Kagame made the recommendation yesterday as he attended the high-level meeting of Heads of State and Government on the international debt architecture and liquidity.
The meeting was jointly convened by the Secretary-General of United Nations, António Guterres, Prime Minister Justin Trudeau of Canada, and Prime Minister of Jamaica, Andrew Holness.
It revolved around seeking together how developing countries can recover from COVID-19 effects through reducing and restructuring debts.
Kagame highlighted that the way global economy is structured doesn’t present equal opportunities to poor countries, especially during COVID-19 pandemic as they have to only alternative to borrow from creditors. On the other hand, rich countries do not depend on debts to recovery their economy but rather finance their own recovery through quantitative easing.
Quantitative easing (QE) is a form of unconventional monetary policy in which a central bank purchases longer-term securities from the open market in order to increase the money supply and encourage lending and investment.
Kagame explained that it creates inequalities that affect poor countries.
“Some countries can finance their own recovery through quantitative easing. The rest must borrow from private or public creditors, much as individuals do. Without corrective action, this divergence will entrench a profoundly unequal global order, in which the poor have no chance of ever catching up with the prosperous,” he said.
In order to lessen debt burdens, Kagame stressed the need for extending the G20 Debt Service Suspension Initiative and issuance of Special Drawing Rights (channeled through the International Monetary Fund) to enhance liquidity.
He also emphasized the need for debt relief negotiations considering citizens’ welfare and development objectives for developing countries.
“Third, debt relief negotiations should be conducted with the welfare of citizens in mind, and with a long-term view of development objectives, including the SDGs. Modernising the international debt architecture should not be seen, as merely a Covid emergency measure. It is a long-overdue discussion that goes to the heart of the inequalities that continue to bedevil our world. Finding innovative solutions to this dilemma should rightly be a central preoccupation of the international community in the immediate future,” he said.