Summit for a New Global Financing Pact: A distraction which produced false solutions that we have heard before
The Summit fell far short of the policies needed to address the global debt crisis, the climate emergency, poverty and inequality - issues which can only be addressed in a fair and inclusive manner in the United Nations, and not in Paris.
French President Emmanuel Macron’s Summit for a New Global Financing Pact was promoted as a united global effort to make the financial system fairer and more effective.
In reality, the summit fell far short of the policies needed to address the global debt crisis, the climate emergency, poverty and inequality - issues which can only be addressed in a fair and inclusive manner in the United Nations, and not in Paris.
“The sad fact is that this summit has not delivered anything new and has not led to a global pact. It was full of ‘announcements’ that amounted to a push for the further financialisation of development and climate action, and that do next to nothing for the current debt crisis,” said Iolanda Fresnillo, Policy and Advocacy Manager at the European Network on Debt and Development (Eurodad), who attended the summit.
“The run-up to the summit was chaotic and far from inclusive of countries in the global south or civil society. Furthermore, it ended with criticism from global south countries on many issues including the failure to meet existing commitments, which were then broadly ignored in Macron's final summary.
“Not a single additional euro or dollar is on the table from global north countries.”
Multilateral Development Banks (MDBs) were called on to ‘step up’, with a strong focus on promoting ‘innovative solutions’. In reality, this reinforced MDBs’ reliance on attracting private finance at scale with risks guaranteed by the state and public money.
This is nothing ‘new’, and is blind to existing evidence that private finance has not rushed into countries or sectors that do not guarantee adequate returns.
Furthermore, the World Bank Group launched a Private Sector Investment Lab to “develop and rapidly scale solutions that address the barriers preventing private sector investment in emerging markets”. This is another private sector-led attempt to de-risk private investments, that shows persistent reliance on failed approaches.
Fresnillo said: “Instead of being a game-changer, this summit has been a distraction - diverting energy and attention away from spaces where inclusive global financial architecture reform should take place - namely in the UN. It has essentially lowered the ambition of the extent of action needed to secure the levels and quality of public finance needed for development and climate action.
“Unless the discussions on international financial architecture reform include the need for a new multilateral debt resolution framework, under UN auspices, together with a UN Tax convention, amongst other substantial financial sector regulations, we cannot take them seriously.”
In the face of a spiralling debt crises in global south countries, the discussions were also unambitious. Announcements included:
The widely advertised inclusion of “Climate Resilience Debt clauses” in new loans by the World Bank, France or the United States, following what the Inter-American Development Bank (IADB) and the UK have already been implementing. These so-called “pause clauses” can be positive for countries facing climate shocks in the future, but do nothing to deal with the debt crisis today, as they only apply to future lending.
On addressing the pressing debt problems, France made sure to use the Summit to announce the deal by Zambia with its bilateral creditors. However, reaching an agreement two and a half years after starting the negotiation that seems to be offering no real debt cancellation (just debt rescheduling and a reduction in interest rates), cannot be seen as a success (see here the initial reaction from the Zambian Civil Society Debt Alliance and Debt Justice to this deal).
Addressing the failure of the G20’s Common Framework on Debt Restructurings by producing a user manual on debt restructuring processes. This is woefully inadequate.
Fresnillo said: “We look forward to the resumption of meaningful discussions in a legitimate fora - at the UN General Assembly, the UNFCCC and in the UN Financing for Development process.”