“Rising inflation has been putting pressure on the Global economy as we know, just as we rebuild from the pandemic. The result has been a tightening of monetary policy disproportionately impacting low and middle income countries.
Now is the time to come together to make the international financial system fit for purpose,” he stressed.
Kagame made the remarks during the High-Level Roundtable on International Financial Architecture on 19th, September, 2023, adding that it is a matter of real substance for Africa’s future, not a competition for geo-political influence which has been going on.
“We simply need fiscal space to finance our development and protect ourselves against climate and health shocks,” he explained.
Kagame further shared four examples on how ‘things can be done differently and better moving forward’.
Essentially, “we must accelerate the debt management process through the G20 common framework”.
Additionally, he encouraged rich countries to honour the commitment to allocate part of their special drawing rights to low income and developing countries on a need basis and not wealth.
Similarly, “international financial institutions need to significantly simplify and speed up the process of approving loan disbursements to enable private investments and financing as means of bridging the financing gap from multilateral banks,” he explained.
Ultimately, Kagame urged collaboration in addressing the ‘unfair’ payment of high risk premiums for developing countries which he termed as “extra costs that come on top of the ‘already high’ interest rates.”
Highlighting that the given examples are not forms of charity, Kagame applauded the efforts already in place that Rwanda has benefited from.
“Fortunately, the political will to change seems to be slowly emerging and we hope this trend gives us faster results. The bridgetown initiative and the Paris summit for a new Global financial pact are important examples.
Another important example is the IMF’s resilience and sustainability trust which happily Rwanda was among the first to benefit from,” he remarked.
The International Financial Architecture was crafted in 1945 after the Second World War designed by and for the industrialised countries of the post war period.
According to the United Nations (UN) Secretary-General, it is ‘failing the test’ as “halfway to the 2030 deadline, the Sustainable Development Goals (SDGs) are drifting further away by the day.
In May, the Secretary-General published a policy brief: Our Common Agenda (OCA) outlining recommendations on reforming the international financial and tax architecture.
To achieve this, the policy brief offers recommendations in six areas ; to reform and strengthen global economic governance, deliver debt relief and lower the cost of sovereign borrowing, scale up international public development and climate financing, strengthen the global financial safety net and provide liquidity to countries in need, reset the rules for the financial system, and to redesign the global tax architecture for equitable and inclusive sustainable development.