WASHINGTON, DC - Tensions relating to global trade and technology continue to rise and the international community needs to "do everything possible" to prevent the world being split into two competing spheres, one led by the United States, and the other by China.
In remarks to the International Monetary and Financial Committee, the UN chief said that "during tense and testing times" he continued to "fear the possiblity of a Great Fracture with the two largest economies splitting the globe in two each with its own dominant currency, trade and financial rules, its own Internet and artificial intelligence capacities and its own zero-sum geopolitical and military strategies."
A trade war between the two economic giants is threatening to wipe out gains across the global economy, which could shrink global GDP next year "equivalent to the whole economy of Switzerland" said the new head of the IMF, Kristina Georgieva, just a few days ago.
Guterres told world financiers that "it is not too late to avoid" the division, but "we must do everything possible to avert this...and maintain a universal economy with universal respect for international law; a multipolar world with strong multilateral institutions, such as the World Bank and IMF."
He noted three main areas where fiscal policy and investment in the future would be pivotal. First, make tax systems "smarter, greener, and more aligned behind the sustainable development and climate action agendas," he urged.
Secondly align the whole financial system behind the 17 SDGs, or Sustainable Development Goals, incentivizing longterm public and private finance, and "revisiting financial regulations that may inadvertently encourage short-termism in financial markets."
Third, "it is time to break the cycle of excessive debt build-up followed by painful debt crises," meaning taking a systemic approach to lending and borrowing more responsibly.
And we must keep a focus on countries particularly vulnerable to the impacts of the climate crisis, namely Small Island Developing States. I fully support proposals to convert debt to investment in resilience such as through the Debt for Climate Adaptation Swap initiative," said the UN chief. "We should move this from idea to reality. "
"Together, let us raise ambition for development finance, climate finance, and finance that is inclusive and enables markets to grow, businesses to thrive and people to live in dignity," he said.