World Bank and IMF Consider Linking Debt Relief to Climate Change Spending | Voice of America
WASHINGTON – The World Bank and the International Monetary Fund (IMF) plan to launch a platform to advise poor countries on financing for climate and conservation activities, in a broader context that could link such spending to l debt relief, according to a draft document seen by Reuters.
Advisors would include UN officials, non-governmental organizations, private investors and even rating agencies with expertise in finding investments, including grants, low or no interest loans, and conditional relief. debt, says the document.
The initiative reflects a growing recognition that the economic turmoil of the COVID-19 pandemic has exacerbated budget constraints and debt issues that are hampering some countries’ ability to switch to clean energy, protect wildlife. or make infrastructural changes to prepare for climate impacts.
“Unlike other initiatives which focus on one project at a time, this will focus on systematically changing entire economies,” said a source close to the initiative, who added that the platform aims for a more holistic approach to “the triple crisis of debt, climate change and loss of biodiversity.”
In an interview in February, World Bank President David Malpass raised the possibility of linking debt relief to investments to fight climate change and reduce fossil fuel emissions, but did not provide no further details.
The institutions’ discussions towards this goal are detailed in a World Bank debt article posted Monday on the bank’s website for their annual spring meetings.
An incentive to go green
He said they were developing an “organizational framework” to link debt relief to countries’ plans to invest in “green, resilient and inclusive development”, or GRID – the latest catch-all acronym in the world. bank.
“For countries that are close to their debt limits, financing GRID will require sufficient grants and concessional loans which could be augmented by conditional debt relief or reprofiling,” the joint document said.
The World Bank estimates that more than 30 of the world’s poorest countries are or are at high risk of debt distress. Three of them – Chad, Ethiopia and Zambia – have called for debt restructuring under a common framework agreed last year by China, the world’s largest bilateral creditor, and another Group of 20. big savings with the Paris Club of official creditors.
Last month, a separate technical working group started working on the new Debt / Climate / Nature platform. It will enable public and private sector experts to provide technical assistance and data to countries on possible investments and help them find public and private funding, according to the document.
A second source said planning was still in its early stages, but the goal was to launch the platform at the end of 2021, with a secretariat to be hosted at the World Bank.
“If not addressed or addressed in a way that does not take into account macroeconomic vulnerabilities and debt sustainability constraints, climate change and loss of nature pose a systemic risk to the global economy.” , indicates the document.
The platform, however, would not replace debt treatment negotiations under the common Group of 20 framework, the document said. Instead, it could provide advice on how to proceed after debt relief has been agreed.