World leaders converging at the New Global Financial Pact Summit in Paris have called for a review in global financial systems to transform the world.
President William Ruto said the financial architecture must be of equals.
He explained that the resources should neither be controlled by the World Bank nor the International Monetary Fund.
“Africa does not want anything for free. But we need a new financial model where power is not in the hands of the few.”
He said such a move will ensure that “we all have fair access to resources”.
President Ruto said the globe cannot continue normally when things are not going forward.
He was speaking on Thursday during a round-table with President of France Emmanuel Macron, International Monetary Fund Managing Director Kristalina Georgieva and the President of the World Bank Group Ajay Banga in the ongoing New Global Financial Pact Summit in Paris.
Echoing President Ruto’s call for a review in the global financial system, President Macron noted that a bold and targeted approach can transform the world.
He said it is also time we integrated debt sustainability and climate vulnerability.
“We need a diverse but inclusive discussion on climate change to fix the game. No one should be left behind; not even China,” explained Macron.
He called for the reconditioning of the World Bank and the IMF on how they operate vis-à-vis the realities at the grassroots.
“It should be done with speed and urgency “
An estimated 50 Heads of State, along with international institutions and civil society representatives are attending the Summit
It aims at developing a new global financial system so that vulnerable countries can be better equipped to combat poverty and climate change.
At the Summit, World Bank announced a suite of new and expanded actions to help countries respond quickly and effectively to an ever-growing onslaught of crises.
TOOLKIT FOR CRISIS PREPAREDNESS
President of the World Bank Group Ajay Banga announced an expanded toolkit for crisis preparedness, response, and recovery that includes: (1) pausing debt repayments; (2) redirecting financing; (3) linking crisis preparedness and financing; (4); backstopping development projects with private sector support, and (5) building enhanced catastrophe insurance without debt.
Elements of the new comprehensive toolkit include:
1. Offering a pause in debt repayments so countries can focus on what matters, not worrying about the bill: To allow countries to focus on meeting the urgent needs of their people instead of on loan repayments, the World Bank Group will launch Climate Resilient Debt Clauses. These will provide a pause in debt repayments for the most vulnerable countries in times of crisis or catastrophe. We will start these new crisis debt clauses with the most vulnerable clients, and we intend to learn and work with all stakeholders to expand coverage.
2. Giving countries new flexibility to quickly redirect a portion of their funds for emergency response, so cash is immediately accessible: The World Bank Group will put in place a new rapid response option, offering all client countries the ability to immediately repurpose a portion of their lending portfolio for emergency needs when a crisis occurs – for example to redeploy undisbursed funds in longer-term infrastructure projects for immediate disaster response.
3. Helping governments build advance-emergency systems, so they are ready to respond on day one: To allow more countries to build emergency systems and have quick-disbursing finance available in times of crisis, the World Bank Group said it will link investments in prevention and preparedness with financing for catastrophe and crisis response support. It will also step-up expertise and analytical support available to every country to design a crisis preparedness and response financing strategy.
4. Providing new types of insurance that will backstop development projects, allowing work to get back on track quickly: The World Bank Group will evolve its tools to more effectively support private sector clients in crisis preparedness and response. This will enable businesses to sustain operations and protect jobs, building resilience and long-term sustainability. The Multilateral Investment Guarantee Agency is partnering with the private insurance industry through the Insurance Development Forum, a public-private partnership, to design an innovative parametric insurance product, and the International Finance Corporation has designed a private sector-led crisis response solution to support financial institutions in addressing the impact of natural disasters due to climate change.
5. Building enhanced catastrophe insurance for providing resources without adding to debt: The World Bank Group will build on its catastrophe insurance solutions such as Cat Bonds and give all countries the option of embedding catastrophe insurance into lending products. Because not every country can afford this insurance, the group will work with donors to make these products affordable for lower-income countries, including funds that can buy down insurance premiums. This will develop enhanced catastrophe insurance products that can provide resources for disaster-struck countries without adding to their debt.
World Bank said across countries, and as a result of these measures combined, billions of dollars could be available for crisis response.
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