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World Bank, IMF Consider Connecting Debt Reduction with Climate Efforts | News on climate change

The new initiative will focus on ‘systematically changing the entire economy’, a source told Reuters.

The World Bank and the International Monetary Fund (IMF) are planning to launch a platform to advise poor countries on financing for conservation and climate activities, amid a broad effort. more could link that spending with debt relief, according to a draft document reported by Reuters news agency.

The discussions of the institutions towards that goal are detailed in a World Bank article on debt published on the bank’s website on Monday for annual spring meetings in the North. their hemispheres.

The advisors will include UN officials, NGOs, private investors and even rating agencies with expertise in sourcing investments, including grants. , low-interest or no-interest loans and conditional debt write-offs, the document says.

This initiative reflects the growing recognition that the economic instability of the COVID-19 pandemic has exacerbated budgetary constraints and debt challenges, hampering the ability of some countries. in transition to clean energy, wildlife protection or infrastructure changes in preparation for climate impacts.

“Unlike other initiatives that focus on one project at a time, this will focus on systematically changing the entire economy,” said a source familiar with the initiative. Told Reuters, adding that the platform moves towards a more holistic approach to the “triple debt crisis, climate change and biodiversity loss. “

In an interview in February, World Bank President David Malpass raised the possibility of linking debt write-offs with investments to combat climate change and reducing fossil fuel emissions but do not provide more details.

Green, resilient, inclusive

It says it is developing an “organizational framework” to connect debt reduction with investment plans in nations’ ‘green, sustainable and inclusive development’, or GRID – the new acronym. most of the bank.

“For countries nearing their debt limit, GRID financing will require grants and concessional loans that can be strengthened by debt relief,” the joint report said. conditional or re-debt, ”said the joint report.

The United Nations estimates that more than two million Ethiopians have been displaced by fighting in the Tigray region of the country, exacerbating Ethiopia’s debt and humanitarian crisis. [File: Mohamed Nureldin Abdallah/Reuters]

The World Bank estimates that more than 30 of the world’s poorest countries are in or at high risk of indebtedness. Three of them – Chad, Ethiopia and Zambia – have requested to restructure their debts to a common framework agreed by China, the world’s largest bilateral creditor last year, and Groups of 20 The major economy differs from the Official Creditors Club of Paris.

Last month, a separate engineering working group started working on the new Debt / Climate / Nature Platform. It will allow public and private sector professionals to provide technical assistance and data to countries on possible investments and help them find public and private funding, the article said.

A second source told Reuters that the plans are still in the early stages but the goal is to launch the platform by the end of 2021, with a secretariat to be held at the World Bank.

“If not addressed or approached in ways that do not take into account macroeconomic vulnerability and debt sustainability constraints, then climate change and loss,” the article states. nature represents a systemic risk to the global economy.

However, the platform will not replace the debt settlement negotiations under the Joint Group 20 framework, the document said. Instead, it can provide advice on how to proceed after the write-off agreement.



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