World Bank-IMF launch Climate Change platform for poor countries
The World Bank and International Monetary Fund have launched a platform to advise the poor countries on funding for conservation and climate activities. Both the financial organizations will use the platform to factor climate change into negotiations about reducing debt burdens of poor countries.
Current Scenario
According to the World Bank and IMF, there prevails twin global problems. They are as follows:
- The need to restructure or reduce the heavy debt burden of poor countries
- The need to reduce fossil fuel emissions contributing to climate change
Therefore, the solution of including climate change into debt restructuring process will help motivate sovereign lenders to write off certain percentage of debt of poorer countries. Basically, the international financial organizations will negotiate in reducing the debt of poorer countries citing climate change and COVID-19 crisis.
The Climate change platform is highly important as several poor countries are struggling to shore up their food supplies and infrastructure due to climate change. These countries are not emitting the green houses in large amounts. However, they are bearing the brunt of the impact from the rest of the world. The platform will address this issue.
About the platform
- The advisors in the platform will include officials from United Nations, private investors and ratings agencies.
- The platform is supported by the G20 economies as well.
- Three countries such as Chad, Ethiopia and Zambia have initiated the negotiations with the creditors under the new platform.
Apart from the initiations of World Bank and International Monetary Fund, there has been other initiatives to reduce the debt of poor countries. One such is the Debt Service Suspension Initiative.
Debt Service Suspension Initiative
China, USA and G20 members offered a temporary relief to the poor countries by suspending the debt service payment from the countries. This is referred to as Debt Service Suspension Initiative.
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Month: Current Affairs - April, 2021