Statement by H.E. Mohan Peiris, Permanent Representative of Sri Lanka to the UN at the Informal meeting of the plenary to hear a briefing on the G20 Summit at the UN General Assembly Hall
01st April 2021
Mr. President , I am most thankful to you for arranging this meeting which gives small States such as SriLanka have an opportunity to place our difficulties before this august body and the G20 with regard to maintaining financial systems stability in these difficult times.
The objectives of the G20 are clear. They are the Policy coordination between its members in order to achieve global economic stability, sustainable growth, the promotion of financial regulations that reduce risks and prevent future financial crises and to create a new international financial architecture more particularly during these difficult times.
It is common ground that the COVID situation made many countries vulnerable to debt. It has been observed by our Minister of State for finance at a meeting to discuss the debt architecture and liquidity a few days ago that multilateral institutions, such as the IMF, and the World Bank should come forward and provide a debt moratorium to emerging nations, so that there is at least an interval of one year for them to structure their debt situations into a better model.
We must appreciate that global crises need global responses, and that an across the board moratorium to the developing nations and the emerging nations would have been very helpful to ensure that all countries would stay healthy in the face of this global crisis.
The second observation he made is about the rating agencies.It would appear that the rating agencies work on the hypothesis and under the pretense that there is no such crisis. They apply the same yardsticks that have been applied in normal times. In a crisis situation when there is a new emerging set of rules as well as a set of developments, they should have been conscious of these situations and then structured their rating of countries using that background knowledge as well. And that was a big drawback, and additional pressure was put across emerging nations during that time.
The final observation was one which was more universal. That is when countries which are advanced and developed make investments in countries which are developing or less advanced, it is described as a loan. But, when countries which are less advanced give loans to those countries which are more advanced, it is labeled an investment. It is rather difficult to understand the underlying rationale for the differentia; there appears to be no intelligible rationale other than to say that investments attract very low interest rates, whereas the loans attract very high interest rates. Mr Chairman SriLanka is of the respectful view that this aspect must be addressed carefully as a matter of urgency. why it is that countries have to pay 6,7 percent interest for the investments that are being made by more advanced countries, and when investments are made by the developing countries - they receive less than 1 percent as interest.
So, this dichotomy needs to be addressed carefully in the context of global reserve management global reserves which are generally retained by countries to show themselves off as credit worthy countries. And I think it is time that this is addressed in a universal manner in order to bring equity and clarity to the situation.
Thank you Mr President.