United Nations chief António Guterres has stressed the need to correct power imbalances in the global debt architecture. Mr Guterres said this during his address at the first meeting of the Governing Council of the Borrowers’ Platform, held in Bangkok, Thailand, on Monday.
“This first convening of the Governing Council of the Borrowers’ Platform is a milestone in our quest for financial justice for developing countries, and perhaps the most important outcome of the Sevilla Commitment,” the UN boss said. “Today’s debt crisis demands more than a technical fix. It requires a fundamental shift to correct power imbalances across the global debt architecture.”
Mr Guterres lamented that developing countries contend with geopolitical tensions and conflicts; trade and climate pressures; a lack of adequate financing; and high debt-service burdens, urging an urgent overhaul of the debt architecture.
He added, “Interest payments on public debt in developing countries approached $1 trillion last year—growing faster than government revenues. And 3.7 billion people now live in countries where external debt service exceeds spending on health or education.
“The Borrowers’ Platform offers members an opportunity to navigate this storm. I commend all countries whose leadership has carried this initiative forward, and for completing the hard work of agreeing how the Platform will function.”
He advocated strengthening the platform’s capacity through the experience, engagement, and political support of all member countries. He urged it to engage with other actors in the debt ecosystem, from international financial institutions to the Group of Seven (G7) and the Paris Club.
According to the UN boss, the platform should also deliver for member countries facing debt crises by providing advice, tools, and solutions in key areas, including using a new set of debt instruments and tools, engaging with investors and ratings agencies, and navigating sovereign restructurings when necessary.
“Standing together, the Platform can be a powerful and permanent space to ensure countries can negotiate debt solutions from a position of strength and experience. And it serves as a further reminder that by strengthening the voice and participation of developing countries, we can create a more effective and just international financial architecture, fit for the twenty-first century. The United Nations stands with you in this important effort,” Mr Guterres added.
The UN chief’s call to overhaul the global debt architecture came as several poor nations were forced into a structural trap amid exorbitant borrowing and compromised debt management due to the current outdated and unequal international financial system.