The case for the relief of the sovereign debt “greening”

Each year, international climate negotiators meet to discuss how to galvanize capital flows in low -income countries to finance green development and climate resilience.

But in the midst of higher global interest rates in recent years, these capital flows have decreased and have become in many negative cases. In 2023 – According to the latest data from the World Bank – low and lower income countries paid more for their lenders than in the new credit (even including concessional loans from international financial institutions).

This has left many of these nations that find it difficult to finance the basic services, not to mention green investment. Below, we highlight a new plan to fight this sticky situation.

Also today: are economies of scale the answer to the biggest killer in Africa?

Sovereign debt

The search for a green opportunity in a debt crisis

In his final speech of the New Year before his death this month, Pope Francis urged rich nations, “in recognition of their ecological debt”, to note the loans of the poorest nations “which are in no way to reimburse the amount they must”.

It was far from being alone to express the alarm to the struggles of the low -income countries, where the invoices of interest which increase are Pressing budgets for essential services and infrastructure.

During the IMF and World Bank spring meetings last week in Washington, IMF figures Kristalina Georgieva to us secretary of the Treasury Scott bets Talked about the need for talks about the restructuring of sovereign debts which are in certain cases unusual.

Although it cannot constitute the radical “jubilee” debt that the late the pope was considering, the momentum seems to develop behind a more intelligent approach to the relief of sovereign debt. And this presents an opportunity for a wider redress on finance for low -income economies, with more emphasis on climate resilience and nature.

This is the argument of a new report Of a group of international experts, commanded by the governments of France, Kenya, Colombia and Germany to explore how the sovereign debt of developing countries “can become more sustainable, both fiscally and environmental”.

“We really can't have the conversation of the debt without including the climate and nature,” said Vera Songwe, a former World Bank economist who co -sponsored the group.

The concept of “ecological debt”, adopted by Pope Francis, was essential to discussions during recent conferences on the United Nations climate and nature. Low -income countries vulnerable to climate have argued that the rich nations – which, per capita, have contributed a disproportionate part of global carbon emissions and environmental damage – are morally forced to help them adapt to climate change and finance their low carbon development.

Songwe and his co-authors suggest that the reduction in conditional debt could be a powerful means of providing this support. They argue for a “restructuring of the greening debt”, creditors taking haircuts in exchange for commitments from the debtor nations to specific climate or nature investments.

The same principle could be applied to the refinancing of the debt due by countries which are not yet technically in distress, but are faced with problematic payments of the debt services. In recent years, a handful of nations such as Ecuador and Gabon have undertaken debt debt exchanges, in which they have committed funds in conservation projects within the framework of a refinancing agreement.

The efforts updated on this front would be in the interest of the countries of the creditors, according to the authors, since climate and nature investment in low -income countries will be essential if the world wants to avoid an ecological disaster. And at a time when the governments of the rich world reduced the expenses of aid abroad, they “could find politically easier” to support low -income countries in this way rather than by new subsidies and loans, suggests the report.

There are reasons for caution on the ideas offered in the newspaper. On the one hand, the addition of a new complex dimension to the risks of restructuring of the sovereign debt further extending a process which is often painfully extended as it is. And the suggestion of compulsory haircut authors for all creditors, as part of the restructuring agreements proposed, could affect the long -term appetite for borrowers in the private sector for loans to low -income countries.

But buyers of high -performance public bonds are well aware of the risks they take, said Songwe. She added that the IMF and the World Bank could help create a framework for these processes by revising their approach to calculate the sustainability of the debt, in order to correctly take into account environmental risks and the economic advantages of investment in resilience.

“We have to consider this as a complete conversation,” said Songwe.

Philanthropy

The newborn health fund is raising $ 450 million in the world's discounts

Each year, more than a million babies in Africa die during their first month of life, making neonatal mortality the largest killer on the continent. A new richly funded philanthropic initiative aims to change this.

Launched yesterday, the Start funds Has collected $ 450 million from a large group of foundations to support the care of mother and infants in Africa, emphasizing the training and improvement of the system, in partnership with national governments.

The launch arrives at a dark time for aid abroad funded by the State, after Donald Trump emptied the American agency for international development and several European nations have reduced their assistance budgets. Although it has been in preparation since well before Trump's return, the Beginning Fund recalls the fire power by hand of philanthropic foundations to soften this blow.

The new initiative has a large crowd of donors, ranging from the Foundation of the leader of the United Arab Emirates, Mohammed Bin Zayed to the Gates Foundation and the foundation of children's investment funds. Until now, the philanthropic approaches of this problem have been fragmented and often sub-cheer, with too much duplication of efforts, said Tsitsi Masiyiwa, president of Delta Philanthropies, another of the donors.

“Neonatal mortality leads to more death than HIV or tuberculosis or malaria, and yet it has not had this kind of initiative joined that these other global health areas have had to date,” said Robyn Calder, president of Elma Philanthropies, another funder. The new fund could benefit from economies of scale, she added, in the purchase of drugs and equipment.

“It is not only a question of money, but also of learning and experience, and to model what works and does not work,” added Masiyiwa. “And if we bring it together, then we are more likely to reduce these flagrant figures.”

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