Commonwealth finance ministers urge reform of global finance

Commonwealth finance ministers have repeated calls to reform the global financial architecture with particular attention given to scaling up development finance and addressing debt vulnerabilities. 

Meeting on the sidelines of the World Bank and International Monetary Fund’s (IMF) annual meetings in Morocco, the session provided a forum for commonwealth countries to engage with G7 and G20 members. The ministers took the opportunity to discuss and echo calls from vulnerable nations for greater urgency on climate finance. 

Commonwealth secretary-general Patricia Scotland KC underscored the significance of the discussions in her opening remarks, emphasising the need for unity and global reform to address pressing economic challenges. 

“The storms we face are real and serious… We meet at a critical time, and the case for reform of the global financial architecture is clear and urgent,” she said. 

The global public debt burden is at 93% of GDP and there are severe limitations in international commitments on debt pauses for climate related disasters. Debt pauses only apply to newly issued debt which means they do no help in emergency situations, so ensuring climate vulnerability is factored into debt sustainability assessments is needed, Scotland KC said. 

Biman Chand Prasad, deputy prime minister and minister of finance of Fiji, echoed  Scotland KC’s sentiments in his opening remarks, commending the Bridgetown Initiative proposed by Commonwealth member Barbados. The initiative calls for urgent and decisive action to address overlapping crises and reform international financial institutions. Furthermore, he stressed the importance of collective efforts in tackling global challenges and reaffirmed Fiji’s commitment to multilateralism and addressing climate change. Fiji recently took significant steps towards addressing climate change, joining a growing list of countries with a green taxonomy. 

During the meeting, ministers received a comprehensive presentation from the Commonwealth secretariat that highlighted various strategies for building economic resilience. These strategies include the role of blended finance, debt-for-nature swaps and the introduction of new climate-related levies to mobilise domestic revenue for financing development needs.

The significance of blue and green bonds in domestic revenue mobilisation and their role in addressing climate change and biodiversity loss was also emphasised. Additionally, ministers highlighted the need to review debt sustainability analysis (DSA) frameworks, with a specific focus on including climate vulnerability in DSA frameworks to reflect the impact of climate-related investments on debt sustainability.