An audience of 147 from core Vi university member, Ateneo de Manila University, joined UNCTAD’s Evru Vojvoda November 23 for a videoconference presentation of the 2015 Trade and Development Report (TDR).
The TDR 2015 reviews recent trends in the global economy and focuses on ways to reform the international financial architecture. It maintains that with a tepid recovery in developed countries and headwinds in many developing and transition economies, the global crisis is not over, and the risk of a prolonged stagnation persists.
"Despite many years of accommodative monetary policy, global GDP growth remains subdued," Vojvoda said. "And emerging economies – the main contributors to global growth since 2011 – are now facing difficulties."
The report argues that these trends reveal the lack of a well-functioning international monetary and financial system.
"The burden of macroeconomic adjustment of global imbalances is mainly supported by deficit countries," she said. “As a consequence, the current monetary system is dysfunctional and can neither prevent boom-and-bust episodes nor recurrent debt crises.”
Against this background, the TDR 2015 identifies some of the critical issues to be addressed in order to establish a more stable and inclusive international monetary and financial system that can support the development challenges over the coming years.
"There is a need for radical reform in many areas, including in banking regulation" Vojvoda emphasized.
This year’s TDR also examines recent external debt trends and highlights the absence of a fair and efficient sovereign debt workout mechanism.
"Despite a general improvement in the debt ratios during the 2000s, the recent increase in external debt positions in developing countries is worrisome," she said. "The current system lacks a fair restructuration process and tends to facilitate the bailout of private creditors."
According to the report, progress can be achieved by improving existing sovereign debt bond contracts, as well as promoting soft-law guiding principles at the international level on how best to conduct sovereign debt restructuring. In the long run, a statutory -- multilateral treaty-based -- approach that defines a set of binding rules and norms, however, is the preferred option.
The final topic of the videoconference focused on the need to strengthen the financial vehicles that support investing long-term needs in developing countries.
"Ensuring long-term development finance requires dedicated government action," Vojvoda said.
The TDR 2015 calls for greater support for development banks, designed specifically to compensate for the “short-termism” of private capital flows and markets.