Development Bank Reform Is Given New Momentum By The Paris Climate Summit

Though some participants were dissatisfied with the progress made to address the debt of poorer states, a Paris meeting to explore revamping the world's financial system achieved several notable victories that should tee up further action before climate talks later this year.
 
Around 40 world leaders, many of them from the Global South, gathered in Paris for the Summit for a New Global Financing Pact to discuss how international financial institutions could adapt to the difficulties posed by climate change and other development issues.
 
The "Bridgetown Initiative" spearheaded by Mia Mottley, the leader of Barbados, was a major topic of discussion. Her adviser Avinash Persaud expressed satisfaction with the meeting's outcome.
 
"It's a roadmap for genuine change," he told Reuters on the sidelines of the talks. "What's emerged here is a real ... understanding of the scale and pace of what is required."
 
A long-delayed debt agreement for Zambia, assurance that the richer world will likely reach the long-overdue goal of delivering $100 billion yearly in climate finance to poorer countries, and a package to increase Senegal's renewable energy capacity were among the highlights.
 
The World Bank and other organisations also announced that they will begin including provisions in financing agreements that permit vulnerable states to postpone debt payments in the event of a natural disaster.
 
Persaud, however, had reason to believe that even more change was on the horizon due to the language of the attendants' final statement and subtle shifts in the tone of discussions behind the scenes.
 
In particular, the text addressed for the first time the probable need for wealthier nations to contribute new funds to multilateral development organisations like the World Bank. This was coupled with a scheme to borrow an additional $200 billion over a ten-year period from their current assets.
 
The clear goal for multilateral development banks to use "at least" $100 billion in private sector capital each year when they lend was another first.
 
It was also mentioned that "new avenues for international taxation" should be explored, along with other Bridgetown Initiative demands including providing investors with foreign exchange guarantees.
 
"That was widely discussed here and (there's) lots of support behind an initiative that's happening outside of Paris, at the International Maritime Organisation in a couple weeks time, on a levy on shipping emissions," Persaud added.
 
Even still, the meeting had its detractors.
 
"Unfortunately, the Paris Summit has not provided the breakthrough needed to find the funding for our planet's survival," Teresa Anderson, Global Lead on Climate Justice for ActionAid International, said, pointing to new funding pledges being loans or temporary debt relief instead of grants.
 
All eyes are now focused on more customary occasions later in the year, such as the World Bank and IMF annual meetings, the G20 summit in September, and the COP28 climate conference in Dubai.
 
By the time of the annual meetings in October, Persaud said he would concentrate on ensuring that the strategy to build up multilateral development bank funding was in place and that pilot work on lowering the cost of capital for poor nations had started.
 
The summit, which was conducted in the face of criticism that global action on climate change is progressing too slowly, was successful in that it produced a roadmap mandating specific steps by specified dates, according to some observers.
 
"They've got a clear timetable of what they want to see happen and it's that timeline that puts the pressure on and means that it's harder to just kick things into the long grass," said Sonia Dunlop from think tank E3G.
 
(Source:www.reuters.com)