PM Hasina Proposes 5-Point Plan to Overhaul Global Financial System Amid Crisis

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In a significant address at the High-level Roundtable titled “Towards a Fair International Financial Architecture” held at the United Nations Headquarters in New York, Prime Minister Sheikh Hasina of Bangladesh called for a fundamental shift in the global financial system to tackle the ongoing financial crisis plaguing the world.

Prime Minister Hasina outlined five key points to reshape the international financial system:

1. Realign Priorities for SDG Implementation and Climate Action: She emphasized the need for Multilateral Development Banks (MDBs), International Financial Institutions (IFIs), and private lending agencies to re-align their priorities and mobilize additional funds for Sustainable Development Goals (SDG) implementation and climate action.

2. Provide Low-Cost Funds for Developing Countries: PM Hasina stressed the importance of making funds available to developing countries at low-cost, concessional rates, and preferably in the form of higher quantities of grants.

3. Introduce Disaster Clauses in Lending Instruments: She called for the inclusion of disaster clauses in all lending instruments to enable vulnerable countries to absorb shocks during crises.

4. Prioritize Fair and Effective Debt Relief Measures: PM Hasina emphasized the need for fair and effective debt relief measures, emphasizing coordination and transparency among creditors.

5. Base SDR Borrowing Limits on Needs and Vulnerability: She advocated for SDR (Special Drawing Rights) borrowing limits to be based on the needs and vulnerability of countries, supported by simplified lending processes.

PM Hasina underscored the urgency of reforming the international financial architecture and stressed the importance of political will in achieving this goal. She highlighted the high cost and inaccessibility of international public finances and emphasized Bangladesh’s commitment to avoiding debt distress and maintaining a record of never defaulting on loan repayment.

Addressing the issue of the global credit rating system, she concurred with the UN Secretary-General’s view that it requires a review. PM Hasina pointed out that the current rating system further limits access to funds for many low- and middle-income countries. She also noted that limits on voting rights, quotas, and representation in MDBs and IFIs undermine the bargaining power of these nations.

Prime Minister Hasina emphasized the need for an inclusive and representative international financial architecture that takes into account the perspectives and needs of the Global South. She stated that Bangladesh, known for its sound macro-economic management, had achieved an 8.15% GDP growth rate just before the pandemic. However, the country faced economic stress due to the COVID-19 pandemic and the Ukraine war, and despite maintaining 6-7% GDP growth, it worked to address inflation, balance of payments, and development expenditures.

PM Hasina concluded by highlighting Bangladesh’s achievements in poverty reduction, with the poverty level reduced from 41.9% to 18.7% and extreme poverty from 25.5% to 5.6%, showcasing the nation’s commitment to sustainable development.

In her compelling address, Prime Minister Sheikh Hasina called upon the international financial system to respond to the expectations of countries like Bangladesh and work toward a fair and inclusive global financial architecture.