• Sat. Sep 23rd, 2023

World Bank offers developing countries debt pauses if hit by climate crisis | Climate crisis

Poor countries will be able to pause their debt repayments if hit by climate disaster, under plans announced by the World Bank at the finance summit in Paris.

The international development organisation said it would insert new clauses in any agreements with developing countries, allowing them to suspend debt payments in the case of extreme weather events, starting with some of the poorest and most vulnerable nations.

The UK also said it would apply similar arrangements to its loans to 12 countries in Africa and the Caribbean.

Debt relief for governments struggling with the impacts of the climate crisis has been a key demand of poor countries. However, the World Bank will only apply the clauses to new loans, and the announcements do not add up to the debt forgiveness that some countries would like to see.

Carly Munnelly, a senior adviser at Save the Children, said: “While such clauses are helpful, they are insufficient for addressing the crippling debt burdens faced by many countries today, which are undermining governments’ capacity to invest in children’s health, education and other rights.”

Mia Mottley, the prime minister of Barbados, told the summit that the world needed not just reform but “absolute transformation” of the global financial system, to help developing countries emerge from poverty in a low-carbon way, and to cope with the impacts of the climate crisis.

“That transformation is required because, while the world knew since the 1890s that we were facing warming of the climate, we chose not to heed the advice of scientists,” she said.

At the summit, hosted by the French president, Emmanuel Macron, countries and institutions unveiled a raft of measures to help raise finance, and assist poor countries.

Several major economies, including France and Japan, will redirect tens of billions of dollars to the developing world, in the form of money known as “special drawing rights” under the International Monetary Fund.

The EU called for an expansion of carbon trading, which it believes can raise a large proportion of the revenues needed for climate finance, in both developed and developing countries.

The US Treasury secretary, Janet Yellen, sought to reassure developing countries that focusing on the climate was not at the expense of lifting people out of poverty.

Senegal signed up to a “just energy transition partnership” deal, which would lead to a large expansion of renewables in the country. However, the agreement did not cover its large gas reserves.

The measures announced at the Paris conference, which ends on Friday afternoon, do not add up to anywhere near the trillions of dollars that experts say are needed to shift the global economy to a low-carbon footing and assist poor nations stricken by climate disaster.

That is not a problem, according to Saleemul Huq, the director of the International Centre for Climate Change and Development, in Bangladesh: “It went very well to talk about the scale of change needed and the scale of finance needed to tackle climate change and poverty alleviation at the same time,” he said.

“I don’t much care for announcements of pledges from such summits. I would prefer to see each leader here to actually deliver what they have promised.”

Nicholas Stern, the UK peer and economist, said the conference would be a success if it set a new direction for countries in thinking about climate finance. “What we should hope for is a shared understanding of what we need to do,” he told the Guardian.

One heated topic of discussion was over taxes. Many poor countries want new taxes, including potentially a new levy on shipping, on frequent flyers, and on the bumper profits of fossil fuel companies, or on fossil fuel production. Some experts also argue for a wealth tax, to pay for the rescue and rehabilitation of poor countries suffering the impacts of the climate crisis, known as loss and damage.

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