Fri, Jun 23, 2023 page12

• Paris summit calls for ‘finance shock’

  AVOIDING CRISES: Barbados’ leader told the Summit for a New Global Financial Pact that what is required ‘is absolute transformation and not reform of our institutions’

  • AFP, PARIS
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  No country should have to choose between tackling poverty and dealing with climate change, French President Emmanuel Macron yesterday told global leaders at a summit tasked with reimagining the world’s financial system.

  The Summit for a New Global Financial Pact is aimed at finding the financial solutions to the interlinked global goals of tackling poverty, curbing emissions and protecting nature.

  In his opening remarks Macron told delegates that the world needs a “public finance shock” to fight these challenges, adding that the current system was not well suited to address the world’s challenges.

  

  French President Emmanuel Macron delivers a speech in Paris, France, yesterday during the New Global Financial Pact Summit at the Palais Brogniart.

  Photo: EPA-EFE

  “Policymakers and countries shouldn’t ever have to choose between reducing poverty and protecting the planet,” Macron said.

  Ugandan climate campaigner Vanessa Nakate took the podium after Macron and asked the audience, which included Saudi Arabian Crown Prince Mohammad bin Salman, to take a minute of silence for people who are facing disasters.

  Nakate slammed the fossil fuel industry, saying that while they promise development for poor communities, the energy goes elsewhere and the profits “lie in the pockets of those who are already extremely rich.”

  “It seems there is plenty of money, so please do not tell us that we have to accept toxic air and barren fields and poisoned water so that we can have development,” she said.

  Economies have been battered by successive crises in the past few years, including COVID-19, Russia’s invasion of Ukraine, spiking inflation, debt and the spiraling cost of weather disasters.

  Barbadian Prime Minister Mia Mottley told global leaders that the international financial order needs “absolute transformation.”

  “What is required of us now is absolute transformation and not reform of our institutions,” said Mottley, who is an advocate for reimagining the role of the World Bank and IMF in an era of the climate crisis.

  Other participants included Kenyan President William Ruto, UN Secretary-General Antonio Guterres, US Secretary of the Treasury Janet Yellen, IMF managing director Kristalina Georgieva and World Bank president Ajay Banga.

  France said that the two-day summit would be a platform for ideas before a cluster of major economic and climate meetings this year.

  However, observers are looking for tangible progress — including keeping promises already made.

  “We’d need to see some down payments from the richer countries and their development finance institutions,” said Alex Scott, head of environmental think tank E3G’s climate diplomacy and geopolitics program.

  One likely announcement is that a 2009 pledge to deliver US$100 billion a year in climate finance to poorer nations by 2020 would belatedly be fulfilled.

  A second pledge to rechannel US$100 billion in unused “special drawing rights” — the IMF’s tool to boost liquidity — would also be in the spotlight.

  Yellen said that the US would use the summit to push for creditors to grant relief and restructure debts of developing countries.

  “The international community must come together to support countries that are currently in crisis,” she told a news conference.

  China, a major global creditor, has come under scrutiny for its lack of participation in multilateral efforts to ease the debt burden on developing countries.

  The summit comes amid growing recognition of the scale of the financial challenges ahead.

  Last year, a UN expert group said developing and emerging economies excluding China would need to spend about US$2.4 trillion a year on climate and development by 2030.

  Countries are calling for multilateral development banks to help unlock climate investments and significantly increase lending, while stressing that new debt arrangements should include, as Barbados has, disaster clauses allowing a country to pause repayments for two years after an extreme weather event.

  Other ideas on the table include taxation on fossil fuel profits and financial transactions to raise climate funds.

  Macron is backing the idea of an international tax on carbon emissions from shipping, with hopes of a breakthrough at a meeting of the International Maritime Organization next month.

  Observers are also awaiting details of a plan from South American countries to create a global structure for so-called debt-for-nature swaps.

  After meetings in Germany last week, Colombian President Gustavo Petro said there had been discussions with the US, Germany and African countries about the idea.

  Petro said it “could be humanity’s first great leap forward to address its biggest problem.”
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