By Nneka Nwogwugwu
Developing world and climate leaders have demanded action to help them deal with climate change.
In closed-door meetings on the sidelines of the UN General Assembly, and so-called climate week discussions alongside, wealthy countries were confronted by increasingly urgent questions about who pays for the catastrophic impact of hurricanes, floods and wildfires.
Mia Mottley, the prime minister of Barbados, who has become the de facto leader of efforts by smaller, less wealthy nations to build a global coalition to secure funds to help tackle the ravages of climate change, called on Friday for “a new internationalism”.
The postwar financial institutions established as a result of the Bretton Woods agreement in 1944, including the IMF and what became the World Bank Group, “no longer serve the purpose in the 21st century that they served in the 20th century”, Mottley said.
The multipronged actions demanded from the IMF and World Bank included the redistribution of $100bn in special drawing rights, or extra foreign reserve assets; a requirement for the IMF to temporarily suspend interest surcharges for heavy borrowers in need of funds; and concessional funding to be provided for infrastructure related to climate resilience.
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The plans Mottley put forward included the issuance of $650bn of special drawing rights or other low-interest, long-term debt instruments to finance clean-energy development across the world. All major issuers of debt should “normalise” natural disaster and pandemic clauses in debt instruments to help borrowing countries better absorb the shocks, she said.
Mottley was not the only leader to push for a rethink of how the world pays for the effects of climate change. Earlier in the week, fellow Caribbean Philip Davis, the prime minister of the Bahamas, said the IMF and World Bank should “revisit” their recommended debt-to-GDP ratios for borrowing countries “in the context of adaptation, mitigation, loss and damage, particularly, as a result of climate change”.
Davis pointed out that “vulnerable countries” were “far above” the debt-to-GDP ratio recommended as sustainable by multilateral development banks, but they still had to pay to rebuild after natural disasters.
Simon Stiell, newly appointed executive secretary of the UN Framework Convention on Climate Change, said there was “growing consensus” that the so-called Bretton Woods structures were “appropriate for the postwar world” but now needed to be “reformed and adjusted”.
The discussion comes as part of a fraught broader debate around so-called “loss and damage”.
Kristalina Georgieva, IMF managing director, said lastTuesday that demands from developing and climate-affected countries for developed countries to help pay for loss and damage were “very fair”.
Georgieva said the IMF was in a “desperate push to replenish” its Catastrophic Containment and Relief Trust after the Covid-19 pandemic had “sucked away” the trust’s money.
