The global summit focused on restructuring the international financial system concludes today, with some progress made towards alleviating the debt burden faced by developing nations grappling with climate and economic crises.
While France, the host country, positioned the conference as an opportunity for consensus-building, there is mounting pressure on leaders to deliver tangible outcomes as economies continue to struggle under mounting debt following successive crises in recent years.
The summit takes place amidst a growing recognition of the magnitude of the financial challenges ahead, with warnings that effectively curbing global warming depends on significantly increasing investments in clean energy in developing countries.
Given the broken promises of climate financing from wealthier nations, developing countries are looking for concrete progress. The V20 group, comprising 58 nations on the front lines of climate change, stresses the need to align the global financial system with climate targets by 2030.
Barbados Prime Minister Mia Mottley, whose nation faces threats from rising sea levels and tropical storms, emphasizes the urgent need to revamp the role of institutions like the World Bank and International Monetary Fund in the face of climate crises.
Barbados has presented a comprehensive plan to address the global financial system and facilitate investments in clean energy while bolstering resilience to climate impacts.
An important development comes from IMF Director Kristalina Georgieva, who announced the successful completion of a pledge to allocate $100 billion from “special drawing rights” to a climate and poverty fund.
World Bank President Ajay Banga also unveils a “pause” mechanism for debt repayments, allowing crisis-affected countries to prioritize critical matters without worrying about impending bills.
Furthermore, Senegal has received a promise of 2.5 billion euros ($2.7 billion) from a coalition of wealthy nations and multilateral development banks to reduce its reliance on fossil fuels.
In addition, Zambia, which defaulted on its debt during the COVID pandemic, has reached an agreement with its main lender China and other creditors to restructure $6.3 billion in loans, providing some relief.
Zambian President Hakainde Hichilema hails this as a “significant milestone” in the country’s journey towards economic recovery and growth.
Turning ‘billions to trillions’
However, much more is needed to help developing countries combat climate change.
President Macron expresses hope that the long-awaited pledge to deliver $100 billion annually in climate finance to poorer nations by 2020 will finally be fulfilled this year. However, the confirmation of actual delivery may take months or even years.
According to the International Energy Agency, annual investments in clean energy in these countries alone will need to reach nearly $2 trillion within a decade to uphold the Paris Agreement’s goal of limiting global warming to “well below” two degrees Celsius.
To achieve this, various ideas have been proposed, including leveraging multilateral development banks to unlock climate investments and implementing carbon emission taxes on shipping. There are hopes for progress in these areas during the upcoming International Maritime Organization meeting in July.
Countries also advocate for including disaster clauses in new debt arrangements, allowing a temporary pause on repayments after extreme weather events occur.
© 2023 AFP
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Climate finance summit wraps up eyeing bigger progress (2023, June 23)
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