Macron sees climate finance summit as opportunity for change
ALBAWABA – The Summit for a New Global Financial Pact took off Thursday with an opening statement by French President Emmanuel Macron, underlining the need for a new global lending system.
Low-income countries "shouldn't have to choose" between fighting climate change and poverty, Agence France-Press (AFP) reported.
The current system, underpinned by the World Bank (WB) and the International Monetary Fund (IMF), has shown its value in the past, but is "not completely suited" to meet current challenges, he said.
Macron is hosting the meeting with Barbados Prime Minister Mia Mottley, who has become a leading advocate for reimagining the role of the WB and IMF in an era of the climate crisis.
Leaders present for the summit include Kenyan President William Ruto, German Chancellor Olaf Scholz, Chinese Premier Li Qiang and European Commission head Ursula von der Leyen, according to AFP.
Saudi Arabia's Crown Prince Mohammad bin Salman (MBS) is also present at the climate finance summit.
France has promoted this summit as an opportunity to discuss ideas ahead of several major economic and climate meetings this year. It aims to create multifaceted roadmaps for the next 18 to 24 months, ranging from debt relief to climate finance, as reported by Reuters.
"We can make it work much better if this money and these liquidities were at the service of progress on the planet and tackling this double challenge that I mentioned: poverty and climate change, (and) biodiversity," Macron said.
A "public finance shock" was needed as well as massive private investment in green technology to help the world transition to a low-carbon economy, he added.
"Policymakers and countries shouldn't ever have to choose between reducing poverty and protecting the planet," he told an audience that included dozens of heads of state attending the summit.
France has billed the two-day meeting as an opportunity to discuss ideas ahead of a cluster of major economic and climate meetings this year.
As for the United States (US), Washington plans to push for creditors to grant relief and restructure the debts of poor and developing countries, said US Treasury Secretary Janet Yellen.
"At this summit, the United States will continue to push for the full and speedy participation of all bilateral creditors in debt negotiations," she said, in remarks prepared for a news conference in Paris.
IMF, WB under pressure in climate finance summit
IMF and WB officials joined dozens of economic leaders for a two-day summit in Paris, aimed at tackling the interlinked challenges of poverty alleviation and climate change.
Last year, the IMF launched its Resilience and Sustainability Trust (RST), with just over $40 billion in funds at its disposal.
The fund’s function is to offer longer-term loans to finance projects related to poverty and climate change issues.
Bangladesh, Barbados, Costa Rica and Rwanda were the first countries to benefit from the fund, according to AFP.
Meanwhile, former WB president David Malpass presided over efforts underway to double climate financing to $32 billion and to put in place a global warming action plan for the period 2021-2025.
However, both institutions admitted that their financing capacities are currently insufficient to meet the growing needs of developing economies, the news agency underscored. The IMF estimates these needs will exceed one trillion dollars by 2025.
Nonetheless, a most significant breakthrough was achieved at the IMF-WB spring meetings.
The international financial institutions agreed to boost the World Bank’s lending capacity by up to $5 billion per year for 10 years, as reported by AFP.
Still, hopes are that progress may be made on a stalled two-year-old pledge by wealthier countries to recycle $100 billion in IMF special drawing rights (SDRs) from rich countries to vulnerable economies, AFP reported.
Media reports have suggested that the Paris Summit could realize pledges from other countries, which would help hit the $100 billion target.
Also, in a speech to be delivered later on Thursday, at the climate finance summit, new WB president Ajay Banga will outline a new "toolkit", Reuters announced.
This kit includes offering a pause in debt repayments to give countries some flexibility to redirect funds for emergency response. This would provide new types of insurance to help development projects and support governments in building advanced-emergency systems.
Many of the topics on the agenda are aimed to take up suggestions from a group of developing countries, led by Barbados’ Mottley, dubbed the 'Bridgetown Initiative'.
