Macron’s Paris summit seeks new life for global finance agenda

French President Emmanuel Macron greets the audience during the conference on European air and missile defense on the sidelines of the International Paris Air Show, at the Hotel des Invalides in Paris, France, June 19, 2023. REUTERS/Stephanie Lecocq/Pool/File photo

PARIS   – French President Emmanuel Macron hosts a summit on Thursday and Friday to pin down a roadmap for easing the debt burdens of low-income countries while freeing up more funds for climate financing.

The summit brings dozens of leaders together in the French capital to forge a top-level consensus on how to progress a number of initiatives currently struggling in bodies like the G20, IMF-World Bank and United Nations.

Ranging from debt relief to climate finance, many of the topics on the agenda take up suggestions from a group of developing countries, led by Barbados Prime Minister Mia Mottley, dubbed the ‘Bridgetown Initiative’.

“We are moving to a world – I would call it the Bridgetown system of finance – (that) recognizes that we have to massively upscale the public sector and focus that on building resilience and adaptation because it’s hard for that to be funded any other way,” said Avinash Persaud, a special envoy for Mottley on climate finance.

Though binding decisions are not expected, officials involved in the summit‘s planning said that some strong commitments should be made about financing poor countries.

Nearly 80 years after the Bretton Woods Agreement created the World Bank and International Monetary Fund (IMF), leaders aim to squeeze more financing from multilateral lenders for the countries that need it most.

Developing countries facing a debt crisis

In particular, there should be an announcement that a $100-billion target has been met that will be made available through the International Monetary Fund for vulnerable countries, officials said.

The plan, first agreed two years ago at an African finance summit in Paris, calls on wealthy governments to lend unused special drawing rights to the IMF to, in turn, lend to poor countries.

Governments are also looking at ways to allow the World Bank to use leverage to lend more to poor countries without putting its top AAA credit rating a risk.

“We want to go farther and should be able to set targets to put more public money on the table,” a French presidency source said.

Rising interest rates

Rising global interest rates have left a growing number of low-income countries dependent on IMF funding while the most distressed – Ethiopia, Ghana, Sri Lanka and Zambia – have had little choice but to default.

A G20 ‘common framework’ for debt restructuring has proven painfully slow with western officials blaming China – now a major creditor after years of heavy lending – of dragging its feet.

Poor nations face peril over elusive G-20 debt relief push

A source close to the Paris Club creditor nations said on Monday that the governments Zambia owes money to aim to make a debt restructuring proposal in time for the summit in what is widely seen as a test case for the much-criticized G20 restructuring framework.

On top of interest rate stress, developing and emerging market countries are also struggling to secure the $1 trillion economists say they need by 2030 to finance carbon emission cuts, boost climate resilience and deal with damage from climate change.

Persaud said support was also expected for the IMF and other multilateral development banks to offer $100 billion in currency risk guarantees to unlock private investment in poor countries for climate and development initiatives.

Some leaders are expected to lend their weight to long-stalled proposals for a levy on shipping industry emissions ahead of a meeting next month of the International Maritime Organization, officials said.

They said calls are also expected to be made in favor of disaster risk clauses in lending agreements, which allow a country to suspend repayments in the case of a disaster.