French President Emmanuel Macron speaks during the Alliance for Entrepreneurship thematic, as part of the New Global Financial Pact Summit at the Palais Brongniart in Paris, France, June 22, 2023. Emmanuel Dunand/Pool via REUTERS
PARIS – Wealthy nations have finalized an overdue $100-billion climate finance pledge to developing countries and created a fund for biodiversity and the protection of forests, France’s president said on Friday.
President Emmanuel Macron was speaking at a final panel of a summit in Paris where some 40 leaders, including two dozen from Africa, China’s prime minister and Brazil’s president had gathered to give impetus to a new global finance agenda.
The summit’s objective is to boost crisis financing for low-income states and ease their debt burdens, reform post-war financial systems and free up funds to tackle climate change by getting top-level consensus on how to promote a number of initiatives struggling in bodies like the G20, COP, IMF-World Bank and United Nations.
READ: Paris summit aims to shake up the financial system
The $100-billion pledge falls far short of poor nations’ actual needs, but has become symbolic of wealthy countries’ failure to deliver promised climate funds. This has fueled mistrust in wider climate negotiations between countries attempting to boost CO2-cutting measures.
The World Bank said on Thursday it would ease financing for countries hit by natural disasters and the International Monetary Fund announced it had hit its target of making $100 billion in special drawing rights (SDRs) available for vulnerable nations.
READ: At Paris summit, World Bank, IMF take steps to boost crisis financing
Of the $100 billion in SDRs to be rechanneled, Washington has yet to pass legislation to release its share, worth more than one fifth of the total. U.S. Treasury Secretary Janet Yellen said that it was a priority for the Biden administration to get approval in Congress.
“Leaders are fed up with the status quo, they want change,” World Trade Organization chief Ngozi Okonjo-Iweala had told the summit.
“Leaders agree that the multiple challenges that we are facing are all linked: poverty, climate change and food security go had in hand. Developing economies need financing that is additional and accessible and they also want a just (climate) transition,” she said
Zambia clinched a deal to restructure more than $6 billion in debts owed to other governments, its president said Thursday, in a long-awaited breakthrough to ease pressure on the southern African country’s strained public finances.
READ: Zambia seals $6.3-B restructuring in breakthrough for developing nations
The coronavirus pandemic pushed many poor countries into debt distress as they were expected to continue servicing their obligations in spite of the massive shock to their finances.
Africa’s debt woes are coupled with the dual challenge faced by some of the world’s poorest countries in tackling the impacts of climate change while adapting to the green transition.
Some Western officials have accused China – the key bilateral creditor to many African countries – of dragging its feet in restructuring debt, something Beijing denies.
The summit also wanted more engagement from the private sector. Senegal struck a deal with wealthier countries on Thursday that will see it get an initial 2.5 billion euros ($2.74 billion) in finance to develop renewable energy and speed up its transition to a low-carbon economy.
A group of forestry heads of state and international organizations said they had launched a biodiversity fund with the aim of concluding partnerships by the COP28 in Dubai in December, they said in a statement.