UN Secretary-General António Guterres has called for sweeping reform of the international financial system to allow poorer countries vulnerable to climate catastrophes to receive adequate funding from richer nations.
Addressing a conference in Geneva on rebuilding efforts following devastating floods in Pakistan, Guterres said the international financial system currently only benefits wealthy countries and should be reformed to ensure a more equal distribution of resources.
“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. The system was conceived by a group of rich countries and naturally, it basically benefits rich countries.”
The diplomat spoke alongside Pakistani Prime Minister Shehbaz Sharif, who claimed Pakistan needed $8 billion (£6.6bn) from the international community over the next three years to support its recovery following floods that killed at least 1,700 people, displaced millions and damaged critical infrastructure.
“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.
The International Monetary Fund has yet to approve the release of $1.1 billion (£956m) 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 lack of 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.
At COP27 in November, Pakistan led calls for wealthy nations to establish a fund to help vulnerable nations cope with the impact of climate change.
A historic decision was eventually made to establish a loss and damage fund that would support countries affected by droughts, flooding, rising sea levels and other climate-related disasters. It isn’t yet clear whether Pakistan will be eligible for this fund.
