Scope

The report examines the Global South’s perspectives on reforming the international financial architecture (IFA), highlighting perceptions of unfairness. It calls for reforms to ensure the IFA better serves developing nations, particularly during crises. It notes that no single coalition represents the entire Global South, though there is broad agreement on the need for change.

Momentum amidst fragmentation

The report highlights how periodic global financial shocks, most recently the COVID-19 pandemic, have exposed vulnerabilities in the IFA. The Global South’s push for reform has gained momentum, with proposals such as the Evolution Roadmap and the Bridgetown Agenda focusing on areas like climate finance, sovereign debt management, and stronger global cooperation.

An outcome-based framework
The report outlines a six-part framework for the desired outcomes of IFA reform:

• Space: Increased representation in international financial institutions is essential, often summarised as ‘a seat at the table’. Quota realignments are crucial for better representation on bodies like the IMF. Other proposals include adding more seats to executive boards for developing countries and ending geographic monopolies on leadership roles in financial institutions.
• Speed: The Global South seeks faster adaptation of the IFA to global challenges. Key reforms include automatic mechanisms for halting capital outflows, injecting resources quickly during crises, and automatically triggering debt relief during economic or environmental disasters. Contingency financing tools like Climate-Resilient Debt Clauses are central to this approach.
• Scale: Developing nations need between $1–2 trillion annually by 2030 for climate finance and SDG commitments. Proposals include scaling up concessional financing, leveraging Special Drawing Rights (SDRs), and increasing private sector participation through blended finance solutions. Multilateral Development Banks (MDBs) should optimise existing resources and capitalise further to meet global needs.
• Sustainability: Debt sustainability is a major focus, especially for low-income countries where over 20% of government revenue goes toward debt servicing. The report recommends improving debt transparency and restructuring mechanisms to ease the burden on developing economies. Financial instruments like Climate-Resilient Debt Clauses, which suspend debt payments during crises, are proposed to ensure greater flexibility and resilience.
• Solidarity: Fairer distribution of financial resources is essential, with the Global South calling for reforms to international taxation and a ‘fair shares’ approach to global finance. Proposals include global carbon taxes and new frameworks for concessional finance based on vulnerability indices rather than GDP. Additionally, the report stresses the importance of balancing global public goods funding with traditional development finance.
• Self-reliance: The Global South is pushing to strengthen its own regional institutions, such as BRICS and the African Union, to reduce reliance on Western-led financial bodies. Efforts to mobilise domestic resources and improve financial autonomy are prioritised, including proposals for regional financial stability mechanisms and South-South cooperation.

IFA governance reforms

The report emphasises the need for reform in global financial governance, particularly greater inclusivity in decision-making processes. Proposals include the creation of a UN-led apex body to oversee global economic coordination and more equitable representation at institutions like the IMF