Reform of the global financial architecture in response to global challenges : how to restore debt sustainability and achieve SDGs?

Achieving Sustainable Development Goals and climate targets in the face of rising debt levels requires financial resources which the current Global Financial Architecture (GFA) is failing to meet. In this context, calls for reforming the GFA have taken both front and centre stage. These calls are not just for raising more finance, but for making the GFA more equitable, just and responsive to crises by addressing longstanding limitations affecting most countries worldwide. This analysis uses desktop research and qualitative interviews with representatives of global and regional multilateral development banks (MDBs), think tanks and civil society organisations to document calls for reforms and various stakeholders' positions. It can be seen that reform initiatives and preferences within the Bretton Woods institutions (the International Monetary Fund and the World Bank) and MDBs fashioned after them are relatively modest, evolutionary and likely to maintain the status quo that mostly privileges GFA architects and majority stakeholders. By comparison, think tanks, civil society organisations and Global South leaders see the current GFA as rooted in colonialism and the need for fundamental reforms, including the possibility of new and alternative institutions. Hence, it is recommended here that influential stakeholders such as the EU and its Member States move their leadership position from talk-based to action-based by reorienting the EU's financial architecture to play a greater role in reforming the current GFA. While incremental changes are popular and pragmatic, they cannot merely be undertaken on an ad hoc basis. They must be accompanied by fundamental reforms, especially those leading to better debt resolution mechanisms and inclusive governance.