NEW DELHI: The World Bank and IMF meetings concluded without a definitive strategy to secure the necessary funds for combating climate change, a crucial issue for the upcoming COP29 conference in Azerbaijan. The New Collective Quantified Goal (NCQG), which determines the annual financial support developed countries must provide to developing nations from 2025 onwards, will be a central topic at the conference.Despite repeated failures, wealthy nations are anticipated to contribute more than the previously committed USD 100 billion per year from 2020.
Recent data shows that financial inflows to developing countries turned negative in 2023, with these nations paying more in debt servicing than they received in external financing. Discussions among G7 and G20 finance ministers during the spring meetings focused on providing financial support to developing countries for achieving climate and development goals. The Vulnerable Group of Twenty Countries (V20) urged increased concessional finance for climate-vulnerable nations and called on G7 and high-emitting G21 countries to protect the 1.5 degrees Celsius limit. The Intergovernmental Group of Twenty-Four on International Monetary Affairs and Development (G24) advocated for reforms to ensure timely assistance to vulnerable nations and urged changes to the
G20 Common Framework to support countries in debt distress.
World Bank president Ajay Banga expressed optimism that donor contributions could provide an additional USD 100 billion to the poorest countries through the International Development Association (IDA). The Bank had previously launched an initiative to increase financing for low-income countries through low-cost financing and grants, with shareholders expected to pledge to the IDA before the replenishment conference in December. While Banga reaffirmed the Bank’s commitment to increasing climate-aligned finance, he stated that the Bank has no intention of halting investments in gas projects.
IMF chief Kristalina Georgieva highlighted that the global economy had lost USD 3.3 trillion since 2020, with the poorest countries spending over 14 percent of their budgets on debt payments, exacerbated by rising interest rates. A report by the Debt Relief for Green and Inclusive Recovery Project (DRGR) revealed that 47 emerging and developing market economies may be unable to allocate necessary funds for climate adaptation and development without risking default in the next five years.
Discussions on international taxation for climate action took place, with the International Tax Task Force launching its first phase of work to assist countries in fulfilling their Paris Agreement commitments. The task force, co-chaired by Kenya, Barbados, and France, aims to explore options for international levies to raise revenues for combating climate change and supporting development and nature. Finance ministers of Brazil and France led discussions on a wealth tax of at least 2 percent of billionaires’ wealth annually, which could raise USD 250 billion to address poverty, hunger, and climate change. The IMF endorsed the proposal, which is being supported by the Brazilian G20 presidency.
Pepukaye Bardouille, Director of Bridgetown Initiative and Special Adviser on Climate Resilience, Barbados Prime Minister’s Office, acknowledged progress in recent months but emphasized the USD 3 trillion funding gap for achieving sustainable development goals and addressing the climate crisis. Bardouille stressed the need for countries from the Global South to speak up more to ensure that funds reach those who need them most, calling for the tripling of IDA by 2030, concessional 50-year loans for low-income and vulnerable middle-income countries, and new funding streams from the wealthiest and most polluting sectors.
Rachel Kyte, Professor of Practice in Climate Policy, Blavatnik School of Government, Oxford University, highlighted the growing net outflows of finance from emerging markets and developing countries, exacerbating the challenges posed by climate change. Kyte emphasized the need for shareholders to do more to support these nations in their efforts to overcome these obstacles.
Recent data shows that financial inflows to developing countries turned negative in 2023, with these nations paying more in debt servicing than they received in external financing. Discussions among G7 and G20 finance ministers during the spring meetings focused on providing financial support to developing countries for achieving climate and development goals. The Vulnerable Group of Twenty Countries (V20) urged increased concessional finance for climate-vulnerable nations and called on G7 and high-emitting G21 countries to protect the 1.5 degrees Celsius limit. The Intergovernmental Group of Twenty-Four on International Monetary Affairs and Development (G24) advocated for reforms to ensure timely assistance to vulnerable nations and urged changes to the
G20 Common Framework to support countries in debt distress.
World Bank president Ajay Banga expressed optimism that donor contributions could provide an additional USD 100 billion to the poorest countries through the International Development Association (IDA). The Bank had previously launched an initiative to increase financing for low-income countries through low-cost financing and grants, with shareholders expected to pledge to the IDA before the replenishment conference in December. While Banga reaffirmed the Bank’s commitment to increasing climate-aligned finance, he stated that the Bank has no intention of halting investments in gas projects.
IMF chief Kristalina Georgieva highlighted that the global economy had lost USD 3.3 trillion since 2020, with the poorest countries spending over 14 percent of their budgets on debt payments, exacerbated by rising interest rates. A report by the Debt Relief for Green and Inclusive Recovery Project (DRGR) revealed that 47 emerging and developing market economies may be unable to allocate necessary funds for climate adaptation and development without risking default in the next five years.
Discussions on international taxation for climate action took place, with the International Tax Task Force launching its first phase of work to assist countries in fulfilling their Paris Agreement commitments. The task force, co-chaired by Kenya, Barbados, and France, aims to explore options for international levies to raise revenues for combating climate change and supporting development and nature. Finance ministers of Brazil and France led discussions on a wealth tax of at least 2 percent of billionaires’ wealth annually, which could raise USD 250 billion to address poverty, hunger, and climate change. The IMF endorsed the proposal, which is being supported by the Brazilian G20 presidency.
Pepukaye Bardouille, Director of Bridgetown Initiative and Special Adviser on Climate Resilience, Barbados Prime Minister’s Office, acknowledged progress in recent months but emphasized the USD 3 trillion funding gap for achieving sustainable development goals and addressing the climate crisis. Bardouille stressed the need for countries from the Global South to speak up more to ensure that funds reach those who need them most, calling for the tripling of IDA by 2030, concessional 50-year loans for low-income and vulnerable middle-income countries, and new funding streams from the wealthiest and most polluting sectors.
Rachel Kyte, Professor of Practice in Climate Policy, Blavatnik School of Government, Oxford University, highlighted the growing net outflows of finance from emerging markets and developing countries, exacerbating the challenges posed by climate change. Kyte emphasized the need for shareholders to do more to support these nations in their efforts to overcome these obstacles.