The challenge of change

Creating new financial order in the world was dwelt on extensively by the president during his recent address at the 49th South East Asian Central Bank Governors (SEACEN) inauguration. His insistence that affluent governments must consider their impact on developing nations when making policy decisions and being quick to address shortcomings in their own systems so that they do not enlarge into global crisis is a pertinent one.

He also called on the International Monetary Fund (IMF) and other monetary organisations to reform and expand their programmes to be more in line with the needs of developing nations. The requirements that he listed out were extensive and linked to alleviating poverty, which is a global focus regardless of developed or developing focus.

He emphasised that the concept of “too big to fail” applies to economies as well and larger countries such as the US must take decisions considering the implications for developing countries as well. The new financial order that is emerging fuelled by Asian growth phenomenon must dispense with double standards and give focus to developing nations.

The blatant application of double standards; the obvious policy contradictions and inconsistencies; the stubbornness of large economies to face realities; the unfortunate attempts to politicise multi-lateral financial organisations; and the lethargy in handling urgently needed financial bailouts as stressed upon by the President are all reasons for the global financial crisis. He insisted that these oversights have to be addressed urgently for the sake of billions of people.  

While emerging economies must work together to gain a fair deal from global trade practices the most immediate need for many of them is educating and employing their vast population. As the number of the planet’s inhabitants grows there is an ever stronger need to change consumption patterns to distribute resources in a more equitable manner and this is something that must be handled internally to a large extent.

The IMF Managing Director in the keynote address at the same forum emphasised on challenges ahead in terms of controlling inflation, dealing with high food prices, tightening capital inflows and export diversification. The organisation urged Sri Lanka, to restore the country’s share of world exports instead of boosting domestic demand. Two important avenues to achieve this is increased regional integration reorienting exports from the US and Europe towards the fast-growing Asian economies and enhancing export diversification and sophistication to take advantage of new opportunities.

Sri Lanka is well-placed to meet these challenges but consistent policies and implementation have to be followed. For emerging countries to change the world order they have to become financially stable enough to provide for their populations through sustainable means, including protecting their environment. It is only then that these changes can have a lasting impact on the world and change it to be more equitable.