NEW YORK: Malaysia has proposed for the United Nations (UN) member countries to establish an International Monetary Cooperation mechanism to address various economic issues, including the rising global inflation.

Prime Minister Datuk Seri Ismail Sabri Yaakob said such mechanism is necessary, considering that in an interconnected world, the policies and decisions made by some countries can affect other countries too.

“For example, in tackling inflation that has become a worldwide phenomenon, the monetary policy and setting of interest rates by one country would also have an impact on other countries,” he said in a speech during the 77th United Nations General Assembly at the UN’s headquarters here on Friday.

The proposed establishment of the International Monetary Cooperation mechanism would create a more effective and just system that is capable of balancing the needs of global development, he added.

“This is where cooperation and coordination between countries need to be improved to achieve the goal of equitable economic prosperity,“ he said.

The rising inflation rate has become a global phenomenon due to the increase in production inputs and fuel prices.

According to a recent study by the World Bank, as central banks across the world simultaneously hike interest rates in response to inflation, the world may be heading towards a global recession in 2023 and a string of financial crises in emerging markets and developing economies that would have lasting harm.

The central banks have been raising interest rates this year with a degree of synchronicity not seen over the past five decades—a trend that is likely to continue well into next year, the report said.

“However, the currently expected trajectory of interest-rate increases and other policy actions may not be sufficient to bring global inflation back down to levels seen before the pandemic,” it said.

Investors expect central banks to raise the global monetary policy rates to almost four per cent through 2023— a more than two percentage points increase over their 2021 average.

In Malaysia, the 109th Laporan Kewangan Rakyat issued earlier this month revealed that the country’s inflation rate has been much lower following the government’s move to increase the allocation for subsidies to RM77.7 billion for 2022 from the original allocation of RM31 billion.

The nation’s inflation rate rose by 3.1 per cent for the period of January-August 2022 -- which is in line with the market’s expectation of 3.2 per cent this year -- driven by the strong domestic demand and high commodity prices, as well as disruptions in the global supply chains.

In August 2022, the inflation rate increased to 4.7 per cent compared to 4.4 per cent in July 2022, and the inflation rate remains high -- something which is also experienced by many countries due to the rise in production input costs and fuel prices.

The phenomenon can be seen in the Eurozone where the inflation rate stood at 9.1 per cent, as well as in the United States (8.3 per cent), Thailand (7.9 per cent), the Philippines (6.3 per cent), and the Republic of Korea (5.7 per cent).

Ismail Sabri also highlighted Malaysia’s commitment to the UN’s Sustainable Development Goals (SDGs).

“The COVID-19 pandemic had hampered our efforts in achieving the SDGs. I stand here on behalf of developing countries in asserting that a successful implementation of a greener and more sustainable socio-economic development can be achieved through a fair and inclusive response to that pledge.

“New technologies can encourage countries to shift to renewable energy, but the technologies should be affordable for developing countries,” he said.

In this regard, Malaysia is committed to carrying out its responsibilities and roles to ensure environmental conservation and sustainability.

This includes implementing various measures such as introducing the Malaysian Sustainable Palm Oil (MSPO) standard and committing to reducing greenhouse gas emissions by 45 per cent based on the Gross Domestic Product (GDP) by 2030.

“Malaysia has also set a target of achieving 31 per cent renewable energy use by 2025 and is committed to achieving its goal of net-zero greenhouse gas emissions by 2050,” he said, adding that Malaysia has also introduced the National Energy Policy 2022-2040 to improve the country’s macroeconomic resilience and energy security. - Bernama