These shocks could have been far worse without the critical role digital public infrastructure (DPI) played during the pandemic to provide emergency fiscal transfers to hundreds of millions, support and coordinate vaccine deployment across large populations, and offer digital platforms for education and commerce to blunt the worst ravages of the lockdowns. In doing so, it supported job creation and private sector innovation.
The latest IMF and World Bank forecasts project that the ‘global south’ will contribute nearly 70% of global growth in the next few decades. Yet, the present international financial architecture is ill-equipped to serve it well. While our markets are flush with liquidity, the global south is unable to attract capital at sustainable terms.
When countries are in crisis, the current architecture fails to meet the liquidity needs of many countries of the ‘global south’ like India and Indonesia, which have no access to dollar swap lines. Protracted disagreements among creditors on resolving debt issues have left many debtors in a financial freefall. A strengthened and reformed IMF must lie at the centre of this effort. The persistent financing gap the ‘global south’ faces is the binding constraint in achieving high global growth and collective SDG and climate goals.
It was clear from the beginning of the New Delhi G20 Summit that a reset was needed, combining an ambition of action and a sense of urgency. The New Delhi Leaders’ Declaration (NDLD) recognises that independence, resilience and interdependence must coexist in the new multipolar landscape to boost growth. An effective, balanced, rules-based multilateralism can deliver accelerated, inclusive and resilient growth. In its absence, multipolarity will lead to fragmentation and a significant drop in growth.
The challenges outlined above are global. It is in the interest of the ‘global north’ to support the ‘global south’. And it is in the interest of the ‘global south’ to enable this support to materialise. The African Union (AU) joining G20 is a concrete example of the commonality of interests, giving G20 more legitimacy.On the climate challenge, while scientists have known about the pernicious effects of GHGs for over a century, public policymakers have known how to control negative externalities, and the climate crisis has marched on unabated. Only a breakthrough underpinned by science and significantly more financing for mitigation and adaptation efforts can be a viable solution.NDLD pledges efforts towards full and effective implementation of the Paris Accord and its temperature goals. Key ingredients to getting there include financing from advanced economies and multilateral institutions and countries aligning their NDCs to the Paris goal. Multilateral institutions capable of operating in the 21st century will need to address liquidity, debt resolution and mobilise capital for the financing needs and adopt a new operational framework to make this happen. NDLD has handed the multilateral institutions this mandate loud and clear. They must use it boldly. Multilateral institutions will now need to embrace a governance structure that recognise the economic weight of the global south to enhance their own legitimacy.
There is a recognition that DPI needs to be nurtured globally since it enables countries to leapfrog evolutionary development processes. DPIs will underpin solutions to many of the challenges we face today. To develop institutions that serve the global interests in the digital space, the adoption of the G20 framework and high-level principles for DPI and data-sharing are key to the future design of the global digital infrastructure.
The next three G20 presidencies – Brazil, South Africa and the US – have the opportunity to anchor the bridge to the future for the global common good.
(The writer is former executive secretary, G20 Eminent Persons Group on Global Financial Governance)
