Mottley calls for overhaul of Global Finance System to “level playing field” for developing nations
Barbados Prime Minister Mia Amor Mottley assailed the “outdated” global financial architecture for excluding the developing countries, while the world relies on them to fight the climate crisis.
“I see trouble ahead of us. We must pause and get it right.”
“Our small states are making commitments that the world wants to hear. But when those commitments are undermined by the ability to supply the electric cars? Or the batteries necessary to sustain renewable energy? Then we know we have a problem.”
These were the words of Prime Minister Mia Mottley of Barbados in her address to world leaders at the United Nations General Assembly on Thursday evening.
Developing nations are facing threats at every passing moment. Guadeloupe, Puerto Rico, Bermuda and Turks and Caicos are under siege by Hurricane Fiona. As this happens, countries are facing poverty as they struggle to cope with the triple threat of the climate crisis, the covid-19 pandemic and inflation.
It is because of this that Prime Minister Mottley urges world leaders to invoke the “power of the pen” to reform the 20th Century Bretton Woods Agreement which not only excludes billions of people, but also no longer serves a 21st century agenda.
PM Mottley asserted there is no reason developing countries cannot be afforded a “level playing field” to other nations which are allowed longer tenures of repayment for larger sums.
“But I ask for us to reach a global compact. That financing for development cannot be short term financing. It needs to be at least 30-year money”
“Countries across the world are being denied the right to access correspondent banking, and leaving their citizens and their economies to function as financial pariahs in a world that is supposed to be globally interdependent for the movement of capital.”
She cited examples such as the long-term debt from World War I that the United Kingdom paid off only in the last decade. She further argued that Germany was allowed to cap its debt payments at the equivalent of 5 percent of its exports, due to the fact that the “cataclysm” experience of a war would not allow them to finance reconstruction while repaying debts incurred during the war.
PM Mottley stated that the developing world is no different since we must have financing to advance efforts toward achieving net zero without being undermined by debts incurred from covid-19 and climate threats.
Barbados, which is as vulnerable as other Caribbean nations to cyclones and rising sea levels, was recently able to buy back $150 million of a $531 million bond due in 2029 and replace it with lower-cost debt that carries repayment guarantees from the Nature Conservancy and the Inter-American Development Bank.
The country also came up with a new bond that allows for two-year suspension in the event of another pandemic, according to Reuters.
Her solution to this was urging countries to join the Bridgetown Agenda. Formulated by academics in her own country, this agenda speaks to the reform of the Bretton Woods Agreement that gave rise to the World Bank and the International Monetary Fund.