The new initiative would focus on “the systematic change of entire 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, as part of a larger push that could link such spending to the debt relief, according to a draft document viewed by Reuters. Press Agency.
The institutions’ discussions towards this goal are detailed in a World Bank debt document posted Monday on the bank’s website for their annual spring meetings in the northern hemisphere.
The advisers would include United Nations officials, non-governmental organizations, private investors and even rating agencies with expertise in seeking 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 the ability of some countries to switch to clean energy, protect wildlife or to make changes to infrastructure 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 debt crisis, climate change and biodiversity loss.
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 other 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 newest 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.
The World Bank estimates that more than 30 of the world’s poorest countries are over-indebted or at high risk. Three of them – Chad, Ethiopia and Zambia – have called for debt restructuring under a common framework agreed last year by China, the world’s largest bilateral creditor, and other major economies. of the Group of 20 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 experts from the public and private sectors 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 in late 2021, with a secretariat 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 talks in the common Group of 20 framework, the document said. Instead, it could provide advice on how to proceed after the debt relief is agreed.