Climate-hit Barbados says it has a plan to reform the World Bank and International Monetary Fund

As they grapple with rising costs, soaring debt and extreme weather events, developing nations are struggling to find the funds to stop burning fossil fuels to heat the planet and prepare for tomorrow’s climate disasters, experts say.

The question is what do we do about it, amid international tensions led by Russia’s invasion Ukraine and trade conflicts between the United States and China.

Enters Barbados Prime Minister Mia Motley.

“We think we have a plan,” the president of the Caribbean island nation, which is threatened by storms and sea level rise, told world leaders at the COP27 climate summit in Egypt in November.

Known as the Bridgetown Initiative, ideas it put forward include using the International Monetary Fund to funnel “billions into trillions” of investments to cut carbon pollution, as well as a tax on fossil fuel profits to cushion the economic blows of climate impacts.

While the proposals are still being discussed, they have gained traction among large economies that control the World Bank and International Monetary Fund, raising hopes of action in the coming months.

The World Bank is under particular pressure, in the wake of Leader David Malpass resigns Amid questions about his position on climate change.

© Brendan Smialowski/AFP

French President Emmanuel Macron has embraced the reform push and will seek to keep up the momentum with a climate finance summit in June, ahead of World Bank meetings and UN climate summits later this year.

Reform plans are gaining momentum as they fill a “political vacuum” over financing the global climate response, said Avinash Persaud, an economist who runs the Barbados campaign with “one-and-a-half people and spreadsheets”.

“I feel like we have a moment here,” he told AFP.

‘Burning and drowning’

climate science experts at the United Nations said time is running out To invest in changes needed to limit warming to 1.5°C above pre-industrial temperatures.

The world is now off track, risking huge costs to nature, human societies and the global economy.

“Unless money is put on the table, we will not be able to solve the climate crisis,” said Harjit Singh, head of global political strategy at the Climate Action Network campaign group.

The past few years have seen severe heatwaves, droughts and floods destroy crops in the global breadbaskets.

© Vida Hussain/AFP

In Pakistan, for example, the economy was already struggling after years of political turmoil, but soaring global energy prices and catastrophic floods last year pushed it to the brink.

Persaud said that developing countries already lose “significant portions” of their gross domestic product each year to climate impacts.

“We burn and drown in the same year,” he said, “that’s climate change for you.”

after the war

The so-called Bretton Woods financial structure was created to help rebuild countries ravaged by World War II and to promote global trade and development.

Cameroonian economist Vera Songwe said the world has now reached a new inflection point.

“If you add up all these crises that we’re facing today, it’s like we just got into a war,” she told AFP.

Of those crises, she said, climate change is now “the most serious and most sustainable threat,” adding that it “already permeates every aspect of global economic development.”

© Luca MATTEUCCI / AFP

Financial institutions are starting to take action.

The International Monetary Fund has created a new loan-based Resilience and Sustainability Fund to help poor or vulnerable countries promote sustainable growth. Barbados was the first beneficiary.

The World Bank says it provided a record $31.7 billion last year to help countries tackle climate change, and has begun crafting a roadmap for change.

But even as rich countries have failed to meet their goal of providing $100 billion annually to help developing countries invest in clean energy and climate resilience, research has shown that the real costs are already much higher.

Songwe co-leads the Independent High-Level Panel of Experts on Climate Finance, set up under the United Nations, which said last year they would need more than $2 trillion annually by 2030 to respond to the climate crisis.

“Change the world?”

The Barbados plan seeks to raise those trillions using nearly $500 billion in reserve assets of the International Monetary Fund. Known as Special Drawing Rights As collateral in a new climate trust fund, it can borrow cheaply to invest in private sector emissions reduction projects.

It also calls for multilateral development banks to dramatically increase their lending, stressing that debt arrangements should include, as Barbados did, catastrophe clauses allowing a country to pause repayments for two years after a high-risk event.

The plan calls for taxation For example on fossil fuel earnings To help countries adapt to climate losses and damage.

Singh welcomed the proposal, though activists want debt cancellation on the table and greater acknowledgment of responsibility from wealthy polluters.

© Julia Hahn Janicki / AFP

The hope, Persaud said, is to build a broad coalition of countries on the climate front lines Almost 40 percent of the world’s population to press for change.

“You will change the world for 3.2 billion people, especially as this group grows,” he said.

(AFP)

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