UN calls for overhaul of global finance

United Nations Secretary General Antonio Guterres, centre, is greeted as he arrives for a service at the Islamic Cultural Center of New York. Photo / AP

A United Nations task force comprising more than 60 international organisations has called for an overhaul of national and international financial systems, warning that current arrangements can't tackle climate change, poverty, inequality and other urgent development issues.

The task force — including the International Monetary Fund, World Bank Group and World Trade Organisation — said in a new report that mobilising sufficient financing remains "a major challenge" to achieve the 17 UN development goals for 2030 aimed at ending poverty and preserving the environment.

Secretary-General Antonio Guterres said in a foreword to the report that private sector interest in financing the goals is growing, and the goals "are increasingly being incorporated in public budgets and development co-operation efforts". But the UN chief said "these changes are not happening at the required scale, nor with the necessary speed".

Guterres, highlighting slowing economic growth, increasing income inequality and threats to multilateralism, said "it is clear" the world won't achieve the UN goals "without a fundamental shift in the international financial system that enables us to address urgent global threats and restore trust in international co-operation".

The 177-page report said rapid changes in technology, geopolitics and climate are remaking societies and economies — and existing national and multilateral institutions which helped lift billions of people out of poverty starting after World War II are now struggling to adapt.

UN Deputy Secretary-General Amina Mohammed told a news conference that "rather than retreating from multilateral co-operation, we must strengthen our collective action to address global challenges in support of sustainable development". Global approaches "must be complemented by national action," she said.

The task force made a series of recommendations to overhaul the current global financial architecture to meet the UN goals. Navid Hanif, the director of the UN's Financing and Development Office, explained the key recommendations:

• The financial system is designed for short-term gains and a shift is needed to long-term investments and returns to address development needs.

• There's a need to rethink multilateral arrangements when a country runs into debt problems and needs to restructure so that both old and new players are at the table.

• One reason for inequality and economic stagnation is market concentration where few actors are running the market and calling the shots. "You need to rethink the rules and regulations to make sure the monopolisation doesn't happen," he said.

• The multilateral trading system needs to be revamped.

• Tax systems that inhibit countries from mobilising resources in an increasingly digitalised world economy need to be challenged.

Mohammed said achieving UN goals including new infrastructure, shifting to clean energy, action to combat climate change and helping cities "that are going to grow at exponential rates" need "billions to trillions" of dollars in major investments.

She said she didn't think the connection has been made yet that these investments will increase jobs and revenue to pay for services that countries ought to have. But all these issues and the recommendations will be presented to the April 12-14 meetings of the World Bank and IMF in Washington, she said.

"I urge the international community and countries to act on the report's recommendations," Mohammed said.

"I think the implications of not investing will cost everyone," she said. "We are seeing an increase in migration that costs. We are seeing that people are not able to eat. ... We are losing all the gains we had on the hunger goal and that creates all sorts of instability." She warned: "When people are hungry, they have no hope. Then we know they're fodder for many of the conflicts that we see around the world today."

- AP