Summit for a New Global Financing Pact

Melinda French Gates
June 22, 2023
AS PREPARED

Thank you, President Macron.

I am so pleased to be here today – and grateful for the opportunity to share some thoughts.

I’ve spent the last 20 years traveling to low-income countries and talking to the women who live there. Hearing their stories. Then, sharing those stories in rooms like this, so people in positions of power might do something to help.

When I got into philanthropy, I didn’t set out to be a gender equality advocate. But over the last decade or so, I’ve realized that in order to address the issues of climate adaptation and international finance, you have to address gender inequality. All of the issues are linked.

For instance, in April, I met the finance minister of Madagascar, just two months after cyclones damaged much of her island’s farmland.

Under normal circumstances, she would have tapped her public coffers to rebuild. But this time, that wasn’t an option. Between the cost of so many natural disasters, higher food and fuel prices, and her country’s debt burden, she didn’t have the money.

And Madagascar isn’t alone. It’s a similar situation all across the Global South.

When I meet with other ministers, they tell me they me their countries face impossible choices: do they pay for essentials like responding to climate disasters, running their health systems, and educating their people—at the cost of defaulting on their debt?

Or, do they pay their debts and watch their people – particularly women – fall backward into poverty? Because although cuts to social services are not intended to specifically harm women and girls, they often have that effect.

The only way to unravel this financial dilemma is to update our financial architecture. And obviously, I’m not alone in that opinion because that’s what all of you are here to discuss.

The big question is: What should reform look like?

President Ruto of Kenya has said it best: It should look more like what the leaders in the Global South are telling us it should look like.

We need to be sure their voices and their needs show up in any new framework. Which is why our foundation put out a paper this week with some ideas reflecting what we’re heard, including a framework for allocating scarce concessional resources.

Number one: Let’s offer an effective, predictable debt restructuring process so that low-income countries can get back to investing in development priorities.

Because building up debt isn’t inherently bad. Debt is a useful tool to make cost-effective, long-term investments. But since 2015, the number of low-income countries at or near levels of unsustainable debt has nearly doubled -- for reasons largely beyond their control.

The current system just doesn’t offer a timely path to restructuring, which raises the costs for low-income countries. And the situation is likely to get worse in the next two years as payments come due.

Number two: donors need to allocate more grants and low-cost financing to low-income countries. Particularly in a world of high interest rates, countries rely on this financing to meet their health and development needs.

Unfortunately, the share of grants and concessional finance going to low-income countries has declined. In 2022, while aid rose by 14% overall, aid going to sub-Saharan Africa dropped by 8%. We need to reverse this trend.

And, finally, number three: we need more ambitious reform of the multilateral development banks, particularly how they meet the needs of the poorest countries.

These institutions are at the heart of the international financial system. They can lead the way in rethinking policies that must reflect the state of the world as it is now—whether it is with respect to the power of women, the rise of digital technologies, the climate, and our planet.

They must innovate to mobilize more financing for the poorest countries, work more efficiently, and address the global challenges we face today.

Of course, these steps alone won’t fix the international financial system. You are going to hear more from President Banga, Managing Director Georgieva, President Ruto, and President Macron about other ways in which IMF and World Bank need to evolve and change.

But these are things we can do right now to ensure all countries have what they need to grow and develop their economies and their people.

This is the critical takeaway: These changes to international finance we’re talking about to improve life in the Global South... they aren’t just kindnesses. They aren’t charity. They’re a smart bet on the future.

If we are not prioritizing a continent like Africa in this work, we are missing the future.

By the end of this century, 10 of the 20 largest cities in the world will be in Africa, where 20 million young people are expected to enter the workforce every year.

The future of the global economy will touch all of our lives, and it will be written in no small measure by these men and women – especially the women.

We should start to listen to them. Thank you.