Prime Minister Sheikh Hasina proposes five measures to restructure the global financial system in response to the ongoing financial crisis

UNB || Shining BD

Published: 9/20/2023 5:19:08 AM

Prime Minister Sheikh Hasina on Tuesday said the world financial system needs fundamental shift to address the ongoing financial crisis across the globe.

She put forward five points in reshaping the financial system while speaking at the High-level Roundtable titled “Towards a Fair International Financial Architecture” held at UN Headquarters in New York of United States.

The points are:

First, MDBs, IFIs, and private lending agencies must re-align their priorities and mobilize additional funds for SDG implementation and climate action.

Second, funds need to be made available for developing countries at low-cost, concessional rates, and preferably in higher quantities of grants;

Third, all lending instruments should have disaster clauses to allow vulnerable countries to absorb shocks during crises;

Fourth, fair and effective debt relief measures need to be given priority based on coordination and transparency among creditors; and,

Fifth, instead of quotas, SDR borrowing limits should be based on needs and vulnerability, supported by easy lending processes.

“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,” Hasina said.

She mentioned that international public finances are found 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 said.

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

“The limits on their voting rights, quotas, and representation in MDBs and IFIs also undermine their bargaining power,” she said.

Sheikh Hasina said it is critical for the international financial architecture to be inclusive and representative of the Global South.

“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.

Noting that Bangladesh has long been credited for its sound macro-economic management, the PM Hasina said: “Our economy grew by 8.15% just before the pandemic.”

She said the country’s economy was put under stress due to the Covid pandemic and Ukraine war.

“Despite we’re still maintaining 6-7% GDP growth, we are trying to curb inflation, manage the balance of payments, and maintain our development expenditures. There are evident strains on our fiscal and policy space,” she added.

She said her government reduced the poverty level from 41.9% to 18.7% and the extreme poverty level from 25.5% to 5.6% in the country.

Shining BD