The Minister of Planning, Economic Development, and International Cooperation discusses efforts to restructure the global financial system and address debt challenges in developing countries for sustainable development

 

H.E. Dr. Rania A. Al-Mashat: Reforming the global financial structure has become a necessity for achieving climate and development agendas.

The need to improve the representation of developing and least developed countries in international institutions and multilateral banks to support their development efforts.

Mr. John Kerry, former U.S. Secretary of State: The "NWFE" program in Egypt is a model for initiatives that countries can adopt to mobilize climate investments and transition to a green economy.

UNDP Administrator: It is hard to believe that a financial system that has been in place for 80 years is still functioning today.

 

H.E. Dr. Rania A. Al-Mashat, Minister of Planning, Economic Development, and International Cooperation, participated in a high-level discussion titled "International Financial Architecture for the 21st Century" during the 79th session of the United Nations General Assembly and the "Summit of the Future" held in New York.

 

The session included participation from Mr. Achim Steiner, UNDP Administrator; Mr. John Kerry, former U.S. Secretary of State and U.S. Climate Envoy; Ms. Mary Robinson, former President of Ireland; and Mr. José Antonio Ocampo, former Minister of Finance of Colombia.

 

In her speech, H.E. Minister Al-Mashat emphasized the importance of reforming the international financial structure for a fair future. She noted that the financing tools available to multilateral development banks today must be utilized in a way that achieves both climate and development agendas simultaneously.

 

H.E. Dr. Al-Mashat also stressed the need to enhance representation in these banks to better reflect the needs of developing and least developed economies. Furthermore, she highlighted the necessity for various institutions to collaborate in addressing the needs of emerging markets and bridging developmental gaps that impact countries and result in global repercussions.

 

Regarding geopolitical challenges, H.E. Minister Al-Mashat pointed to issues related to the sequencing of various financial reforms and the need for a coordinated approach to address them swiftly. She noted that geopolitical dimensions often hinder developing countries from obtaining much-needed financing, even when following the correct channels and procedures. Additionally, private sector investments may be impeded by political considerations.

 

The Minister of Planning, Economic Development, and International Cooperation underscored the importance of providing additional financing to countries facing high debt levels, indicating that in some cases, more than 60% of GDP is allocated to debt servicing. H.E. Dr. Al-Mashat stressed the urgent need for a mix of public and private investments to drive transformation and called for a focus on practical examples and the coordination of efforts to address these challenges effectively.

 

For his part, Mr. John Kerry stated that the international community's failure to commit to climate action negatively impacts all aspects of life on Earth. Despite approximately 200 countries pledging not to expand fossil fuel projects, the actual practices are quite the opposite. He remarked, "We are talking about the future; there can be no conversation about the future without providing the necessary investments to achieve a sustainable transition, mobilizing between $2.5 to $5 trillion annually to eliminate emissions by 2030." He urged developed countries to increase their international contributions toward climate action and reduce reliance on projects that increase emissions.

 

Mr. Kerry further emphasized, "We must provide the necessary investments to realize our goals and adopt constructive initiatives like the “NWFE” program in Egypt, which we have worked on with our partners. This program aims to close 12 conventional energy stations with a capacity of 5 gigawatts while launching renewable energy projects with a capacity of 10 gigawatts, thus enhancing the position of clean energy in Egypt and enabling it to export to neighboring countries."

 

Mr. Achim Steiner highlighted that reforming the infrastructure of the international financial system has become a central goal necessary to overcome the contradictions within this system. He remarked that it is inconceivable for the current financial system, which has operated for 80 years, to function effectively in today's context.

 

Ms. Mary Robinson noted that the international community has not done enough to protect the environment and the planet, pointing out that Africa has not attracted the necessary investments for energy transformation, while 90% of energy investments in the past four years have gone to China and developed countries.

 

Meanwhile, the former Minister of Finance of Colombia stressed that the most pressing issue currently is the debt crisis affecting many countries, particularly in sub-Saharan Africa, which requires international cooperation to address. He underscored the importance of increasing development financing.

 

Addressing Debt Challenges for Sustainable Development

 

In a related context, H.E. Dr. Rania A. Al-Mashat participated in a discussion titled "Addressing Debt Challenges for Sustainable Development" during her engagement at the 79th session of the United Nations General Assembly and the "Future Summit" in New York.

 

The session discussed the sharp rise in debt levels in developing countries, coupled with increasing debt servicing and refinancing costs, which reduce the fiscal space for implementing sustainable development goals, as well as multilateral solutions to address this issue. The session featured participation from Rebeca Grynspan, Secretary-General of the United Nations Conference on Trade and Development (UNCTAD), and Mr. José Antonio Ocampo, former Minister of Finance of Colombia.

 

In her remarks, H.E. Minister Al-Mashat addressed the obstacles facing countries in their pursuit of progress, including developmental gaps that hinder growth. She pointed out that recent global challenges have threatened national systems' ability to achieve sustainable development goals and that these challenges and international conflicts have repercussions on emerging economies that extend well beyond the conflict areas.

 

H.E. Dr. Al-Mashat continued that in their pursuit of advancement, countries find that their domestic resources alone are insufficient, and thus, this financing gap can be filled through various funding sources, although these sources are not always accessible. Countries facing poverty, hunger, or the need to invest in more schools or healthcare often resort to commercial financing or bond issuance, leading to crises that increase borrowing costs.

 

Regarding solutions, H.E. Dr. Al-Mashat emphasized the importance of coordination among creditors. Multilateral solutions, such as the G20 Common Framework for Debt Treatment, aim to bring together all major creditors, including non-traditional lenders like China and India, as well as private sector participants, to ensure a coordinated approach to debt restructuring. She highlighted that financial stability through liquidity provision is crucial, where the allocation of Special Drawing Rights from the International Monetary Fund can support immediate liquidity for countries without adding debt burdens.

 

H.E. Minister Al-Mashat also mentioned the sustainability of debt in the long term, noting that multilateral initiatives like the Heavily Indebted Poor Countries (HIPC) Initiative, the Multilateral Debt Relief Initiative (MDRI), and the G20 Debt Service Suspension Initiative provide targeted debt relief for eligible countries, freeing up resources for development.