The United Nations on Tuesday called for a reform of the global financial system to help poor countries struggling to bridge huge financial gaps.
The United Nations Conference on Trade, Investment and Development (UNCTAD) indicated in a new report that multiple crises – from the Covid pandemic to soaring inflation and declining foreign direct investment – have heavily affected the world's poorest nations.
The report notes that the 46 so-called least developed countries (LDCs) faced substantial economic slowdown in the early years of the pandemic. Their per capita GDP in 2023 was estimated to be 16% lower than the growth targets set under an action programme adopted by the UN in 2022, according to UNCTAD.
This economic downturn has pushed 15 million people into extreme poverty. Meanwhile, LDCs are grappling with a significant debt crisis and spent $27 billion in 2021 on servicing this debt – a 37% increase compared to the previous year.
UNCTAD emphasised that these countries would "need a significant share of foreign resources," and warned that the current international financial system is poorly equipped to provide assistance.
The disparities in the international financial structure, broken promises on climate change funding, and the fact that the LDCs' voices are often overlooked in financial decision-making highlight systemic dissonance, according to UNCTAD.
LDCs and other nations are increasingly calling for a reform of the international financial architecture and how institutions such as the World Bank and International Monetary Fund allocate their support.
