President Nana Akufo-Addo has called for a reform of the international financial system, saying, the world’s financial structure is skewed against developing economies.
According to him, the international financial market structure appears to have been designed to favor the rich and powerful nations as against developing nations like Ghana.
Making this call at the 77th Session of the UN General Assembly, the President cited the continuous increase in interest rates by central banks, making it unattractive for investors to put monies into the African money markets.
“The current economic turmoil which has been caused mainly by the Russian invasion on Ukraine has caused a lot of uncertainties in the international money market. This has triggered an unusual increase in food and other commodities causing hyperinflation in the world”.
“Moreover, the spillover from central banks raising policy rates to combat inflation has been severe beyond borders. As global investors pull monies from developing economies to invest in bonds in the developed world, this has led to depreciating currencies and increased borrowing costs. Meaning, we need to raise and spend our own currencies to service our foreign in dollars”, he added.
The President further explained that “it has become clear that if ever there was any doubt, the international financial structure is skewed significantly against developing and emerging economies like Ghana. Avenues that are available to powerful nations to enable them to take measures that will ease pressures on their economies are closed to small nations.”
He also called on credit rating agencies who have downgraded a number of African countries to be mindful of their assessments in order to dismiss the perception of Africa as being a high-risk investment zone.
All of this, he said, makes it appear as though the system has been designed to favor powerful countries.
“To make matters worse, credit agencies have been quick to downgrade economies in Africa, making it hard to service our debt. The tag of Africa as an investment risk zone is little more than in substance, a self-fulfilling prophecy created by the prejudice of the international money market which denies us access to cheaper borrowing, pushing us into debts”, he mentioned.
“The financial markets have been set up and operate on rules designed for the benefit of rich and powerful nations”, he added.