New Delhi, 21 Apr: The annual World Bank and IMF meetings have wrapped up without a concrete plan to mobilise the trillions of dollars needed to fight climate change, in a year where agreement on New Collective Quantified Goal (NCQG) or a new climate finance goal will be the key issue at the United Nations climate conference (COP29) in Azerbaijan.
NCQG is the new amount developed countries must mobilise every year from 2025 onwards to support climate action in developing countries. Rich countries are expected to raise more than the USD 100 billion they promised to provide every year from 2020, but repeatedly failed.
A recent analysis revealed that financial flows into developing countries turned negative in 2023, with these nations paying out more in debt servicing than they received in external financing.
Discussions between G7 and G20 finance ministers on the sidelines of the spring meetings that wrapped up on Saturday touched on providing finance to developing countries for meeting climate and development objectives.
The Vulnerable Group of Twenty Countries (V20) called for increased concessional finance for climate-vulnerable nations, and urged G7 and high-emitting G21 countries to safeguard the 1.5 degrees Celsius limit.
The Intergovernmental Group of Twenty-Four on International Monetary Affairs and Development (G24) called for reforms to ensure timely assistance to vulnerable nations and urged reform of the G20 Common Framework to support countries in debt distress.
World Bank president Ajay Banga expressed hope that donor contributions could add up to an additional USD 100 billion to the poorest countries through its lending arm, the International Development Association (IDA).
The Bank had earlier launched a bid to add more financing to its portfolios to support low-income countries with very low-cost financing and grants. Shareholders are expected to pledge to the IDA before the replenishment conference in December.
While Banga reiterated the Bank’s commitment to ramp up climate-aligned finance, he said the Bank has no plan to stop investments in gas projects.
IMF chief Kristalina Georgieva noted during her opening press conference that the global economy had lost USD 3.3 trillion since 2020. She said that the poorest countries spend over 14 percent of their budgets on debt payments, with interest rate hikes pushing up debt servicing costs.
A new report by the Debt Relief for Green and Inclusive Recovery Project (DRGR) revealed that 47 emerging and developing market economies may not be able to spend needed funds for climate adaptation and development without risking default in the next five years.
Discussion on international taxation for climate action took place on the sidelines, with the first sherpa meeting of the International Tax Task Force launching the first phase of its work to help countries fulfill Paris Agreement commitments.
Launched at COP28 and co-chaired by Kenya, Barbados, and France, the task force’s aim is to advance options for international levies to raise revenues for the fight against climate change, and to support 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 tackle poverty, hunger, and climate change. The IMF endorsed the proposal, which is being backed by the Brazilian G20 presidency.
Pepukaye Bardouille, Director of Bridgetown Initiative and Special Adviser on Climate Resilience, Barbados Prime Minister’s Office said: “There has certainly been some good progress in the past few months. But the fact remains there is a USD3 trillion gap in funding to achieve the sustainable development goals and address the climate crisis.” (PTI)