Washington, D.C. — A new analysis from the Center for American Progress urges the United States to push for major financial institution reforms to address the debt burdens that prevent many Global South countries from investing in climate resilience, economic development, and democratic institutions.
The push comes as the United States averted its own domestic debt crisis and ahead of the Summit for a New Global Financial Pact that begins in Paris on June 22. Hosted by French President Emmanuel Macron, who is facing credit challenges in France as well, the summit is slated to focus on how the international financial system can be redesigned to address the converging debt and climate crises.
Working with these low- and middle-income countries to make global economic governance more equitable and transparent is in line with the Biden administration’s pledges to tackle climate change and elevate global “democratic renewal” as a central component of its foreign policy agenda, the analysis says.
To bolster healthy democracies and build resilience to climate change, global financial infrastructure must change. At the Paris summit, high-income countries should push for:
- Changes that enable multilateral development banks to unleash better financing.
- Debt reforms to alleviate financial strain on the Global South.
- A renewed issuance of special drawing rights to increase fiscal capacity for low-income and other developing countries.
Read the analysis: “To Tackle Climate Change, the Cycle of Crisis, Debt, and Underinvestment in the Global South Must End” by Kate Donald, Frances Colón, Anne Christianson, Heba Malik, and Cassidy Childs
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