Growing Debt Crisis in the U.S. Poses Risk to Global Financial Stability, According to Lavrov
In the heart of the 17th BRICS summit, Russian Foreign Minister Sergei Lavrov voiced his concerns about the current state of the global economy. Addressing the outreach session, Lavrov highlighted several pressing issues related to the international financial system.
Lavrov expressed his concerns over the reliance on Western financial systems, particularly those dominated by the US dollar. He emphasised that BRICS countries are actively working on creating independent infrastructure for settlements and cross-border payments, aiming to reduce this reliance. The Foreign Minister mentioned ongoing projects such as the Cross-Border Payment Initiative, independent settlement and depository infrastructure, and efforts to enhance reinsurance capacity, as well as improve the Contingent Reserve Arrangement using alternative currencies to the dollar.
The global economic landscape, according to Lavrov, is undergoing a significant shift, with the Global South and East becoming key drivers of growth. He underlined that BRICS itself accounts for over 40% of the global GDP by purchasing power parity and about 20% of global trade, representing nearly half of the world's population. This transformation, Lavrov argued, challenges the dominance of the Western financial order and promotes multipolarity in global economic governance.
The summit, chaired by Brazil, covers a wide range of issues. In addition to economic matters, discussions are taking place on healthcare, trade, investment, finance, climate change, AI management, and strengthening peace and security. These topics, Lavrov believes, are particularly relevant given the current challenges.
The Foreign Minister also cited the COVID-19 pandemic as a factor that exposed flaws in the global trade-financial system and accelerated its fragmentation. He further noted that many developing countries are forced to spend more on servicing their debt than on investing in their own development. Lavrov also highlighted the record level of U.S. public debt, which has surpassed $37 trillion, as exacerbating the debt situation.
Moreover, Lavrov stated that illegal unilateral sanctions and the use of the dollar as a pressure tool have undermined confidence in the dollar currency. He believes that the increasing number of countries with high debt levels, which has risen from 22 to 59 since 2011, is a direct result of these practices.
The 17th BRICS summit, therefore, serves as a platform for discussing and addressing these significant concerns. The summit aims to foster economic independence, promote alternative currency mechanisms, and recognise the growing economic influence of the Global South and East in the global economy.
- Russian Foreign Minister Sergei Lavrov stressed the importance of reducing reliance on Western financial systems, particularly those dominated by the US dollar, during the 17th BRICS summit.
- Lavrov highlighted ongoing projects such as the Cross-Border Payment Initiative, independent settlement and depository infrastructure, and efforts to enhance reinsurance capacity as ways to achieve this independence.
- The Foreign Minister argued that the global economic landscape is undergoing a significant shift, with the Global South and East becoming key drivers of growth, challenging the dominance of the Western financial order and promoting multipolarity in global economic governance.
- Lavrov stated that the 17th BRICS summit serves as a platform for discussing and addressing issues such as the fragmentation of the global trade-financial system, the impact of illegal unilateral sanctions, and the escalating debt levels of many developing countries.
