On the sidelines of the International Paris Air Show, on June 19, 2023, at the Hotel des Person with a disability in Paris, France, French President Emmanuel Macron greets the audience at the conference on European air and missile defense, which is attended by EU defense ministers. French President Emmanuel Macron will host a summit on Thursday and Friday to establish a plan for reducing low-income countries’ debt and increasing funds available for climate financing.
The summit brings together dozens of leaders in the French capital to reach a high-level agreement on how to move forward with a number of initiatives that are struggling in organizations like the G20, IMF-World Bank, and UN.
Many of the topics on the agenda, from debt relief to climate finance, are based on ideas from the “Bridgetown Initiative,” a group of developing nations led by Barbados Prime Minister Mia Motley.
Avinza Perissad, a special envoy for Motley on climate finance, stated, “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.”
Despite the fact that binding decisions are not anticipated, officials involved in the summit’s planning suggested making some firm commitments regarding financing poor nations.
The World Bank and the International Monetary Fund (IMF) were established nearly eighty years ago by the Bretton Woods Agreement. Now, leaders want to get more money from multilateral lenders for the countries that need it the most.
According to officials, a $100 billion target that will be made available to vulnerable nations through the International Monetary Fund ought to specifically be announced.
The plan, which was first agreed upon two years ago at an African finance summit in Paris, calls for wealthy governments to lend the International Monetary Fund (IMF) unused special drawing rights in exchange for loans to poor nations.
Additionally, governments are looking into ways to safeguard the World Bank’s top AAA credit rating by allowing it to leverage its lending to more impoverished nations.
A source close to the French presidency stated, “We want to go further and should be able to set targets to put more public money on the table.”
Western officials blame China, now a major creditor after years of heavy lending, for the painfully slow progress of a G20 “common framework” for debt restructuring.
In what is widely regarded as a test case for the G20 restructuring framework, a source close to the creditor nations of the Paris Club stated on Monday that the governments of Zambia owe money in order to aim to make a debt restructuring proposal in time for the summit.
In addition to the pressure on interest rates, developing and emerging market nations are having trouble raising the $1 trillion that, according to economists, they will require by 2030 in order to finance reductions in carbon emissions, increase climate resilience, and address the effects of climate change.
Perissad stated that the IMF and other multilateral development banks were expected to receive support for their $100 billion currency risk guarantees to encourage private investment in developing nations for climate and development initiatives.
According to officials, ahead of the International Maritime Organization’s meeting next month, some leaders are expected to support proposals for a levy on shipping industry emissions that have been in the works for a long time.
They stated that calls for disaster risk clauses in lending agreements, which permit a nation to suspend repayments in the event of a disaster, are also anticipated.