UN Expert Calls for Overhaul of Global Financial System to Uphold Equality, Solidarity and Human Rights

The global financial system must be fundamentally restructured around the principles of equality, solidarity, and human dignity, which form the foundation of the United Nations Charter, said George Katrougalos, the UN Independent Expert on the promotion of a democratic and equitable international order, in a powerful address to the UN General Assembly.

Presenting his latest report, Katrougalos called for bold, systemic reform of international financial institutions, including the International Monetary Fund (IMF) and the World Bank, to create a more just, inclusive, and democratic global financial architecture that prioritizes human rights and sustainable development over austerity and profit.

A Call to Rebuild the Financial System on Human Dignity

Katrougalos emphasized that the current financial order continues to mirror historic inequalities entrenched in the post-World War II economic structure, where decision-making power remains concentrated in the hands of wealthy nations. "This report is not about assigning blame but about advancing reforms through open, forward-looking dialogue," he said.

He urged governments and international institutions to rebuild the global financial system on the moral and legal foundations of the UN Charter—principles that include equality among nations, international cooperation, and respect for human rights.

The Global North's Disproportionate Influence

The Independent Expert argued that international financial institutions often prioritise market liberalisation, deregulation, and fiscal discipline—policies that disproportionately affect developing economies. "Although these institutions claim neutrality, their decisions directly shape how much a country can invest in education, health, and social protection," he said.

Katrougalos pointed to austerity measures and structural adjustment programmes imposed over recent decades, which have weakened labour protections, reduced public services, and undermined democratic participation. He warned that these policies have entrenched poverty and inequality while eroding the capacity of governments to respond effectively to crises such as pandemics, climate change, and conflict.

Economic Policy and Human Rights: An Inseparable Link

In his report, Katrougalos stressed that economic policy cannot be divorced from human rights obligations. Financial institutions, as specialised agencies of the UN system, are bound by the Charter of the United Nations and by international human rights law. Yet, in practice, he said, references to human rights, climate action, or social justice in financial discourse often remain rhetorical and unenforceable.

"We cannot continue to pretend that fiscal policy and human rights operate in separate spheres," he said. "Every loan condition, every budget recommendation, and every debt restructuring decision has direct implications for the dignity and wellbeing of people."

The expert noted that in 2023, developing countries collectively transferred an estimated US$263 billion to the wealthiest one percent in the global North, primarily through interest payments, profit repatriation, and debt servicing. Meanwhile, many low- and middle-income countries spend nearly half their budgets repaying external debt, leaving little room for social investment.

Reforming Bretton Woods Institutions

Katrougalos' report calls for a comprehensive reimagining of the Bretton Woods system, established in 1944 to govern global monetary relations. He proposed three pillars for reform:

1. Democratised governance – equal participation of all countries in decision-making within international financial institutions, ensuring that the Global South has a meaningful voice.

2. Accountability and transparency – independent oversight mechanisms to monitor compliance with human rights standards and assess the social impacts of financial policies.

3. Integration of human rights into all financial decisions – making human rights not an afterthought but a binding framework guiding global economic governance.

He further suggested that the UN General Assembly seek an advisory opinion from the International Court of Justice (ICJ) to clarify the legal obligations of the IMF and the World Bank to uphold fundamental human rights. Such a move could establish new global norms linking financial governance with international law.

From Debt Dependence to Economic Sovereignty

The Independent Expert also highlighted the unsustainable debt burdens that have trapped many developing nations in cycles of dependency. He called for debt restructuring frameworks rooted in fairness and justice, ensuring that repayment does not come at the expense of essential social services.

"Debt must not be a tool of domination," he said. "We must move from debt dependency to economic sovereignty, allowing nations to chart their own development paths with dignity."

Katrougalos also pointed to the rise of climate finance inequalities, noting that while low-income countries are most affected by climate change, they receive a fraction of the funds pledged under global climate agreements. He urged that climate finance mechanisms be restructured to ensure equitable access and genuine support for sustainable development.

Toward a Democratic and Equitable Global Order

In his concluding remarks, Katrougalos reiterated that reform is both urgent and achievable. He warned that without structural change, the world risks deepening inequalities and eroding trust in international institutions.

"A democratic and equitable international order is not merely an aspiration but an obligation," he said. "Only by placing people before profit and dignity before debt can we build a fairer, more sustainable global economy."

His appeal aligns with growing international momentum for reform, as developing nations continue to call for debt relief, fair trade, and global tax justice, especially in the wake of multiple crises—from the COVID-19 pandemic to climate-driven disasters and inflationary shocks.

The UN expert's message was clear: the era of economic governance detached from social justice must end. A new financial order—anchored in democracy, equity, and human rights—is essential for restoring global stability and trust.