African nations pay 'extortionate' interest rates on debt, U.N. chief says

The global financial system is cheating African nations, the U.N. chief charged on Saturday in calling for another "Bretton Woods moment" to sort things out.

U.N. Secretary-General António Guterres told the opening of the African Union's annual summit in Ethiopia's capital Addis Ababa on Saturday that Africa's developing nations are rich with potential but repeatedly left in the lurch, oversaddled with high-interest debt payments.

"The global financial system routinely denies them debt relief and concessional financing, while charging extortionate interest rates," he said. "As a result, vital systems are starved of investment — from health and education, to green technology, social protection and the creation of new, sustainable jobs."

Women and girls still don't get the support and investment they need at school or in the workplace, or in political and citizen forums, Guterres said, and African nations cannot grow or develop with "one hand tied behind their backs."

"I have called for a new Bretton Woods moment to radically transform the global financial architecture," he said. The beating heart of this system — every decision, mechanism and process — should be centered on the needs of developing countries."

Need for 'a new debt architecture'

Africa is underrepresented in the global financial system that revolves around institutions like the World Bank, the biggest intergovernmental source of low-cost development loans, and its sister lending agency, the International Monetary Fund, which provides emergency loans for nations to weather economic crises.

The two Washington-based organizations are at the heart of the so-called "Bretton Woods" institutions that were set up to rebuild postwar Europe and promote international cooperation at a U.S.-led meeting of 43 nations at Bretton Woods, New Hampshire in July 1944.

Since that time and increasingly in the 21st century, their missions have shifted to focus more on global development and anti-poverty.

"We need a new debt architecture," Guterres said, "that provides debt relief and restructuring to vulnerable countries — including middle-income countries — while providing immediate debt suspension and write-downs to countries in need."