Know more about New Global Financing Pact as summit begins in Paris

Finance Minister Nirmala Sitharaman on Wednesday left for France to attend the Paris summit for a New Global Financing Pact.

On the sidelines of the two-day summit, scheduled for June 22-23, Sitharaman will have multilateral and bilateral engagements with her counterparts, the Union Finance Ministry said.  The summit will bring together heads of state and government, ministers, leaders of key international organisations, representatives of global financial institutions, private sector and civil society representatives.

The stakeholders will look at how best they can address global challenges such as poverty, climate change, and the protection of diversity. 

Here’s a close look at what to expect at the summit.

Why the summit now?

At the 1944 Bretton Woods Agreement, the Bretton Woods system of monetary management was arrived at. This was meant to establish rules for commercial and financial relations among the US, Canada, Western European countries, Australia, and Japan. The system is seen as the first-ever fully negotiated monetary order to govern monetary relations among independent states.

Now, almost 80 years later, a pressing need was felt for an overhaul of the international financial system. This is what the Paris meet hopes to work towards. It will be followed by other financial summits such as the Africa Climate Summit in Kenya, a G20 summit in India, an SDG summit, IMF and World Bank Group annual meetings, the COP28 climate summit, and a G20 summit in Brazil.

The aim is to establish a new system that addresses all the participating countries’ shared challenges, including combating inequality, addressing climate change, and protecting biodiversity.

When, where and who?

French President Emmanuel Macron will host the Summit for a New Global Financing Pact in Paris from June 22-23 (Thursday and Friday). The summit is being organised by France, India and Barbados. The Summit will be held at the Palais Brongniart, Unesco, and the OECD premises in Paris.

Among the key attendees, apart from Sitharaman and Macron, are UN chief Antonio Guterres, German Chancellor Olaf Scholz, European Commission President Ursula Von der Leyen, and Barbados Prime Minister Mia Mottley.  

Many other heads of state across the global north and south, leaders of multilateral development banks, international organisations, the private sector, and international NGOs have been invited to attend.

What will the FM do?

Sitharaman is set to have multilateral and bilateral engagements with her counterparts.

On Thursday, she will participate in a round table titled ‘Evolving the model of multilateral development banks to address the 21st century challenges’. The session is moderated by former French diplomat and writer Bruno Le Maire.

The summit programme includes thematic discussions on June 22, which will contribute to a plenary session on June 23. During this session, it is anticipated that a declaration will be adopted. If that happens, India will likely be a signatory to it.

What topics will be discussed? 

Participants will collaborate to develop a new financing “toolbox,” which will be implemented through six high-level round-table discussions and 40 parallel events. The agenda will cover a range of important issues, including multilateral development bank reform, mobilisation of private capital, climate finance, green infrastructure, and debt-related solutions.

The discussions around a New Global Financing Pact will look at the guiding principles for future reforms and pave the way for a more equitable financial partnership between the Global North and South.

As the world emerges out of COVID and its economic and social impact, the summit will serve as a platform for new agreements. The aim is to alleviate debt distress and enable more countries to access the necessary financing for sustainable development. This includes investments in nature protection, emission reduction, and climate change adaptation measures.

According to the summit website, “to restore trust in the international system, a new pact is needed that ensures fairness, addresses the burden of climate change, and promotes prosperity and security for all countries”.

Whom will the summit help?

The New Global Financing Pact is seen to play a crucial role in defining the principles and steps required to reform the financial system across the board. It will also seek to address the high levels of debt that hinder governments from implementing ambitious climate actions. 

So, it is expected to help both poor nations that are burdened by debt, and rich nations that are looking to even out income inequities. Addressing climate change will be another key aspect of the summit. The aim is to reduce the climate, economic, and technological gaps that threaten to divide our world.

Unesco, meanwhile, is engaged in the summit with a focus on ensuring that the discussions fully take into account financing for global public goods, including education, biodiversity and culture.