Emerging Markets’ Needs Should Be Considered By The Global Financial Architecture, Says Kant

Amitabh Kant, India’s G20 Sherpa, said on Saturday that the world’s financial system has to be awake to meet the demands of developing countries like Brazil, South Africa, and India since they are the main forces behind world development.

According to him, developing economies will generate 80% of global growth, hence resources must be allocated toward these nations.

According to figures shared by Kant, when the G20 was founded in 2008, wealthy countries provided 60% of the world’s GDP, while emerging countries made up 22% of it.

 

According to him, the percentage of established economies is now at 48%, while the share of developing economies is at 37%.

 

He continued, “This would require financing and the international financial architecture will have to be adequately tuned to ensure that resources flow from the developed world to the emerging markets and not vice versa as is happening right now.” As a result, he said, it indicates that growth in the future will come from developing markets.

 

He said, “For example, the International Energy Agency speaks about needing USD 4.5 trillion for the energy transition. There are various estimations of the kind of resources needed. The research by N K Singh and Larry Summers said USD 3 trillion. However, if you look at both the established economies and the developing countries, you’ll see that 5–6 trillion is needed for both the SDGs and climate action.

 

It’s crucial to realize that transitioning to a clean economy offers you a business opportunity of about USD 90 trillion, he stated.

 

Second, he claimed that there are enough of resources available in the globe, with 150 trillion dollars now coming from institutional investors and pension funds, and a total of about 350 trillion dollars accessible for investment internationally.

 

The problem is that the hazards are unevenly distributed and that there is little data.

 

He said that the absence of a sufficient project pipeline makes the risks associated with ventures in emerging countries considerably greater.

 

He said that this would necessitate a global accelerator for project development in developing countries as well as the de-risking of existing enterprises and the creation of new initiatives.

 

According to him, derisking projects would be necessary in order to increase the amount of capital flowing into these developing markets.

 

The international organizations themselves should also be using a lot more indirect financing, such as private capital and blended finance, he said.

 

NITI Aayog Vice-Chairman Suman Bery said that there is no lack of funding but that data and project preparation need to be worked on.

 

In a press conference to brief the media on the G-20 conference titled “A Green and Sustainable Growth Agenda For The Global Economy,” Bery listed some of the recommendations made during the workshop, including ensuring sustainable transparent debt management, scaling up green financing, and regulating credit rating agencies for a more accurate assessment of emerging economies.

 

The CEO of NITI Aayog, BVR Subrahmanyam, brought up the topic of how the cost of financing affects the development of developing countries.

 

Commercial flow won’t occur until demand and supply side difficulties, as well as the issue of the high cost of capital, are solved, according to Subrahmanyam, as the majority of the money that will arrive will be private capital.

 

The Sherpa added that as many as 182 meetings had taken held in 58 places in relation to India’s presidency.

 

On November 30, Brazil would take over the G20 presidency, which would finish with India. On December 1, 2022, India replaced Indonesia as the G20 president.