Reshaping the Global Financial System: Paris Summit Aims to Tackle Poverty and Climate Change

Paris is playing host this week to a global summit to tackle poverty and climate change issues by reshaping the global financial system. More than 300 participants, including over 40 heads of state, various international NGOs, and private sector partners, are in attendance. French President Emmanuel Macron opened the summit by calling for a substantial increase in public and private funding to reduce inequality. Vanessa Nakate, a Ugandan climate campaigner, then took the podium to criticize the fossil fuel industry for promises of development for poor communities that go unfulfilled. UN Secretary-General Antonio Guterres outlined the challenges faced by developing countries, saying more than fifty nations are in or near debt default. He also said that the global financial system — conceived at the end of World War II — is failing to meet modern challenges and now "perpetuates and even worsens inequalities."

The French Ministry for Europe and Foreign Affairs released a statement saying the public debt of all countries has reached unprecedented levels since the COVID-19 crisis. One-third of developing countries and two-thirds of low-income countries are facing "excessive debt." A key goal of the summit is to establish an "effective international financial architecture" that will provide more resources while sheltering vulnerable countries from shocks. IMF head Kristalina Georgieva said the world's wealthiest countries had met a target of reallocating $100 billion of funds from the institution to tackle climate change and poverty.

Barbados Prime Minister Mia Mottley, who is leading a group of developing countries, has argued that developing countries are forced to pay such high-interest rates that financing green initiatives or simply repaying loans is a struggle. Activists have expressed skepticism that the summit will not live up to expectations. The two-day summit in Paris is a major global attempt to address the pressing issues of poverty and climate change. It is hoped that the summit will provide the much-needed financial support for developing countries and help realize sustainable development goals while financing the energy transition. If successful, the summit could be a major milestone in creating a more equitable global financial system.