By: Charlie B. Chilufya, S.J.
The long-anticipated New Global Financial Pact Summit, hosted by French President Emmanuel Macron, commenced yesterday, June 22nd, in Paris. After months of preparation, including webinars, working groups, and drafting concept papers, this meeting aims to forge a “New Global Financing Pact.”
The Summit is ambitiously striving to establish a more inclusive international financial system. This initiative has attracted the attention of various stakeholders, from U.N. agencies, Foundations, and nonprofits such as Global Citizen, to 15 African finance ministers.
However, concrete commitments have been scant, leading some to suspect that we may only witness a declaration at the end of the summit. One key agenda is an urgent call for action on pre-existing commitments, rather than creating new ones. There is a growing demand from low-income countries for progress on debt relief, coupled with their displeasure at the failure of wealthy nations to meet their global obligations, such as the $100 billion annual climate finance target.
Yet, in the spirit of Pope Francis’s teaching from his major documents like Laudato Si and Fratelli Tutti, it is essential to address emerging global needs and vulnerabilities, without diverting resources from the poor. This aligns with the Bridgetown Agenda, championed by Barbados Prime Minister Mia Mottley.
The global South will emphasise the need for differentiated pathways of transition, defined by national circumstances and priorities. Many unresolved issues, such as blended finance, innovative finance mechanisms, and decarbonised investments, are expected to generate vigorous discussions.
About a month before the Summit, Reuters reported that one plan being considered by the Summit involves using multilateral development banks (MDBs) and the IMF to provide $100 billion per year of foreign exchange guarantees to assist low-income countries in funding environmentally-friendly projects.
President Macron’s ambition for the Summit is to generate decisive actions on a range of subjects. These include increasing fiscal space for low-income countries, enhancing green investment, and bolstering the private sector.
It is anticipated that the Summit will produce a roadmap for MDB reform, a framework for suspending debt repayments for countries hit by natural disasters, and new avenues for rechanneling Special Drawing Rights (SDRs) from the IMF. The MDBs are poised to play a critical role in implementing the global agenda and will need sufficient funding to do so.
Reflecting on a similar summit in Paris in May 2021, this Summit will evaluate progress on key global challenges – climate change, poverty, financing vulnerability, and debt restructuring. The desire for a new world order is palpable, with the Summit seeking to unify the world in its approach to these issues.
However, the foreign ministers of the BRICS nations stressed during their recent meeting held earlier this month in Cape Town that the world is multipolar, and old ways cannot address new situations. This sentiment is a reminder that, despite the Summit’s lofty ambitions, the world of multilateralism can seem increasingly fragmented.
With the war in Ukraine and its considerable reconstruction costs at the forefront of European and American policymakers’ minds, the Global South’s needs may not take precedence. Therefore, while some may deem the Summit a success merely because it is taking place, the governments most at risk from climate change, who have heard similar rhetoric before, may remain dissatisfied.
We look forward to the discussions and potential commitments of today, the second and last day. We continue to pray and advocate for a financial system that aligns with the values of justice, inclusivity, and care for our common home.
Stay tuned for updates on day two of the Global Financial Summit.