Changes in Financial Institutions’ Governance to Address Views of Middle-income Countries ‘Long Overdue’, Deputy Secretary-General Tells Morrocco Conference
Following is UN Deputy Secretary-General Amina Mohammed’s message at the Middle-Income Countries Conference, in Rabat today:
Let me begin by thanking the Kingdom of Morocco for hosting this important and timely conference with a focus on middle-income countries.
We live in an unequal world. The last couple of years, marked by crises, have made us understand the extent, consequences and perversity of global asymmetries.
While developed countries have been able to protect and swiftly support their populations, other countries have been left dependent on international community and the existing global support systems. However, the current frameworks and instruments available do not measure up to the needs of developing countries in today’s complex context.
The obstacles that persist speak loud and clearly to the challenges middle-income countries face and the opportunities lost for growth, stability and sustainable development.
Middle-income countries represent close to one third of global gross domestic product (GDP) and they are major engines of global growth. With 75 per cent of the world’s population, middle-income countries are global drivers of sustainable development. Yet, vulnerabilities are not solely a function of and do not disappear with income level.
Middle-income countries are also home to some 62 per cent of the world’s poor. Of the 10 poorest countries in the world, where more than half the population lives in extreme poverty, three are middle-income countries in Africa. The country with the lowest vaccine coverage in the world is a middle-income country in Asia-Pacific.
Each middle-income country, diverse in size, population, income and level of human development, faces unique challenges, an untenable trade-off and tensions that demand a second generation of solutions.
In an uncertain world with multiple and cascading global crises, flexibility, innovation, creativity and global solidarity are needed to secure a sustainable future, not just for the few, but for the global community as a whole, especially for women and children.
Middle-income countries are still recovering from the impacts of the COVID-19 pandemic that left millions, especially women and youth, without jobs and livelihoods and drove millions into poverty, setting back decades of achievements, fuelling social discontent and loss of confidence in governance.
Like other developing countries, they are staring down a climate emergency that, for some, threatens their very existence or viability.
Increasing conflicts and instability, and for some domestic upheavals, are causing immense suffering to those directly affected with consequences felt around the globe.
Recurrent and more intense natural disasters, with mounting economic losses, equally dramatic recovery costs and heavy public debt burdens, hamper economic recovery and weigh on investments for a better future.
Thirty-nine middle-income countries have net interest payments that account for more than 10 per cent of Government revenue, compared to 23 countries a decade ago. With global growth slowing in the coming years and interest rates staying higher for longer, many middle-income countries are unable to find the fiscal space for sustainable development. Some even find themselves losing economic dynamism in a “middle-income trap”.
Yet history shows that in our darkest hours also lie opportunities and potentials — if we summon the courage, vision and solidarity to seize them. And this meeting has provided the place to deliver.
But you cannot do it alone. To unleash this potential, support and solidarity from the international community is essential in three areas.
First, scaling up development finance. Middle-income countries require a step-change in levels of investment to meet their development needs including trade. But today’s economic conditions — with national budgets at full stretch, high interest rates and widespread debt overhang — render such investments almost impossible for most middle-income economies.
That’s why the Secretary-General has called for an SDG [Sustainable Development Goals] Stimulus. The Stimulus aims to scale up affordable long-term financing for development by at least $500 billion a year, while simultaneously tackling the high cost of debt and rising risks of debt distress and expanding contingency financing to countries in need.
Second is the reform of the international financial architecture. Today’s architecture leaves middle-income countries short-changed. They are denied resources and voice. Global initiatives to assist countries in need often exclude middle-income countries by design.
Changes in the governance of financial institutions to give full expression to the views of middle-income countries and reflect their true economic weight are long overdue.
Third is incorporating measures of progress on sustainable development that go beyond GDP. Our over-reliance on GDP results in the pursuit of a kind of development with little concern for equality, resilience and sustainability in all its dimensions.
It also underpins the country income classification, which downplays the diversity found among middle-income countries and the significant development challenges many currently face.
By adopting measures of progress that go beyond GDP, we can better recognize the multidimensional nature of sustainable development and support middle-income countries based on their specific challenges and diverse needs.
This year’s Financing for Development Forum Follow-Up in April and the Summit of the Future in September provide opportunities for the global community to agree and act on these three issues:
1) mobilizing development finance;
2) reforming the international financial architecture; and
3) developing measures of progress beyond GDP.
The achievement of our SDGs hinges, above all, on your progress and prosperity.
The health and relevance of our multilateral institutions, including the international financial architecture, can be judged by how well they respond to your goals.
The proposal for middle-income countries to develop a Strategic Plan of Action for 2025-2030 is a positive path forward. And I hope such a plan will provide the direction to accelerate progress on the SDGs and Africa’s Agenda 2063 during this last leg of the race to 2030.
I urge all of you to come together in a spirit of unity, and commit to invest in hope, to invest in sustainable development, and to invest in a better future for people and planet where no one is left behind.