” in UN headquarters here convened by Spain and the European Council on the sidelines of 78th UNGA session.

The premier also called for reviewing the global credit rating system as the current one has restricted access to the funds for many low- and middle-income countries.

“We agree with the UN Secretary General that the global credit rating system must be reviewed. The current rating system further restricts access to funds for many low- and middle-income countries,” she said.

The limits on their voting rights, quotas, and representation in Multilateral Development Banks (MDBs) and International Financial Institution (IFIs) also undermine their bargaining power, she added.

“We often find international public finances to be costly and out-of-reach. We try to stay clear of high-interest-rate loans to avoid debt distress. Bangladesh has never defaulted on its loan repayment, and we hope to maintain that record,” she continued.

It is critical for the international financial architecture to be inclusive and representative of the Global South, Sheikh Hasina said, adding that development narratives from countries like Bangladesh demonstrate that “we can do our part”.

“It is time for the international financial system to respond to our expectations,” she said.

She continued: “We recognize that the international financial architecture needs urgent reforms. But agreement on the nature and extent of the reforms remains lacking. Political will is important.”

Referring to the words of the UN secretary general, the prime minister said, "A fundamental shift is required".

She also has put forth five points to this end as she said in her first proposal that the MDBs, IFIs, and private lending agencies must re-align their priorities and mobilize additional funds for SDG implementation and climate action.

Secondly and thirdly, she said funds need to be made available for developing countries at low-cost, concessional rates, and preferably in higher quantities of grants and all lending instruments should have disaster clauses to allow vulnerable countries to absorb shocks during crises.

“Fourthly, fair and effective debt relief measures need to be given priority based on coordination and transparency among creditors,” she said.

In the fifth proposal, the prime minister said instead of quotas, SDR borrowing limits should be based on needs and vulnerability, supported by easy lending processes.

She said Bangladesh has long been credited for its sound macroeconomic management.

“Our economy grew by 8.15 percent just before the pandemic. Due to COVID-19 and Ukraine war, our economy was put under stress," she said.

"Despite, we’re still maintaining 6-7pc GDP growth, we are trying to curb inflation, manage the balance of payments, and maintain our development expenditures," she added.

"We reduced our poverty level from 41.9pc to 18.7pc and the extreme poverty level from 25.5pc to 5.6 percent," she went on saying.

Sheikh Hasina thanked the prime minister of Spain and the president of the European Council for convening the meeting.

Thematic Ambassador of the Climate Vulnerable Forum (CVF) Saima Wazed and Foreign Minister Dr AK Abdul Momen were present.