Addis Ababa, Ethiopia, June 14th, 2023 (ECA) -Ahead of the Summit for a New Global Financing Pact in Paris on 22-23 June 2023, the Africa High-Level Working Group on the Global Financial Architecture convened to discuss critical reforms to the global financial architecture to better respond to the needs of African countries and to enhance their voice and representation.
Coordinated by the Economic Commission for Africa (ECA), the Africa High-level Working Group comprises African Ministers of Finance, Planning and Economic Development, the African Union, the African Development Bank, Afreximbank, and the World Bank, and includes the participation of IMF staff and Executive Directors. The Group serves as a forum to develop reform proposals for the global financial architecture and strengthen the African voice on the global stage.
The World Bank Evolution Roadmap
The World Bank Group (WBG) team led by Mr. Ed Mountfield, Vice President for Operations Policy and Country Services, and Mr. Akihiko Nishio, the Vice President of Development Finance, presented the World Bank Group’s Evolution Roadmap. Multiple overlapping crises, reversals in hard-won development gains led to a call for action by the global community, for Multilateral Development Banks to ‘step up support for the world’s polycrises; lend substantially more to governments and do more to mobilize private financing; and do more to fight climate change mitigation and adaptation. The Evolution Roadmap aims to expand WBG’s vision and mission to reflect the global challenges by strengthening the emphasis on resilience and sustainability; reviews the operating model by considering enhancements to country engagement model within and enhanced one WBG approach; and lastly, explores options to expand WBG’s resources, and enhance its financial model.
The Ministers expressed broad support for the WBG’s efforts to realign its organization and operations to enhance its efforts and optimize their contribution to global development. Ministers emphasized that urgent needs of African countries in the areas of food security, access to affordable water and energy, and regional integration should be prioritized. Resources should be available at scale and with speed to support investments in SDGs. Several Ministers also pointed out that the needs of Small States for a nuanced approach that fit their special circumstances, where the country might be highly vulnerable to climate-related risks yet is not IDA-eligible. Ministers also called for strengthening support to private sector through blended finance and de-risking instruments.
Strategic Proposals for Africa at The Paris Summit
During the meeting, Ms. Hanan Morsy, ECA’s Deputy Executive Secretary and Chief Economist, presented for Ministers’ consideration strategic proposal for Africa at the upcoming Summit for a New Global Financing Pact in Paris. The recommendations presented closely align with the proposed reforms to the international financial architecture by the UN Secretary-General, as outlined in the Secretary-General's SDG Stimulus to Deliver Agenda 2030.
First, the need to reduce the cost of financing and increase its accessibility was emphasized. A potential immediate priority would be to allocate greater resources to the World Bank's International Development Association (IDA) and ensure the long-term financial viability of the IMF's Poverty Reduction and Growth Facility (PRGT). Moreover, redirecting the IMF's Special Drawing Rights (SDRs) to Multilateral Development Banks (MDBs), such as the African Development Bank, has the potential to leverage resources, up to four times the amount of the re-channeled SDRs. Additionally, expanding sovereign-sovereign and MDB-sovereign guarantee programs can substantially decrease borrowing costs for developing countries. To mobilize more private sector investment, blended financing can serve as an important tool for reducing risk.
Secondly, reforming the debt resolution and regulatory framework is imperative. The existing G20 Common Framework has not effectively supported countries in debt distress. It requires an overhaul to be more effective, time-bound, and transparent, extending eligibility to middle-income countries, and allowing standstills on debt service payments upon application. To proactively prevent future debt distress, all new sovereign debt issuances should include climate contingency clauses, which suspend debt service payments in the event of climate-related disasters.
Thirdly, enhancing Africa's voice and representation is of utmost importance. It is essential to secure a permanent seat for the African Union in the G20 and to increase Africa's quota share at the IMF. These measures will ensure that Africa's viewpoints and interests are adequately represented and considered in global economic decision-making processes.
Sustainable Debt Coalition - side event in Paris
The ECA has extended an invitation to African delegations to a key side event at the Summit, themed: Recommendations from the Sustainable Debt Coalition and friends, hosted at 16:30 on Thursday 22nd June at the OECD Building in Paris. Further details are available here: Register to attend here:
https://us06web.zoom.us/meeting/register/tZMlceqgrzIoHNA8YYLHkXLy8V9O2y6Cymsa#/registration
For media inquiries and interviews with the ECA, contact:
In Paris: Sophia Scheidewind: sophia.schneidewind@un.org
In Addis Ababa: Sophia Denekew, Media Relations eca-info@un.org
Issued by:
Communications Section
Economic Commission for Africa
PO Box 3001, Addis Ababa, Ethiopia
Tel: +251 11 551 5826
E-mail: eca-info@un.org
Twitter: @ECA_Official
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