More power to poor nations? UN financial summit
June 25, 2009 - 12:54pm | author: Petrony | Analytics | News
Talking about the global financial crisis at Wednesday's opening of a three-day UN financial summit developing countries along with UN officials called for more money and a greater role in regulating the world economy, reports the Associated Press. Blame for the crisis was laid on financial liberalization and deregulation in the United States and other rich nations. It was stated that the world financial system should be reformed under the auspices of the United Nations.
"The reforms based on the belief in the efficiency of the market and the diminution of government did not work," said Bangladesh's Foreign Minister Dipu Moni, speaking on behalf of the world's poorest nations. "Reforms are needed to enhance productivity and capacity to cope with risks."
Nobel Economics Laureate Joseph Stiglitz, who headed a Commission of Experts on Financial and Monetary Reform that developed recommendations for the conference, called for the creation of a Global Economic Coordination Council to address the implications of the crisis that started in 2008. But the council was not included into the 15-page draft final document agreed upon by rich and poor nations prior to the conference.
Meantime, the draft says that the International Monetary Fund, the World Bank and other lending institutions should be flexible in imposing conditions on developing countries so they can take action to deal with the economic crisis, including adopting stimulus packages. Besides, it also calls for corresponding measures to prevent new debt crisis and other strategies to restructure debt.
"It needs to be an inclusive process of decision. Not the G-8, not the G-20, but the G-192," Stiglitz said referring to the Group of Eight major industrialized nations, the Group of 20 key economic powers, and the U.N.'s 192 member nations.
Stiglitz also touched upon the question of providing aid to developing countries. He said that financings to the poor nations should come in the form of grants, rather than loans, "because we don't want to end up with another debt crisis further along." Thus, the draft urges that donors and financial institutions need to consider "grants and concessional loans as the preferred modalities of their financial support instruments to ensure debt sustainability."http://www.ecommerce-journal.com/news/16418_more_power_to_poor_nations_un_financial_summit