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UN chief urges sweeping reform of ‘biased’ global financial system

In this file photo taken on Feb 24, 2020 UN Secretary-General Antonio Guterres speaks during an update on the situation regarding the COVID-19 in the SHOC room (Strategic health operations centre) at the World Health Organization (WHO) headquarters in Geneva. (SALVATORE DI NOLFI / POOL / AFP)

GENEVA — UN Secretary General Antonio Guterres called on Monday for sweeping reform of the international financial system to allow for low-income countries vulnerable to climate calamities to receive adequate funding from richer nations.

Addressing a conference in Geneva on rebuilding efforts in the wake of devastating floods in Pakistan, Guterres said the international financial system was skewed to benefit wealthy countries and should be reformed to ensure a more equitable distribution of resources.

Voicing frustration at the inaction of global leaders and scant investment to combat climate emergencies, Guterres called for the vulnerability of countries to be taken into account

"It is very clear that the present system is biased," he told reporters in a strongly-worded critique of what he called a "morally corrupt global financial system".

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"The system was conceived by a group of rich countries and naturally it basically benefits rich countries."

Guterres was speaking alongside Pakistani Prime Minister Shehbaz Sharif, who said Pakistan needed $8 billion from the international community over the next three years to support recovery efforts after floods that killed at least 1,700 people, displaced millions and damaged critical infrastructure.

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"We need a new debt architecture and we need to make sure that debt relief is effectively provided by the system even to middle income countries that are on the verge of very difficult, very dramatic situations including suspending payments," Guterres added.

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The International Monetary Fund, whose delegation was meeting Pakistan's finance minister on the sidelines of the conference, has yet to approve the release of $1.1 billion originally due to be disbursed in November last year. That has left Pakistan with only enough foreign exchange reserves to cover one month's imports.

Voicing frustration at the inaction of global leaders and scant investment to combat climate emergencies, Guterres called for the vulnerability of countries to be taken into account when major financial institutions distribute below-market-rate financing.

"We need to redesign our financial system in order to be able to take into account vulnerability and not only GDP when decisions are made about concessional funding to countries around the world," he said.