Global leader Ruto urges immediate financial restructuring to facilitate climate-oriented initiatives worldwide

President William Ruto has once again emphasized the need for a comprehensive overhaul of the international financial system, highlighting its potential to either serve as a catalyst for resilience and prosperity or a structural barrier.

Speaking at the second Africa Climate Summit in Addis Ababa, President Ruto expressed concern over the current state of the financial system, particularly its impact on power sector reforms and climate finance. He underscored the importance of the International Monetary Fund's (IMF) debt sustainability analyses to account for the unique financing needs of these sectors.

However, President Ruto pointed out that the IMF's Resilience and Sustainability Facility (RSF) remains tied to traditional program conditionalities, a situation he finds unsatisfactory. He called for a fair, timely, and effective debt restructuring under the IMF's Common Framework.

The President also emphasized the urgency of reforming multilateral development banks (MDBs), stating that MDB capital increases are essential for financing at scale. He urged the replenishment of concessional windows such as the International Development Association (IDA) and the African Development Fund.

Balance sheet optimization alone, according to Ruto, cannot mobilize the trillions needed for climate and development. He stressed the importance of refinancing and restructuring being placed at the centre of the reform agenda.

President Ruto's call for reform extends beyond the financial system, as he warned that Africa's debt burden and shrinking fiscal space are undermining both climate and development action. He highlighted that at least 21 African countries are in or at high risk of debt distress.

The President's concerns focus on the RSF's role in channeling Special Drawing Rights (SDRs) for climate action. He emphasized that SDRs must serve people directly and not become "another instrument of procedure."

Without significant investment in reliable energy systems, Africa's aspirations for green industrialization will remain a deferred dream, President Ruto warned. He urged a united stand and a strong, collective voice from Africa, the Caribbean, and across the developing world to reform the international financial system.

President Ruto's renewed calls for reform come amidst growing concerns about the ability of developing countries to meet their climate finance commitments within the current global financial architecture. The President's emphasis on the need for a reformed system that can effectively address these challenges is a call to action for the international community.