At IMF-World Bank Talks, Small Steps In Climate Finance

The IMF and World Bank have been holding their first annual meetings in Africa in 50 years under pressure to reform a system too outdated to properly help poor nations battered by the effects of climate change

Marrakesh, (UrduPoint / Pakistan Point News - 13th Oct, 2023) The IMF and World Bank have been holding their first annual meetings in Africa in 50 years under pressure to reform a system too outdated to properly help poor nations battered by the effects of climate change.

The heads of the IMF and World Bank outlined their efforts to refocus on climate in Marrakesh, Morocco, but change is not coming fast enough for activists and officials who fear the planet is running out of time.

The 78-year-old system is "outdated, dysfunctional and unjust," said Kenyan President William Ruto, the heads of the African Union Commission and African Development Bank, and the chief executive of the Global Center on Adaptation said in a New York Times essay on Sunday.

In Marrakesh, hundreds of people marched on Thursday holding signs saying "make polluters pay". Others held a banner in front of the venue that read "end fossil finance."

Campaigners even bought space on street billboards -- one featured an image of new World Bank President Ajay Banga that also urged him to "be champion for people and planet."

Banga has vowed to make climate a priority since he took over in June from David Malpass, a former US Treasury official who stepped down early from his five-year term following questions about his position on global warming.

In his first major speech since taking office, Banga said Friday that the World Bank has adopted a new mission "to create a world free of poverty on a liveable planet."

He outlined ways to encourage countries to tackle climate change.

"Uruguay became the first country to take advantage of reduced interest rates as a direct result of meeting climate performance targets," Banga said.

"We're investigating if we can reduce interest rates (of countries) to incentivise exiting from coal as part of energy transitions," he said.

The global lender has also taken measures that could increase its funding capacity by $150 billion over the next decade.

But Banga has warned that the bank would need much more to help nations combat a "perfect storm" of challenges that include a climate crisis, a slow economic recovery, food insecurity and conflict.

- 'Not fast enough' -

French Finance Minister Bruno Le Maire backed a "step-by-step approach" which should begin by assessing the needs of the World Bank and then raising a debt instrument known as hybrid capital from shareholders.

The third step would be a capital increase at the World Bank that would not take place before 2025 at the earliest, Le Maire said.

"We are still at the observation round on the global financial reform that is needed for sustainable development," said Oscar Soria, campaign director at non-profit group Avaaz.

Friederike Roeder, a senior director at NGO Global Citizen, said reforms were "not moving fast enough."

"We see concrete progress, and that's good, but there needs to be much more ambition," she said.

Earlier this week, Banga was confronted by members of NGOs about the bank's continuing investments in fossil fuel projects.

"There is a real dichotomy between what the World Bank says it does and what it really does on the ground," said Rebecca Thissen, global lead on multilateral processes at Climate Action Network.

Banga said Tuesday that the bank has dramatically reduced its funding of fossil fuel projects since 2019, with only $170 million in direct funds going to natural gas projects last year out of $120 billion it committed.

The lender, Banga added, has tripled its renewable energy investments over the past decade.

But German environmental group Urgewald has estimated that $3.7 billion in World Bank trade finance ended up going into oil and gas last year.

- 'Running out of time' -

The essay co-written by Ruto said the World Bank and IMF "now recognize that climate change is a threat to economic and financial stability, and they are changing their lending policies in response."

"But much more needs to be done -- and we are running out of time to do so."

The V20 group of 68 nations vulnerable to the impacts of climate change travelled to Marrakesh to press for reforms and for them to get a seat at the IMF.

"Recognition of the V20 as an official IMF Group is more than just having a seat at the table and goes beyond giving a voice to the vulnerable," said Ghanaian Finance Minister Ken Ofori-Atta, who chairs the V20.

The group can provide its expertise on "the interconnections of climate, debt, and development," he said. "The IMF's board of directors have much to benefit from V20 experience."