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World Bank and IMF Consider Linking Debt Relief to Climate Efforts | Climate change news

The new initiative would focus on “entire evolving economies,” a source told Reuters.

The World Bank and the International Monetary Fund (IMF) plan to launch a platform to advise poor countries on financing climate and conservation activities, in a broader context that could link such spending to relief. debt, according to a draft document consulted by Reuters. Press Agency.

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 in the northern hemisphere.

The advisers would include officials from the United Nations, non-governmental organizations, private investors and even rating agencies with expertise in finding investments, including grants, low or no interest loans and conditional debt 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 that focus on one project at a time, this will focus on systematically changing entire economies,” a source close to the initiative told Reuters, adding that the platform is aiming 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.

Green, resilient, inclusive

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 of. the bank.

“For countries that are close to their debt limits, financing GRID will require sufficient grants and concessional loans that could be augmented by conditional debt relief or reprofiling,” the joint document said.

UN estimates more than two million Ethiopians have been displaced by fighting in Tigray region, exacerbating humanitarian and debt crises in Ethiopia [File: Mohamed Nureldin Abdallah/Reuters]

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 asked for a restructuring of their debts under a common framework agreed last year by China, the world’s largest bilateral creditor, and other groups 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 told Reuters that 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 the 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 any debt relief has been agreed.

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