Ghana makes four recommendations to global financial architecture
The government of Ghana has presented four recommendations to the global financial architecture on how Africa could accelerate poverty reduction and restore its countries to the path of attaining the SDGs.
The government of Ghana’s recommendations encompass the following: expanding affordable, long-term financing for the SDGs, revisiting the “crisis response punishment” discourse by rating agencies, actively pursuing debt relief through initiatives like the G20 framework, and aiding developing nations with risk-mitigation tools within the International Financial Architecture.
Hon. Kojo Oppong Nkrumah, Minister for Information, made this known at a side meeting on Sustainable Development Goals on Poverty Reduction at the ongoing 2023 Annual Meetings of the International Monetary Fund (IMF) and World Bank Group in Marrakesh. The meeting was aimed at providing African Ministers an opportunity to share their ideas on how to accelerate poverty reduction on the continent.
Reports indicate Africa has made significant efforts in driving the global climate agenda. This is demonstrated by the very high levels of ratification of the Paris Agreement by – over 90%. Many African nations have committed to transitioning to green energy within a relatively short time frame. Clean energy and agriculture are, for example, prioritized in over 70% of African NDCs (Nationally Determined Contributions).
According to the Minister, in spite of the above, Africa continues to fall off the agenda of the SDGs due to the major impacts of climate change, as well as the need for sustainable growth in the midst of limited financial resources.
The solution to the myriad of challenges impeding the achievement of SDGs targets on the continent were known to all, but what was lacking was the financing in the face of limited resources, he explained.
‘’We know what to do on the SDGs, but the challenge is the financing in the midst of the current circumstances’’ he said.
According to a report by United Nations Economic Commission for Africa (UNECA), as many as 149 million non-poor remained at considerable risk of falling into poverty in 2022 implying that 10 percent of Africa’s population were vulnerable to fall into poverty in 2022.
Regarding recommendation by the government of Ghana on access to affordable and long-term financing of the SDGs agenda, the Minister emphasised that this remained paramount to provide respite for countries that were already in debt distress.
Mr. Oppong Nkrumah underscored the need for the global financial architecture to tackle the high cost of debt and rising risks of debt distress of African countries by converting short-term, high interest borrowing into long-term debt at lower interest rates.
He disclosed the urgency to massively scale up affordable long-term financing for development, especially through public development banks (PDBs), including multilateral development banks (MDBs), and by aligning all financing flows with the SDGs.
Again, he called for a relook at the existing conversation about ‘’crisis response punishment’’ from rating agencies. He regretted how rating agencies downgraded developing economies for the effect of their responses to climate changes and other exigencies.
The Information Minister echoed Moody’s and Micron’s recommendations for interest and principal payments to be adjusted during crises and urged vigorous implementation of this proposal.
Thirdly, he stated Ghana proposes that, the Debt relieve efforts like the G20 framework should be pursued. The Common Framework for debt treatment beyond the DSSI was an initiative endorsed by the G20, together with the Paris Club, to support, in a structural manner, Low Income Countries with unsustainable debt.
The government of Ghana’s final recommendation was on the need for the International Financial Architecture to assist developing countries with de-risking instruments.
This, he said could be achieved through a range of measures such as debt, equity and guarantees, spreading the risk between participating parties or transferring the risk to a third party. Public financial institutions play a critical role in de-risking, as they provide the de-risking capital, instrument, or mechanism.
