Nueva Arquitectura Financiera

Reforming the Global Debt Architecture

Extract from the report: Spotlight on Global Multilateralism. Perspectives on the future of international cooperation in times of multiple crises

Extract written by Patricia Miranda*

Debt distress, defaults and the increasing debt burden on the budgets of countries in the Global South are a threat in the current context of multiple crises, putting in evidence the fragility of the current financial architecture and taking the world backwards in the elimination of inequalities and poverty. At the same time, we are witnessing a lack of timely and efficient measures to deal with current debt problems but also to prevent debt deterioration in many countries. The impacts of pursuing conventional mechanisms that don’t fit the need for a long-term debt resolution are regrettably borne by the people that are more exposed to economic, social and climate vulnerabilities.

The experiences and failures of debt restructuring efforts reflect the fact that there is a “non-system” in place for an ordered debt restructuring mechanism and this is why in the middle of a polycrisis with no precedents, with debt trends increasing while debt service is prioritized at the expenses of people, the international financial community needs to start urgently taking the right steps towards debt architecture reform, as part of a new financial architecture that finds a fair balance of power between developed and developing countries.

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This new report Spotlight on Global Multilateralism offers critical analyses and presents recommendations for strengthening democratic multilateral structures and policies. Its contributors cover key areas such as peace and common security, reforms of the global financial architecture, calls for a New Social Contract, an inclusive digital future, the rights of future generations and the transformation of education systems. The report also identifies built-in deficiencies and weaknesses of current multilateral structures and approaches. This applies, inter alia, to concepts of corporate-influenced multistakeholderism, for instance in the area of digital cooperation. And while not yet adequately recognized in the global multilateral system, the report also explores the increasingly active role of cities, regions and their international associations on the frontline of interconnected crises.

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*Global Advocacy Director at Latindadd.