Urges global leaders to make debt restructuring less complex and more effective
Advocates increase in concessional financing through multilateral development banks
Delivering the opening speech at the Head of State Dialogue at the Berlin Global Conference on September 28, President Ranil Wickremesinghe expressed the need for a comprehensive dialogue between Western nations and China, the United States of America and China and the European Union and China, as a critical component of a robust international plan capable of addressing the global challenges anticipated in 2024.
The President also highlighted that initiatives such as the ‘Belt and Road’ have led to increased scrutiny of countries like Sri Lanka, potentially impacting the economic prospects of nations in the Global South. Nevertheless, he emphasized that Sri Lanka has a history of engaging with countries like the United States, India, and China, making such interactions a familiar and essential part of international relations.
He also expressed gratitude for the support received from India and Bangladesh in addressing Sri Lanka’s recent economic challenges. He underlined the contrast between advanced economies, which possess buffers and reserves to weather these shocks, and developing nations that lack such resources. He emphasized that this disparity was the starting point for the sovereign debt crisis.
The President cautioned that without immediate corrective measures, the world could be on the brink of another crisis. He acknowledged that many developing countries are burdened with substantial debt, highlighting the inadequacy of existing mechanisms like the IMF to address this new situation. He shared Sri Lanka’s experience when declaring bankruptcy, which led to a halt in foreign funding and triggered a political crisis.
President Wickremesinghe praised Germany for its significant contribution to the Green Climate Fund, which has been instrumental in addressing climate change mitigation and debt restructuring challenges. However, he stressed that the current funding available is insufficient to meet the immense challenges.
The President called for utilizing the $100 billion with the IMF as a starting point, emphasizing that it is better than having no funds at all. He noted that the financing needs for climate prosperity and clean energy technology to achieve net-zero emissions are substantial, even for countries facing economic hardships.
He stressed the urgency of global coordination and leadership to resolve these challenges, which have not been sufficient to address their magnitude. He highlighted the need for a new international financial architecture to replace the existing one, designed nearly 80 years ago. The President urged ambitious action to reform the international financial architecture, making debt restructuring less complex and more effective.
He advocated for a significant increase in concessional financing through multilateral development banks, emphasizing the importance of broader accessibility, even for middle-income nations facing economic vulnerabilities. The president pointed out that the current IMF negotiation process is not tailored to address countries in crisis.
He urged for a comprehensive dialogue between Western countries, China, and other key global players. He emphasized that 2024 is the year to act, given the reduced leadership capacity of the United States due to its impending elections.